This is the idea I had today when I was driving:
Allow sellers in the domaining.com’s marketplaces to decrease the reserve price of their domains that are in auction.
Remember that I allow a start bid under the reserve price and if the auction finish with the highest bid under the reserve price the domain does not sell except the seller declares the highest bid as sale price (we give him a maximum of 24H after the closing of the auction to decide).
Since this feature is up I noticed how some investors started to place bid in auctions under the reserve with the hope seller accept their lower bid.
And it’s what happen! When their lower bid is not a low ball offer this often generates a sale.
But there is no way for the seller to send a signal to the bidders like:
“Hey buyers, you are right! I just realize I asked too much in my reserve, but you are also not offering enough! If you meet me here then a sale may happen!”
And this is exactly the idea of this new change, allow sellers to decrease their reserve price to motivate bidders to bid just a little higher to generate a sale.
Today the buyer who placed a bid under reserve don’t know until the end of the auction if his bid will generate a sale or no.
So OK, let say this feature is already implemented, what should happen when the seller decrease the reserve price of a domain in auction?
We will send a mail to all the buyers having a bid placed in this auction informing them the reserve has been lowered.
Logical and fine, except some would like to abuse the system and lower their reserve just few dollars many times simply to have emails sent to bidders with the hope they remember their auction is running.
I cannot tolerate having buyers annoyed by multiples emails just saying the reserve is now $25 lower on domain where the current bid has a $3,000 reserve for example.
So the solution should be the same way they are minimum bidding increments I should setup minimum decreasing increments on reserve.
And the “Buy-It-Now” (BIN)?
Remember, the BIN is proposed while there is no bid over the reserve price creating some urgency to bid until reserve for the most motivated buyers.
Why not also allow to decrease it during an auction?
This way the seller could play with it in his sale strategy.
I don’t see why it should not be possible.
I welcome your comments on my ideas and if you think they should be an improvement or no.
6 Responses to “Dynamic reserve, a good idea?”
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August 30th, 2010 at 1:13 pm
Another great idea from your prolific stable!
But decreasing reserve would be useful if you allowed the seller to input reserve of own choice rather than a system forced reserve like you had previously on bargaindomains.com.
August 30th, 2010 at 1:25 pm
Interesting concept. What happens if there is a bid just under the reserve, but then the seller decrease the price below that bid? Does that become a binding sale if that ends up being the highest bid?
That may require some bidders to rethink their strategy if they know that their bid, even if below the current reserve, might end up being the winning bid.
August 30th, 2010 at 1:53 pm
Sri,
All the interest of BargainDomains.com is the reserve price is capped.
In BargainDomains.com buyers are looking for bargains and nothing else.
In fact when the reserve is 5% over the apraisal value it’s rarely considered as a bargain for resellers. I simply auhorized to raise it to 20% to attract more sellers, but I will switch back as soon our new marketplace that allows total customization and no resriction will be up.
A bunch of new services around our new sale page technology should be launched within the next weeks …
August 30th, 2010 at 1:55 pm
@Mike Sullivan – There would have to be some restriction in place preventing seller from lowering the BIN under or equal to the highest offer to prevent confusion.
@Francois – I think it’s an interesting idea as well. To ensure sellers don’t abuse the new policy perhaps you should only allow them to lower the BIN one time during the course of the sale.
August 30th, 2010 at 1:59 pm
Mike,
If the seller decrease his reserve under the highest bid then automatically he becomes the potential winner of the auction.
I don’t see any problem on this:
People bid to buy domains otherwise they are scamming, trying to manipulate auctions, and the ones caught doing that will have their account immediately closed and banned from all our sites.
So people that was hopping to buy a domain for less bidding under the reserve should in fact be happy they be sure to get the domain if they are not oubided.
Now it’s sure that buyers must be informed in the sale page that even if it’s rare (maybe no, we will see), at anytime during an auction the reserve and bin may be lowered by the seller.
August 30th, 2010 at 2:19 pm
Mike Law,
I have thought like you at a moment to not authorize most than one decrease during auction, and after more than decrease per day mainly to annoy bidders with decrease price notifications. But I found the other idea to set minimum decrease increment better.
More when if you look at this on another point of view it may look likes the offer/counter offer scenario. So finally I offer this way the advantage of the two systems this way.