Online auctions have plenty to offer but you need more than just time and a willingness to buy to get the most from bidding on the net. Angus Kidman talks tactics.

Published in The Bulletin, September 17 2002

Christopher Coleman is a definite fan of online auctions. Coleman collects video games, including software for Sega's long-out-of-action Master System console. "One of the highlights of my Sega Master System collection is a Pro Action Replay cart," he says. "A long time ago, I saw one for sale at a swap meet, and didn't get it because it was 'too much' at $30.

"I never saw hide nor tail of one for years afterward. Then I saw one on eBay US go for more than $US150 [$270], which depressed me until I had a thought: what about the European branches of eBay? I knew that Master System stuff had come out over in France and Germany and a lot of American collectors would be scared of dealing with 'foreigners'." The strategy paid off, and he eventually acquired a copy for $US80. Coleman's story shows how you need more than just a willingness to bid and some time on your hands to get the most from buying online.

Auctions have proven immensely popular since eBay was established in 1995. Its main local rivals are Sold.com.au and Stuff.com.au, although eBay dominates in terms of traffic and sales.

One advantage that eBay enjoys is its international focus: it currently operates in 20 countries. The auctioneer's commitment to the international market was underscored last week when it paid $US65m ($118m) to buy out its Australian and New Zealand joint­venture partner, ecorp (owned by Publishing and Broad­casting Ltd, the publisher of The Bulletin).

"Buying the business outright will enable us to bring it more in line with our other international businesses as part of our overall strategy to build a global on­line marketplace," said eBay senior vice-president, international, Matt Bannick.

eBay's plans include the expansion of its storefront operations, which allow individuals to sell goods at a fixed price rather than using an auction format, and its partnerships with other retailers. For the near future, however, no major changes to the local operation are planned. eBay will continue its marketing deal with ecorp subsidiary ninemsn.

Going global has produced an enviable scale for the business. eBay has 50 million users worldwide and processes more than $24m in sales every day.

Taken together, that's a lot of potential bargains and unique items but also a mountain of junk to sift through and a heap of people to compete with. How can you get the best-value deals from online auctions or make sure that you don't lose out on that one-of-a-kind item?

The first rule is simple: you're an Australian, so act accordingly. "Using online auctions is a significantly different experience outside the United States," says Lewin Edwards, a former Australian resident who, like Coleman, uses eBay to expand his collection of console games.

Thinking local is especially the case with the common technique of "sniping", which means placing your bid for an item at the last possible second so no one can top it. "To win an auction [offering] that I really want, I like to wait until the last minutes of the auction before bidding," says Rachel Beckway, who uses eBay to extend her Barbie doll collection and to purchase discount software for her children. "I then snipe bid, usually with several windows open for that auction, each with a different bid price just in case I haven't bid high enough."

Bidder's safety net One of the scarier aspects of bidding in online auctions is that you know little about the person offering the goods. Can they be trusted? Will the goods match their descriptions? What can you do if deals go wrong? eBay's response to the problem has been a built-in feedback system. Sellers receive either positive or negative feedback for every transaction they conduct. The more positive feedback entries, the more reliable the system. For the most part, this self-policing system works well, although it's sensible to try and resolve problems before entering a negative feedback comment. "It's always best to contact the seller first," says Rob Watson. "People don't like getting a negative feedback. It looks bad." Of course, the determinedly dodgy will find a way around any system. "A crooked seller can have three or four different eBay user names and when he wears his welcome out with eBay, he'll just register again with another name," says Wayne Tangey. Researching bad sellers can involve more than just looking at eBay's records. Particularly disgruntled buyers often set up their own pages detailing their troubles. For instance, Sydney's spanking museum, Spankoz, was so unhappy when it was duped in a rare video auction that it set up a page detailing its complaints and contributed to an international investigation into the problem. However, it's important not to become overly paranoid. "Two or three times I've sent payment and never received the item," says Christopher Coleman. "But I'd say that, over the years, I've made at least 150 transactions on eBay as a buyer, so those are pretty good odds. If you play it safe when bidding, and go with people who have good feedback, you can do pretty well."

Beckway's strategy has proved highly successful at times: "I got a doll for $90 that retails here for $599." However, not everyone has her luck. Sniping is difficult enough in the US but the extra few seconds imposed by bidding across the Pacific makes it a particular challenge for Australian users, who often find themselves outbid at the last second because of network lag.

Sniping aside, there are other pragmatic reasons to look locally first. You'll pay less in postage (many overseas sellers won't ship bulky items overseas anyway), you won't need to worry about currency conversions, and you're less likely to experience competition from Americans.

That said, if you collect something that travels relatively easily -- books, Kinder Surprise toys or vintage hosiery -- going overseas will substantially increase your range of choices. "The best purchase I've made was for two military Dinky cars in superb condition for about half their proper value," says Peter Seaman, a Brisbane resident who collects diecast model vehicles. "They came from Italy."

Buying from overseas is also easier these days with the advent of online payment systems such as PayPal, which eliminate the need for money orders or foreign currency and generally mean items are delivered faster.

One common mistake by eBay newbies is to pay more for a second-hand item than they might through normal retail channels. "Find out whether or not it's still available at retail and, if so, for how much," says Coleman. Before entering a bid, it's worth checking the cost by looking at other resources such as online shops. You should do a search for similar items in current auctions to see if a better deal can be had elsewhere.

eBay also allows searches through completed auctions, which gives you an idea of what other people have paid in the past. If that rare piece of Wedgewood has a minimum price of $500 but no one else has paid more than $250 in the past year, it's probably not a good deal.

Don't limit your researches to the internet, though. Wayne Tangey, who has built up a substantial collection of vintage microphones in Perth, recommends choosing your targets carefully. He bought an RCA 44BX microphone via classifieds in his local newspaper for $200. On eBay, the same micro­phone routinely sells for $3500 to $4000.

The reverse also applies: eBay can be a useful way of checking market values for other purchases. "I have primarily used eBay as a resource to see what is available in the market," says Trevor Rowbotham, a Brisbane-based collector of John Deere belt buckles. "I get to see what is on offer and it provides an ­excellent guide to prices."

For rare items, price may be secondary. "Items sold on auctions aren't always cheap -- possibly more the other way -- but it's a global market so obviously there's more on offer," says Tangey.

Before the deal is sealed, make sure that the delivery charges are reasonable. "The most annoying thing is sellers who overcharge on postage," says Beckway. Items that are difficult to post may prove to be bargains, however. Notes Tangey: "Large items that are difficult to ship never reach their market value."

Once you've decided on a price range, you're ready to make an offer. Seasoned eBay users advise against placing your bid too early. "Bidding early for an item only shows the opposition that you're after the item," suggests Tangey, who adds that this is a particular problem in the small microphone-collecting community.

"Most other microphone collectors know my eBay user name and likewise I know theirs, so if I bid early the other collectors know that I'm interested. Another ploy I've tried is to put a high maximum bid early on in the hope that it might scare off other bidders but it's not really a good ploy. It just ups the price to everyone's disadvantage except, of course, the seller."

eBay uses a system known as proxy bidding, which allows you to specify a maximum bid rather than entering a new amount every time another purchaser mounts a rival bid. Proxy bidding is a useful technique since it allows you to set in advance the most you're prepared to shell out and reduces the odds of making a huge impulse bid. "Work out the maximum you want to spend on the item, and don't go over it," says Coleman.

Veteran buyers recommend subtle adjustments to your final price. "If it is an item I really want, I usually bid $11 more than I would like to pay, just so I don't kick myself for losing out by a dollar," explains Seaman. "If I lose out by $11 then I can justify it to myself."

Another tactic is to make bids of slightly unusual amounts. "Go one cent over what you would pay," says Rob Watson, who uses eBay to expand his­collection of records by alt-pop group Garbage. "If you are willing to pay $10, bid $10.01. Then, when the other bidder wants to pay $10, you will win with $10.01. It's more risky but it can work."

If you find yourself frequently losing auctions to the same rival bidders, it's worth researching their own techniques. Watson advises checking out your competition and planning accordingly. If your adversary is located in Japan but the auction finishes at midday US time, the odds are they'll be asleep when it finishes, leaving the field clear. "I like to research the current high bidder," says Beckway. "I do a search for past auctions that they have bid on to see what their bidding amounts have been. I like to know if they always bid with even amounts or with an uneven amount."

Over time, you're likely to find yourself searching for items in similar categories, which can save time hunting for bargains or rarities. "I am only interested in diecast model toy vehicles, so I just go to those parts of eBay," says Seaman. "I have all of my favourite pages bookmarked and I go straight to them. I always go to the 'ending today' pages as I don't have time to troll through all of the listings."

Even with all these tactics and a bottomless wallet, there will be times when you lose. Be philosophical. With 50 million potential competitors, it's inevitable someone else will win sometimes. Notes Coleman: "The best strategies are patience, knowledge and more patience."