It's happened to best of us.
You've been watching auction all week, and finally you're about to claim your prize--a rare bronze statue from Shang Dy dynasty. Or something just as tantalizing. You log on a few minutes before auction closes, and confirm that you're still top bidder -- no one has challenged you in several days. You're already picturing "your" statue prominently displayed on living room mantelpiece, your friends green with envy as you tell them about great deal you got on eBay. You refresh page a few times, to make sure you're still #1. You even up your bid a little just to make sure no body tries to outbid you at last minute.
50 seconds to go...30...10...the auction has ended and statue is yours!! You refresh page for last time so you can see your eBay ID announced as winning bidder. And that's when your heart drops to your toes. It's not your eBay ID at all, but some joker who calls themselves "speedyfingers147".
How could this have happened? You were winning bidder with only 10 seconds to go!! Speedy or not, it just doesn't seem humanly possible.
Well, you're right. No one is that fast. Speedyfingers (I made that one up, so if it's your actual eBay ID, please don't sue me!) won auction in final 4 seconds. It isn't humanly possible because "speedy" didn't actually place bid. The bid was place on his or her behalf, from a remote server, using something called Bidding Software.
The act of placing a bid during final seconds of an online auction is called "Sniping" and it's perfectly legal on eBay. Bidding wars and sniping are an eBay sellers dream and a buyer's nightmare. Why, you're asking yourself, don't these people just use eBay's trusty proxy bidding process? Why not just discreetly enter maximum they're willing to pay at beginning of auction, then let cards fall where they may? Well, for a couple of reasons. First, it's not human nature. If all you have to do is outbid next guy by fifty cents or even five dollars to win, wouldn't you?
Second, it doesn't make economic or strategic sense to place a bid anytime before last five minutes of an auction.
Think about it. EBay encourages bidders to use proxy system and place bids early. What this means is that an inexperienced bidder who wants an item will to want to be highest bidder right away, and will keep upping their bid to hold that winning position. They'll only stop when bidding exceeds their budget. Then next guy comes along and continues process. If this starts at beginning of a seven or ten day auction, and ends with a bidding war in last 10 minutes, final price for item can spiral out of control. Many items sell for far more than fair market value because people get caught up in "bidding fever" -- all they want is to WIN, they're not even thinking about whether price is realistic.
A better strategy would be for everyone to "watch" auction until very end. Again, there's two good reasons. One, price doesn't spiral up as just illustrated. Two, auction has zero bids, so it attracts fewer bidders-- less competition. It's a fact that once an auction has at least 1 bid , it becomes a magnet for additional bidders. Shoppers scanning an auction page tend to jump to ones with bids, figuring there must be something that attracted other bidders. The more bids, more interesting item looks.
Wouldn't it be great if a seller started a two carat diamond ring at $0.99 and no one bid until last five minutes, and they all bid in fifty cent increments? Someone might win ring for just a few bucks!! Of course, that never happens, but it would be ideal situation for a buyer -- and it would put eBay out of business in a hurry. EBay encourages early bidding and smiles upon snipers of world. EBay makes their profits on listing fees and "final value" fees. The more item sells for higher "final value". This makes eBay very happy. That's why you'll never find any tutorials anywhere on eBay telling you to wait until end of an auction to bid.