Many newer eBay sellers aren't sure which listing type to use, auction or fixed price. There are advantages and disadvantages to each. Choosing which listing type also is a matter of which business model a seller uses. A fast nickel indicates a quick sell through at a lower price, whereas the slow dime is a slower process with higher prices.
When eBay was first founded back in 1996, auctions were the only listing type available. Even today, people not familiar with eBay assume that auctions are the only listing type, although eBay has added these options:
- Auction with Buy it Now
- Fixed Price
- Fixed Price with Best Offer
- Good Til Canceled (store listings)
- Good Til Canceled (store listings) with Best Offer
With such a variety of listing types, how can a seller know which one is best? Sellers have different objectives. Not every seller is seeking the highest price for their item in the shortest amount of time. Some want to turn over their inventories quickly and make a lower profit. For example, dealers who clear out estate sales or go to weekly auctions buy a huge amount of inventory at one time, maybe even truckloads. They can't afford to hold on to this inventory for very long because it costs money to store it and they know there will be more inventory coming soon.
Advantages of Auction Listings
Inventory can move quickly through eBay auctions. Depending on the store level, sellers get at least 250 free auctions a month, so there are no insertion fees. Final value fees apply to listings that sell.
Auctions are also good for collectible, rare, or hard to find items. Things like autographed items, vintage or historical memorabilia, or artwork can sell for high prices on auction because collectors bid. These types of items are limited in number, only a few exist on the planet. eBay has a feature where buyers can set alerts, so when an item is listed with the keywords entered by the buyer, they get an alert that the item has been listed and can bid.Another advantage of auctions.
Prices can go very high on auctions of valuable items. One advantage of auctions is that the market determines the price. Sometimes sellers leave money on the table by not pricing a Fixed Price listing high enough. There is some guesswork in pricing rare or unusual items. The best way to find out what a buyer will pay is to run an auction and let the market determine the price.
Disadvantages of Auction Listings
A shipping backlog. When a lot of auctions end at one time, shipping can be a challenge. eBay periodically offers specials where sellers can list hundreds or thousands of items for free. Sometimes sellers don't think ahead and send a large number of unsold items to auction. They forget that if everything sells, the shipping could be a nightmare. A good sell-through rate for auctions is about 80%. So if you list 100 items on an auction special, sure, you are saving money with insertion fees, but be prepared to ship 80 items when the listings end.
Lack of indexing on Google is another disadvantage of auctions. For sellers who run their eBay store like a brick and mortar, having all their inventory for sale all the time, indexing on Google is a good thing. But, auctions aren't live long enough for indexing on Google to happen. Auctions run in durations of 3, 5, 7, or 10 days. It usually takes 30 days for something to start showing up on Google.
Limited visibility. The right person might not see the item within the 3-, 5-,7-, or 10-day auction timeframe. If a buyer who would bid on an item isn't online because of travel or some other reason, they can't bid on the item. Auctions don't reach a large number of people like a fixed price listing would over a period of time.
Lack of automation. Auctions have to be managed. If an item is unsold, the seller has to decide what to do with it. Leave it in unsold item folder, re-list it, or discard it. This cannot be automated.
Slow Payment. Auction buyers can take their time to pay, up to 4 days. This is aggravating but a part of the system.
Advantages of Fixed Price Listings
More automation. Fixed price listings are like inventory at a regular retail store. Everything is for sale at any time. When a seller has an eBay store, they can use a feature called Good Til Canceled, GTC. With GTC, items renew automatically every 30 days. This makes managing a store more automated. Listings can be tweaked with the Bulk Editor so making global changes to listings is easy and fast.
Best Offer Feature. With fixed price listings, sellers can enable the Best Offer Feature so shoppers can submit offers for the seller's consideration. The seller has full control to accept, decline, or counter the offer. Best Offer empowers buyers to start a conversation with the seller and negotiate.
Markdown Manager. This feature gives sellers the ability to run sales. Sellers can mark down items in a category or with a keyword by a certain percentage. Markdown Manager can accommodate 200 listings at a time.
Immediate Payment. Non-Paying bidders are the biggest hassle with auctions. Fixed Price and GTC can include the immediate payment feature. A buyer can click on the Buy It Now button, but the item will stay available for someone else to purchase until it is paid for. If the item sells on Best Offer, the immediate payment option goes away.
Disadvantages of Fixed Price Listings
No Sense of Urgency. Buyers may bookmark or watch a listing and never return. With auctions, buyers get a sense of urgency that they must bid or buy the item now.
Fees. Fixed Price and GTC listings incur charges each month if they renew. These fees can add up over time.
Whatever your business model, make sure you understand the pros and cons of each listing type. eBay offers many options for different ways of making money. Also, make sure you understand the fees for each listing type.