Flippa to implement proxy bidding

[Clinton]

When this forum first started Luke Moulton, then marketing manager at Flippa, asked what features would improve Flippa. Several of the suggestions we made were implemented. Today they've announced that they're implementing another suggestion - proxy bidding.

Say goodbye to the hours spent outbidding other interested buyers for a great website. With maximum bidding, the auction is won by the approved buyer who is willing to bid the highest, not by the one who is able to stay up the longest

Sellers need to be aware that they are no longer approving a buyer's bid, they are approving the buyer. Once they've approved one bid from a buyer, all his future bids will be automatically approved so, if you're one of those who approves first bids prior to checking the buyer out, stop now!(There are lots of non paying bidders in Flippa so do your research on the buyer before approving any bids of his)

You can unapprove a bidder mid-way through the auction, but you can't unapprove his bids already placed.

Buyers would need to bear in mind that they're trusting Flippa to bid on their behalf. Most buyers won't have a problem with that but some would recognise that up to the point where the success fee maxes out, the higher your bid the more profit Flippa makes via the success fee (which is a percentage of the sale price).

The proxy bidding feature does not remove the four hour extensions to avoid sniping.

[delta4]

Thanks for the info. I am one that don't like to see Flippa bidding for me and would prefer current situation with some changes. But I understand that in many auctions it can go forever if buyers are bidding +$50 or $100.

[Clinton]

Just a caveat with this proxy bidding.

It doesn't work like eBay's, there's a major difference! In eBay, the systems bids on your behalf and bids the lowest amount you need to beat the second highest bidder. So if the current bid is $500 and you offer a max of $1000 eBay will bid only, say, $510 to ensure you become the highest bidder at the lowest possible cost to you.

Not so in Flippa.

The system would bid your entire $1,000 if that $1,000 is below the seller's reserve! It's the seller's reserve that seems to determine what bid the system makes on your behalf, not the value of competing bids.

Don't get caught out.

[grynge]

Lucky I hate automatic bids. If I actually used them, that would have really annoyed me if it jumped to the max instead of just beat the other bidder.

I sometimes love to play with bidders using automatic bids. People are dumb and will use 100 or 950 so the bids will be either 100 or 50 in increments. I love to annoy those suckers and bid them up automatically lol. Only once have I been stuck with an auction I didn't want.

[Andrew]

It doesn't work like eBay's, there's a major difference! In eBay, the systems bids on your behalf and bids the lowest amount you need to beat the second highest bidder.

This is false.

Check out http://pages.ebay.com/help/buy/automatic-bidding.html

In their words "In reserve price auctions, if your maximum bid is at least the reserve price, we'll automatically increase your bid to meet the reserve, and bidding will continue from there."

The only difference on Flippa is that we'll go right to your max bid if it is BELOW the reserve.

The reasoning behind this - and I'm assuming its the same for eBay - is that your max bid is the highest price you're willing to pay while the reserve is the minimum price for which the seller is willing to sell. When the former is higher that the latter, there is no point automatically placing a lower bid as it will not result in a sale.

[Clinton]

there is no point automatically placing a lower bid as it will not result in a sale.

Yes, it could result in a sale. Sellers lower the reserve when they see bidding not going well.

In cases where they don't lower the reserve the auction fails and they end up negotiating with the buyers post sale. Your actions expose buyers to a higher price threshold than if they didn't use your proxy bidding. One of the implications of a marketplace having a success fee based on a percentage of the sale price is that the marketplace has a perverse incentive to make the buyer pay more (if he can and the marketplace has "inside information" that he can).

I would therefore advise buyers to exercise caution when using your proxy bidding as it does not necessarily work in their interests.

You would do well to tweak your system to incrementally increase bids irrespective of whether bidding is below or above the reserve.

[grynge]

I can't say I have ever been in an online auction that jump from your bid up to your highest bid in one jump. The ones I have seen normally increase in smaller amounts. I don't use automatic bids so my thoughts are probably moot, but if I were a bidder at $10 with a max bid of $1000 I bid $10 and the next bidder put one in at $20 then my bid jumped to $1000 I would be absolutely peeved for the main reason that I could have won the auction at $30 and then negotiated the sale with the seller. But then again I wouldn't be stupid enough to use automatic bidding.

[Andrew]

I would therefore advise buyers to exercise caution when using your proxy bidding as it does not necessarily work in their interests.

I've spoken to more experienced buyers who would disagree with you on this. It's not quite as clear cut as you make out - as evidenced by the ongoing dialogue on these rules also over at eBay: http://community.ebay.com.au/questio...imum/600146611

Without the current implementation, you're more likely to end up in situation whereby there was no sale despite your max bid being higher than the seller's reserve.

At the end of the day, our auctions are designed to operate as auctions and post-sale negotiation is merely a fallback. As such, auctions rely on buyers appropriately defining the max they're willing to pay, as well as the seller appropriately defining the minimum they're willing to accept.

I like to think we've been pretty clear on how we manage proxies and reserves in both the blog post (http://flippa.com/blog/new-on-flippa...id-management/) as well as the helps pages (eg https://flippa.com/help/how-bids-offers-work).

It is naturally the user's prerogative as to whether they want to run with manual minimum increments or automated bidding up to their max.

[Clinton]

I've spoken to more experienced buyers who would disagree with you on this.

I look forward to any comments from them.

[3Six]

Without the current implementation, you're more likely to end up in situation whereby there was no sale despite your max bid being higher than the seller's reserve.

What's wrong with that? You then enter into a discussion with the seller to see if you can reach a mutually agreeable price instead of entrusting Flippa to push the price up for you beyond what you'd have to pay in a seller-buyer negotiation situation.

At the end of the day, our auctions are designed to operate as auctions and post-sale negotiation is merely a fallback. As such, auctions rely on buyers appropriately defining the max they're willing to pay, as well as the seller appropriately defining the minimum they're willing to accept.

Sounds good in theory - all buyers should bid the maximum they're willing to pay and all sellers should define the minimum they're willing to accept. Buyers then have no absolute control over that max bid while sellers can always change the reserve - the "minimum they're willing to accept". Nice fair play system even balanced in favour of the seller (and the marketplace taking a cut of that selling price).