Why Auction Extensions (Auto-Extend, AE, etc.) are not right for Ebay from here

"A Solution in Search of a Problem"--wlaud

Almost every day on one of Ebay's message boards, a poster declares that the current auction format is flawed, and then goes on to suggest a "new" idea.  They feel that auctions should auto-extend if a late bid is placed in hopes of leveling the playing field.  After all, the live going, going, gone auctions do not end until the bidding has stopped, right?  Typically, the poster is relatively new and has been outbid in the closing moments of the auction.  Suggestions for extension times have ranged anywhere from 10 seconds to an entire day.  Five minutes is about the average as well as the most commonly suggested time.  While the idea may seem like a quick fix for a problem that really does not exist, it has some serious implications.  By far, this is the number one "solution" presented to end the practice commonly known as "sniping".  In fact, it may be the most suggested item in all of Ebay.   Let's look at the dark side of extending auctions.

(1) There has been plenty of time to decide already  Ebay's auctions run 3,5,7 or 10 days.  If someone cannot decide what their maximum bid is in that amount of time, what good is a few extra minutes going to do?  Often, there is a claim that people simply cannot make up their mind for a maximum bid.  Those who can make up their mind should not be punished with an extension for those who cannot.  The key is to bid the maximum, add on a few cents, and wait for the results.  

(2) It is still not fair to everyone  AE is meant to reduce sniping, when in fact, only the snipers themselves could gain from it.  The only ones who could participate in an extension are the late bidders at their computer at that exact time.  Those are the snipers.  Because of time zones, work, sleep, raising children, cooking, and other duties, not everyone can be at their computer at any given time to participate.  Does this sound fair?  Let me ask you some questions:  Would you really be willing to be at your computer at the end of every auction in case of an extension?  Is this really for you?  Be honest.  If you are winning the bid (with a higher maximum set as your proxy) before the auction is extended, do you really want an extension?  Probably not, right?  Proxy bids are just as effective as those late bids.  All auction extension does is require everyone to be snipers to have the full advantage.  Since those who propose extensions hate snipers, it does not make sense.  As some message board posters have so put it, the ones who would benefit the most from AE would be the independently wealthy or those on welfare.  After all, who else would have that much time to sit in front of their computer?

(3) Sellers have schedules to keep   Many sellers schedule auctions to end at a particular time in order to email their winners in one shot and to schedule bulk deliveries.  This makes recordkeeping very easy indeed.  Sometimes, they have jobs, vacations, children, errands to run, or something else that might make them be away from their computer after a specific time.  If an auction were to run over the regular time, it would put a lot of strain on such a seller.  They may not be able to contact the eventual winner of an extension for a while, and that could cause panic on the buyer's side.

(4) Bidding behavior will change  If you could only remember one thing about this page, this should be it.  Those in favor of  AE assume that bidding patterns will remain unchanged as the new feature is implemented.  I propose that something different will happen.  It is best to show a comparison.  Assume in this illustration a widget with a  market value of around $100 and and a current bid of 50$ on the final day of the auction.

In the current format:  If the high bidder at 50$ is an effective proxy bidder, they have a maximum bid somewhere near 100$.  Snipers could enter the picture in the final moments placing maximum bids in the $100 dollar range.  The winner will be whoever placed the highest bid regardless of when it was placed.  Thus, the selling price for the item will be near its market value of 100$.

In an auto-extend:  In hopes of winning the auction at the lowest possible price, the late bidder places a bid of 51$.  The auction is extended due to the late bid.  Just before it ends, the competition (if any) will likely bid 52$ hoping to win by this amount.  One of two things will happen.  Either the bid will continue incrementally to the 100$ range taking a whole lot of unnecessary time, or someone will give up and the item will sell below the market value.  Perhaps the other person (s) had to quit due to an impending workshift, a bowel movement, a flight to catch, or whatever drove them away from the computer.  The seller loses a lot of money and I am sure the winning bidder is real happy.  There is a great incentive to bid the next increment only in hopes that everyone else will give up.  The problem is, if every else is thinking the same thing, this auction can drag for hours on end.  From a seller's point of view, they will be hoping that the item approaches the market value before the auction finally ends.

(5) Ebay already has a live auction site  Most people who propose the extensions are likely thinking about the going, going, gone auctions that take place in brick and mortar establishments.   However, an online auction requires a different format to achieve the maximum success, and Ebay realized that.  They have created a site where live auctions take place that act in this format.  The website is http://www.ebayliveauctions.com/

(6) Strain on the server will intensify  Already, Ebay is plagued with outages from time to time.  With millions of auctions running at a given time, it puts a lot of strain on the system.  Also, much of the email now goes through the server at Ebay.  Extensions would require software to update the remaining time on every auction that has been extended.  This will further add to the enormous load that the system must bear.

(7) The search feature will now be flawed  The search feature is used to look up a particular item on Ebay.  It will provide a list of these items and show the time remaining.  Typically, the search feature is not updated continuously, so any extension that takes place will likely not register on it.  This could lead to a flood of complaints from buyers and sellers alike concerning the system's inaccuracy.  Because the search will not automatically updated, it is unlikely that many people would not even be aware that an extended auction was still in progress.  

(8)  It has not seen success on those other auction sites Yahoo has AE and its success is nowhere near that of Ebay.  They have had complaints from buyers and sellers in the past about the feature.  Most sellers choose not to use the feature.  Many people have been scared to bid, because they did not want to get caught up in a bidding war resulting from an extended auction.  Savvy bidders will avoid this feature like the plague.  Remember, most items on Ebay are not unique.  If an item can be obtained with less struggle than participating in an extended auction, this will be an attractive alternative.  

(9) The proxy system will be jeopardized  Similar to (4), I believe this feature would ruin the effectiveness of the proxy bid.  Let us assume that I bid late in an extension against someone who has submitted a proxy bid.  I cannot lose as the sniper!  I will either bid incrementally until I outbid your maximum, or until I have met my own maximum bid.  If I want to beat you, I will.  There is no risk for me not to bid my maximum.  All I have to do is bid the next increment to keep the auction alive.  It is not even necessary for me to make a winning bid to keep the game alive.  The only way for the early proxy bidder to win  is to make a maximum bid so ridiculously high, that no one is likely to meet it.  If you did that, you would not be worried about sniping anyway, and thus no need for an extension.  No one in their right mind would enter a proxy bid in an extension.  There is no need to bid your maximum.  Just bid the next increment, and hope you outlast everyone else (be the ultimate Ebay "survivor").  The hapless individual who placed a proxy before the extension will just have their maximum whittled away by the participants of the extension.  The proxy bidder will either lose or will have their winning bid pushed up in the extension.

(10)  There will be a rise in Non-Paying Bidders  Let's assume that some incremental bidders will be present at the end of the auction.  Imagine how stressed those individuals would be as they bid against each other.  After minutes or maybe even hours, whoever remains may be more determined to win.  The goal of some of these bidders could be to win at all costs.  They could end up paying more than they were willing to just to win.  After all, they invested so much time in that extension period, that losing may no longer be an option to them.  A circumstance like this could cause many people to not think as rationally as before.  Once they finally win the item at an exhorbant cost, no doubt many will see the mistake that they have made.  Some honorable people may pay anyway, however I think that many more will not be willing to pay.  Sure, the seller gets a high price for the item, but it will be useless in the face of buyer's remorse.  This would cause a considerable increase in the non-paying bidder type.  This situation was suggested on the bidding board by Ebay user Esippert.  Of course, I agree with him.

If you suggested AE, because you think Ebay is not a"real" auction:
The regulars get this a lot!  Let's look at the dictionary for the definition of an auction: Webster's Ninth New Collegiate Dictionary says: auc*tion  \'ok-shen\  n [L auction-, auctio, lit., increase, fr. auctus, pp. of augure to increase] (1595) 1: a sale of property to the highest bidder By definition, Ebay has a true auction, because the winner is the highest bidder.  The going, going, gone type auctions only last a few minutes, and extensions last only for a matter of seconds after the last bid.  So, in order to Ebay to truly mimic one of these, the auctions would only last a few minutes, and the extensions--a few seconds.  Does this sound reasonable?

Ebay's official statement on extending auctions
Well, here it is straight from the horse's mouth.  This is the only suggestion I have seen that Ebay has actually come out against on a discussion forum. "From:Reed @eBay.com - We are not going to add auto-extensions to the end of auctions. We believe bidders should bid during the standard auction time period and that they shouldn't attempt to game the system with auction extensions and variable ending times. When you know an auction ends at a specific moment we believe it elevates the overall
excitement of the process and encourages bidding."

 The only acceptable Extension on Ebay
Because of Ebay's power outages, auctions that end during that time will not receive bids.  Consequently, this will cause sellers to lose money.  Since so much of the bidding occurs late in the auctions,  the final price is not likely to equal the going rate for the item.  Also, bidders will lose out on a chance to bid for the item, so they will be effected by the outage.  This, in my opinion, is the one acceptable reason to extend an auction on the main site.

Excellent links about "Sniping"
Before giving these excellent links, I have a few personal comments.  Sometimes I snipe, and sometimes not.  All bids made during the life of the auction are binding and legal.  A well placed proxy is just as effective as the snipe.  Every experienced sniper will testify to that.  Sniping should be thought of as Time Awareness Bidding (TAB).  It is a very effective strategy that is used to circumvent a lot of potential problems.  Anyone who bids has the ability to do it.  It is not immoral, and those who bid late are not evil "snakes in the grass" hoping to prey on a hapless victim.  It is all about economics, folks.  Look at these links to find out all you ever wanted to know about the subject of sniping.