Ebay Transaction Costs

Transaction costs can be cut down in a huge way when using an online auction market, such as eBay. While these costs have been cut down, on eBay, some of these costs do exist for buyers and sellers. To put the spotlight on sellers for a moment, a number of costs remain. When you decide to post a service or good on eBay, there is an upfront fee for the sellers (unless the site is running a special). With the conclusion of the auction, the seller is also responsible to pay a final value fee to eBay which is a percentage from the final bidding price. Sellers can also market their product differently on the website as well. You have the option to pay for you listing to be "featured," or catch the eye more by allowing bidders to scroll their mouse over your listing and automatically your main picture pops up without loading the actual auction page (helps generate interest but also another cost). In addition, you can also use the services of a third party such as Auctiva. Auctiva's specialty includes "spicing" up your auction page. The website provides professionally produced templates, selling tools, allow you to list auctions right from the site which will be transferred to eBay. Using their services is another transaction cost as a monthly fee exists with Auctiva. Moving to other side, buyers do in fact have transaction costs as well. The buyer's costs come in asymmetric info. This is because they don't have the product physically with them. In addition, all the buyers can really base their information from is the description of the product, the picture and to tie things together, the feedback of the seller which helps to determine how much integrity they have. Additional costs for the buyers can also include shipping costs with the product along with paying for extra insurance on the product as well.

Question Two:

The package, that eBay has put together with their rules and regulations, has been highly productive and efficient. Quite simply, eBay's two main objectives for implementing these regulations are: 1) Provide a vehicle to make the transaction of goods and services between buyer and seller much easier and simpler. 2) Help to cut-down and eliminate fraud. To be brief, you are contractually obligated as a buyer to pay for the auction you win, and as a seller to provide accurate description and the deliver the good exactly as described. A muted incentive of note is in a way the use of PayPal because it is pretty much included as a packaged deal for use on eBay. PayPal is a quick, easy way for buyers to pay and sellers to receive payment, adding in to the speed and efficiency of the transaction, which help cut down on transaction cost. PayPal also assists eBay in preventing fraud as a buyer can receive their money back in a relative quick fashion if they receive an item that is far off of the description or if they did not receive their item at all. All these