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How does eBay actually work?Hi, It's a bit embarassing to ask this thing. I know what is eBay and that's all. Please tell me how does it work? I heard a lot about scams in eBay. How can I avoid them? Thank you so much. If you've been involved with the Internet for any length of time, I think it's inevitable that you've bumped into either eBay (Nasdaq:EBAY) or one of its huge subsidiaries, Paypal or Skype. I know I use all three of these with alarming regularity! In terms of how eBay actually works, though, that's an interesting question, because in many ways, eBay represents a perfect implementation of what we could call Economy 2.0: it's a business that makes money by being an intermediary. They have no warehouses, no stock, no shipping department, no salespeople and no retail storefronts. Yet for all that, they make billions of dollars in profit. With competitors like that, why bother with retail, temporary staff, the hassles of shipping and all the rest of the burden of a traditional business? Apocryphally, when Pierre Omidyar founded eBay (originally called AuctionWeb), he created it to allow his girlfriend to buy and sell Pez dispensers with other collectors. In fact, the first thing sold on eBay was Pierre's broken laser pointer, which -- amazingly -- someone bought for $14! I won't belabor the company history as there are many excellent sources for that, including an authoritative Wikipedia entry and literally hundreds of books. In many ways, eBay offered up a completely frictionless marketplace where sellers gained the benefit of far greater visibility for their goods than they could obtain through other outlets (e.g., flea markets, garage sales) and buyers gained access to a far wider range of goods than possible in a physical setting. If each party had to pay a small transaction fee on a consummated transaction, the price was easily absorbed when compared with the benefits. What I believe really made eBay a harbinger of things to come in the online commerce world (remember, eBay was started up in 1995) was the rating system, which allowed the community to police itself, promote and recognize great buyers and sellers, and grow without being trapped in the vacuum of anonymity that's one of the banes of the Internet. However, as with all things, scammers have figured out how to game eBay and while the percentage of transactions that are fraudulent are surprisingly low, it's not hard to find someone who has been ripped off, almost always from a fraudulent seller. How can this be, in a world of ratings and user feedback? It's not hard, especially if you create a shilling circle or other group of people who collectively intend to scam others. It can work like this: five of my best pals and I all create eBay accounts and then auction off ridiculously cheap items like pencils or gum wrappers. Each transaction costs perhaps $0.25 in fees and if we're all bidding on each other's auctions, each complete the transaction, and each give the other positive feedback as a buyer/seller, it won't take long to establish a good community rating and seem legit. 20-30 low-cost items, less than $1/transaction in fees, and now you can move into selling $2500 plasma TVs or high-end laptops without appearing like someone who just started on eBay. Meanwhile, though, your intent is to take the payment but not ship the goods. If you run a half-dozen auctions simultaneously, you could pocket a quick $10,000 or more through this strategy, even though it's clearly illegal. The best way I have found to avoid scams is to #1 not buy from anyone with less than a few hundred feedback votes, at least 95% positive (things happen, I don't expect 100% clean feedback), and to avoid anything with a strange payment scheme. Wiring a money order, sending a check to a Post Office Box, or similar are all warning signs. Instead, use an escrow service and if you use Paypal, opt for the insurance they offer. Hopefully that answers your question and offers some basic tips on how to avoid being ripped off. Good luck to you, and perhaps other eBay enthusiasts will add their own best practices in terms of avoiding being ripped off, which none of us want.
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Categorized:
Auctions and Online Shopping
(Article 7216,
Written by Dave Taylor)
Tagged: auction scams, ebay, ebay fraud, rip-offs, scams Previous: How can I delete an "undeleteable" MySpace comment? Next: How do I add a Google Gmail sender to my contact list address book? Reader Comments To Date: 15Dave Taylor said, on February 27, 2007 9:04 AM:
Hi Gary. I don't know much about your Auction Mapper service, but yes, if I were using a third-party auction search system, I would definitely like to screen out those sellers with a rating of less than 10, for example. Shawn said, on March 6, 2007 1:50 AM:
That is great advice Dave but I am wondering more about the online commerce things like PayPal and so on. Are there more things you as a consumer do to protect your self other than buying the insurance? Jeremy Pierce said, on November 11, 2007 9:53 PM:
I've come to the conclusion that several large-volume sellers make extra money by sending about 99% of their products and ignoring the rest, leaving them with 99% ratings or slightly lower. Some of them have prices way too low to be making money, and this is how they make it back. I've stopped ordering from people with lower than 100% if they're high-volume sellers. Cathy said, on July 7, 2008 5:28 AM:
I want to start an ebay or other online jewelry business. How is the best way to get started? Do I need my own web page to link? What other information should I consider. I'm very new at this whole process. Thanks for your help. Donny Kim said, on October 8, 2008 11:57 AM:
Hi Dave Daniel Carattini said, on June 27, 2009 12:24 AM:
My name is D.C.,live in Las Vegas and I'm not good in computer or even understand it.I have one item that I would like to sell on eBay,but don;t no how to even get started,or how it would work,and how I beenafit from it sally said, on February 22, 2010 7:58 AM:
Hi! I am in the midst of buying a vehicle through another web page, and the buyer has said that they will be setting up an ebay account in which i put money into and then when i receive the vehicle and agree to take it then ebay sends him the money. My question is, is this sort of account real or am i being scammed? Dave Taylor said, on February 22, 2010 8:05 AM:
Sally, sounds like a sam. You want to use a credible service like escrow.com to complete the transaction. Check this out too: http://moneycentral.msn.com/content/savinganddebt/saveonacar/p92243.asp luke said, on March 4, 2010 1:57 AM:
paypal holds the payment until either the buyer posts a posstive feedback or something like 25 days past buy so if someone scams you alert ebay and your money will be refunded Malcolm said, on September 9, 2010 3:52 AM:
I live in New Zealand. I want to list an item to sell on Ebay.com. I assume that the currency used on the auction is US dollars ? Also do I need to listr separately on Ebay.US and Ebay.UK or is the listing linked ? Thanks heaps, Malcolm. naman said, on January 7, 2011 12:59 AM:
i m a graphic designer.and i have heard a lot about ebay. and i have ebay account bt i dnt know how to work in it.how can i work for the clients through ebay online???????????? plz help me out Sue Parker said, on June 9, 2011 10:38 AM:
Hi Dave, Dave Taylor said, on June 10, 2011 12:02 AM:
Sue, I tackled your question here: http://www.intuitive.com/blog/contracts_after_the_company_goes_under.html Mike said, on September 27, 2012 2:01 PM:
While I do agree to take care in who you buy from, NOT everyone is out to scam people I am selling my Iphone and I have never sold on ebay, I am NOT a scammer so your advice actually hurts someone who has a real item for sale, so your advice is not that great bud
I do have a comment, now that you mention it!Check This Out Too... |
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Great advice, Dave.
You mentioned not buying from anyone with less than a certain minimum feedback vote and rating. We're constantly trying to improve AuctionMapper and I was wondering if you think it would be helpful if we added a filter for these fields. In other words, have a field where you can specify a minimum feedback rating and feedback vote total, and then items which don't meet these minimums would not be shown in search results.
Just curious how important this may be for shoppers.