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In Our Words / Article

eBay 101: Using the World’s Largest Auction House for Fun and Profit

Part 2: eBay Terminology

By Justin Laby, Co-founder, Mouko, LLC

In order to get started using eBay, you first have to understand some of the basic words, terms, and technologies that drive the eBay experience. Undoubtedly, you will have heard many of these terms before, but perhaps not in the context of an online auction.

First of all, eBay could not exist if it were not for the items, products, or services one finds there. On eBay, the term item is used to describe anything that is placed up for auction, whether it is one thing, such as a painting, or a group of things, such as a complete set of baseball cards. Items are put up for sale by sellers, who are either casual merchants or professionals who depend on eBay for a large portion of their income.

The act of putting an item up for sale is called listing an item. Once an item has been listed, it is now a “listing” and is available for people to bid on. The person who wins the auction is called the buyer. When a listing is created, the seller determines many factors for their auction, among these are the starting bid, the reserve price, and the “Buy It Now!” price. The starting bid is the minimum price someone can bid on an object to become the highest bidder, after which point the next person must bid higher to become the highest bidder. The reserve price, which is optional, is the minimum price you will accept for the item being auctioned. If the reserve price is never met, the item does not sell. “Buy It Now!” is another optional price you can set on an item that lets someone buy an item at a fixed price before it receives any bids. As soon as an item gets a bid by anyone, the “Buy It Now!” option goes away.

When you list an item on eBay, the auction will occur over a period of 3, 5, 7, or 10 days, known as the listing period. When the listing period ends, if the item has received enough bids to put the price at or over the minimum accepted value (determined by the listing price or reserve price), the buyer is contractually obligated to buy the item from the seller at the final selling price. When payment is received, the seller is contractually obligated to deliver the item to the buyer.

Because of the nature of commerce on eBay and because of the anonymity afforded by the Internet, it is important for buyers and sellers to have a strong trust relationship. Buyers need to know that when they pay for an item, they will receive it; sellers need to be sure that a sold item will be paid for, and within a reasonable time. The mechanism utilized by eBay to determine the trustworthiness of anyone is called feedback.

Every member of eBay, whether buyer or seller, has a “Feedback Score.” Whenever an item is sold, a mutual exchange occurs between the buyer and the seller. The seller rates the buyer and vice-versa by giving “Feedback” to the other. Feedback comes in three forms: positive, negative, and neutral. Giving or receiving negative feedback should be reserved only for terrible interactions, such as an item never being paid for, an item never being received, or an item being received in damaged condition without any reparation or consolation from the seller. It is impossible to stress enough the value of having a high feedback score. Many people will not bid on an item sold by someone with less than a 99.9% feedback score (one negative in a thousand positives). It is also important to leave positive feedback after a successful transaction.

Next, we will discuss eBay fees, and how eBay makes its money.