Historic Change at eBay: Semi-Persistent BIN (Buy It Now) Goes Live

A small announcement from eBay last week.  Most people probably didn’t notice it, given the news around Q3 earnings, Skype, and 100 other stories that people were tracking.

Here is the AuctionBytes article:

eBay Moves to Longer Lasting BIN Auctions

Actually, eBay began testing this back in July, but just recently expanded it to quite a few more categories.  Here is the original note from Sohil Gilani, the Product Manager who has spent a lot of time over the past two years studying and implementing this change:

Hi everyone, I’m Sohil Gilani with our Buyer Experience team. Over the years, we’ve routinely been asked why the Buy It Now option disappears from a listing when the first bid is placed. Our reason has been concern that it would create a confusing experience for a buyer, who could place a bid on an item, but then have someone Buy It Now (BIN) out from under them before the end of the auction. That said, we’ve done some extensive research that suggests keeping the BIN option available on a listing longer will increase the chance that a buyer wins the item and that it will close at a higher price for the seller. As a result, we’re looking at ways to change how BIN works that balance both buyer and seller needs.

In case it isn’t clear, let me explain the problem:

Ever since eBay launched the ability to add a “Buy It Now” button to an auction, it has disappeared as soon as anyone placed a bid.  So, for example, if you were auctioning a cell phone with a starting bid of $0.99 and a Buy-It-Now price of $99.99, a single bid of $1.00 would make the Buy-It-Now price disappear.

The idea is that a buyer has the chance to “snap up” the item for a fixed price set by the seller, or place a bid to try to win it at auction.  Usually, the motivation to place a bid is the belief that the bidder will get it for a lower price.

The problem is, once the Buy It Now button disappears, every future potential buyer is deprived of two things:

  1. The ability to immediately buy the item, without waiting for the auction to end
  2. The ability to see what the seller thought a fair “fixed price” was for the item

Many people, for a very long time, have asked why eBay makes the BIN button disappear after one bid.   Usually, they focus on issue (1).  After all, the need to wait for an auction to end is a major disincentive for a potential buyer.  eBay is likely losing quite a few buyers to the fact that useful BIN buttons are disappearing.  Sellers are also losing the ability to close a sale quickly, for a fair price that they have assigned.  Even worse, sellers actually pay eBay a fee to place that BIN button there in the first place.

The problem lies with issue (2).  As a former employee, I can’t reveal the actual number, but you would be shocked at how many auctions actually close at a price higher  than the original Buy It Now price.  This happens for a couple reasons.  First, sellers may not be very efficient at setting their own fixed prices – auctions are likely much better at fairly pricing the item.  Second, the original bidder who “knocks out” the BIN button is not likely the one who bids above that price.  Every future bidder has now lost that information, and as a result, is free to bid whatever they think is fair.  Apparently, in a large minority of cases, bidders end up with a price that is higher than the seller expected.

So, eBay has a dilemma:

  • If they keep the disappearing BIN button, they are likely losing sales AND velocity (the time it takes to close a sale).  They are also encouraging sellers to use a higher starting price (to avoid losing the BIN quickly), use reserve prices (to keep the BIN), or to not use BIN at all (which is a fee-generating feature) – all bad things that hurt the likelihood of a sale.
  • If they make the BIN sticky, aka “Persistent BIN”, they might actually decapitate the final selling price on millions of auctions.  That would hurt both eBay sellers and eBay itself, since both make money based on the final sales price.

The solution that eBay is testing finally allows eBay to gain some empirical data in real situations on how to best control the way the BIN price disappears.

  • Do you let the BIN button stay until a fixed dollar amount?
  • Do you let the BIN button stay until a fixed percentage of the final price?
  • Are the results different in different categories?  For different starting prices?

Well, all I can tell you is that, as an eBay seller, I was tickled pink to see this on my latest cell phone auction this week:

As you can see, I start all my auctions with a starting price of $0.99.  Normally, I lose that BIN button very quickly.  But in this case, the BIN button stayed, even after a bid of $0.99.  In fact, the button stayed until the bidding reached $50.00, giving buyers ample opportunity to buy my phone for fixed price.  The difference?  Literally 6 days of BIN button goodness were added, since my auction didn’t clear that price until the 7th day.

(Wow, that sounds like a biblical reference.  It was evening and it was morning, and the BIN button worked for 6 days and 6 nights, but on the 7th day, the BIN button rested…”)

Anyway, I’m glad to see eBay continuing to push its understanding of one of its most popular formats.  And a big congratulations to Sohil for seeing this effort through to live-to-site.  Count me as a big fan.

BTW If you are wondering why I bother buying the BIN feature on my auctions, even though it disappears so quickly, it’s a fair question.  In my selling experience, adding the BIN button not only increases the chances of my auction selling quickly, I also tend to set it for a higher-than-average price based on my research.  The way I see it, a buyer who wants it right now tends to be willing to pay a bit more for the privilege.  If not, they can always bid.

New eBay Guide: The Native American $1 Dollar Coin Program

Yes, despite my lack of support for the initative, I have documented what information I have available about the new 2009 $1 dollar coin program in this eBay Guide:

The Native American $1 Dollar Coin Program

It now joins my other four eBay Guides:

Interestingly, these four guides have accrued enough positive  votes to make me one of the “Top 1000” reviewers on eBay.  In fact, I’m currently ranked #275 as of the writing of this post.

If I get to the Top 100, I get a different badge by my user ID, and you know, I’m all about eBay badges.  So if you have an eBay account, vote “yes” on my guides to recommend them.  If you don’t like them, well, don’t vote “no”.  That hurts my ranking.

The LinkedIn Store is LIVE!

Tonight, the new LinkedIn online store went live.

https://store.linkedin.com

One of the best parts of working at a startup is that you get to participate in all sorts of company activities.  In this case, all of the “models” in the store are actual LinkedIn employees.

For example, you may recognize the guy talking here on the LinkedIn fleece vest page:

If you hover over the “Adam Nash” link on the real website, it says “Props to our Product team”.  🙂

I guess with the new store, our CEO may have to modify his explanation of our business.  Technically now we have four revenue streams.

Order your LinkedIn merchandise today!

Microplace Launches

I got an email from my friend, Karl Wiley, today announcing the launch of Microplace, a website that opens up a marketplace for microfinance to the broadest possible audience.

From his email:

I am so pleased to let all of you know that today we launched MicroPlace – an innovative new website that allows everyday people to make financial investments in the microfinance industry. It gives you the opportunity to have a direct impact on global poverty while earning a financial return!

As many of you are probably aware, last summer I joined up with this new eBay initiative, and have been serving as its Chief Operating Officer. Today is an exciting day for us, as the site is finally live to the world – the result of over a year of hard work and dedication.

I’m writing you all to invite you to check out the site (www.microplace.com), make an investment, and help us spread the word! For those who aren’t familiar with microfinance, it is a powerful, proven tool to alleviate global poverty. It involves making small loans – often as small as $50 – to the working poor in the developing world. They use these loans to start or grow small businesses – to purchase a sewing machine to make clothing, or inventory to start a small shop, for example. Over time, the borrowers use income from their businesses to pay back their loans with interest, and pull themselves and their families out of poverty.

Microfinance started around 30 years ago, with the formation of the Grameen Bank in Bangladesh by Dr. Mohammed Yunus – the winner of last year’s Nobel Peace Prize. Since then, the industry has grown dramatically, but demand for microloans still vastly exceeds the funds available in the industry to make loans. Together, we can change that. MicroPlace opens up the ability for all of us to put a modest portion of savings into this incredible, profitable and self-sustaining industry. Roughly half of the world’s population still lives on less than $2 per day of income, so there is lots of work to do.

You can visit MicroPlace and choose from a selection of investments, each of which supports a loan to a specific microfinance lending organization in a developing country. We have 15 listings today, and will be adding more every week. Our minimum investment is only $100, so it’s easy to participate. And while you are earning interest, you know that every one of your invested dollars is going to be lent out to the working poor in the developing world, over and over again. For just a few hundred dollars investment, you can have a direct impact on dozens of peoples lives. Remember, this is not a charitable donation – this is a savings and investment vehicle, but with equal or even greater power than a donation might have.

You can also help us spread the word by forwarding this email, or using our e-card feature on the site (www.microplace.com/ecards). Microfinance is still not well known in the US – and we have great resources on the site that can help educate people about this powerful model. Help us spread the word and take a bite out of global poverty.

Thanks in advance for your support for this exciting initiative. I hope you’ll participate – you’ll feel good about yourself, and the borrowers who benefit from your investment will have the chance to change their lives dramatically!

I am a huge fan of microfinance and of Karl, so it’s great to see this vision come to life. I’ve already signed up on the site and made my first $100 investment.

So congratulations to Karl and the whole Microplace team. Go check out the site now – sign up, and start investing.

Electronic Warfare: Israel’s Syria Bombing Raid

I don’t normally post about military or political events here, but this this article had a specific technology angle to it, and I thought it was too interesting to ignore.

From Aviation Week:

Syrian President Bashar al-Assad said the Israelis struck a construction site at Tall al-Abyad just south of the Turkish border on Sept. 6. Press reports from the region say witnesses saw the Israeli aircraft approach from the Mediterranean Sea while others found unmarked drop tanks in Turkey near the border with Syria. Israeli defense officials admitted Oct. 2 that the Israeli Air Force made the raid.

blog post photo
The big mystery of the strike is how did the non-stealthy F-15s and F-16s get through the Syrian air defense radars without being detected? Some U.S. officials say they have the answer.

U.S. aerospace industry and retired military officials indicated today that a technology like the U.S.-developed “Suter” airborne network attack system developed by BAE Systems and integrated into U.S. unmanned aircraft by L-3 Communications was used by the Israelis. The system has been used or at least tested operationally in Iraq and Afghanistan over the last year.

The technology allows users to invade communications networks, see what enemy sensors see and even take over as systems administrator so sensors can be manipulated into positions so that approaching aircraft can’t be seen, they say. The process involves locating enemy emitters with great precision and then directing data streams into them that can include false targets and misleading messages algorithms that allow a number of activities including control.

A Kuwaiti newspaper wrote that “Russian experts are studying why the two state-of-the art Russian-built radar systems in Syria did not detect the Israeli jets entering Syrian territory. Iran reportedly has asked the same question, since it is buying the same systems and might have paid for the Syrian acquisitions.”

I find it a little surprising that your could commercialize an exploit like this.  I’ve done enough security software work to know that it’s not surprising that any system engineered in the last 50 years would have vulnerabilities.  Thanks to the ongoing wars over security on the Internet, in fact, our ability to “crack” into systems seems to be growing at a rapid pace.

That being said, when an exploit is discovered, typically a patch is quickly produced.  For example, if they find a serious exploit tomorrow in a common piece of networking equipment, like a Linksys home router, typically a software patch would be quickly released to block that exploit.

As a result, if an exploit like this existed in serious military systems, you’d think that a patch would be quickly released to block it.  The lead times to produce military systems in volume would seem to preclude commercializing an exploit the way this article describes.

Then again, I guess the exploit would have two things going for it:

1) The exploit would not be used frequently, making it hard for the enemy to “simulate” or understand the exploit well enough to produce a patch.

2) Not everyone keeps up-to-date with their security patches… do you?

It would be a fascinating turn of events if the next-generation military advantage did not depend on speed, munition strength, or even targeting & accuracy.  Instead, the real advantage could go to the force who could most rapidly disable and coopt enemy systems.

Tracking ROI: Prosper Loans in Quicken & Understanding Investment Returns

Kevin over at RateLadder had a really interesting post this weekend on the discrepancy between what his Quicken records indicate for rate of return on his Prosper loans, and what Prosper reports:

Quicken enters the money into the account the moment the money leaves my account and it only acknowledges interest after it has been paid. Prosper only counts money in loans and acknowledges interest the moment it is accrued. Both acknowledge default sale amounts the moment they happen. Neither approach attempt to project a future loan’s value.

What does this mean? Well it means that with Quicken you can get the ROI for the moment the money enters the account with interest only for actual payments received. With Prosper you get the ROI for the loans with all accrued interest. Since you can only deduct defaulted principal (cash basis) I feel that Quicken’s approach is correct.

You can see the discrepency in the chart he provided below:

I haven’t run the numbers on my own account, but I believe that the cause of this discrepency is due to the difference between tracking the actual return on the cash moved to Prosper vs. the actual loans themselves. When you move money to Prosper, it wastes time. It takes some time for money to appear in the new account, and it takes time to bid and win loans to invest the money. As a result, your money does not spend 100% of its time in loans, and thus your actual return is lower than the Prosper reported return on your loans.

This is a really important financial concept to grasp, and it extends to other instruments besides Prosper.

First, when you invest in bonds, loans, or other fixed-income investments, re-investment risk is real. Re-investment risk is the risk that when you receive interest payments, you may not be able to re-invest them at the same (or better) rate of return. Prosper is an example of this, since the minimum investment is $50.00, you have to accrue payments until you have another $50.00 to lend. That time spent uninvested is time spent earning a big fat 0%.

Second, when investment vehicles report returns, they only report returns for specific time periods. Your actual returns, however, reflect your actual dates for moving and investing money. Mutual funds are notorious for this, as they tend to report annual results for very specific 1-year, 5-year, and 10-year dates. Because people rarely have invested all of their money on exactly those dates, their returns can vary significantly.

Imagine a fund that on January 1st earned 20% (big day!), and then earned -2% the rest of the year. Their prospectus would brag about an 18% return last year. If you actually moved your money into the fund on January 2nd, you might be wondering why your account actually lost money that same year.

I hope these two tips are helpful the next time you’re looking at your investments and wondering, “Why don’t my returns match the ones on the website?” Caveat Emptor, my friends.

Mr. Angry & Ms. Calm. A Tale of Email & Digg

I got an email this weekend forwarding a cool optical illusion.  I thought I’d share it here on my blog:

If you are near to this picture, Mr Angry is on the left and Mrs Calm is on the right. If you view it from a distance, they switch places!

For me, stepping away from my computer and looking at the image from about 8 feet away did the trick.  Your mileage may vary.

CREDITS This illusion was invented by Philippe G. Schyns and Aude Oliva of the University of Glasgow. It is featured on this web page: http://cvcl.mit.edu/gallery.htm , listed under ‘Dr Angry and Mr Smiles’. It is taken from Schyns and Oliva’s paper, “Dr Angry and Mr Smiles: when categorization flexibly modifies the perception of faces in rapid visual presentations, Nov 1998”. It is a copyright image and if they tell me to take it off this web page, I will.

I didn’t use to do this, but now when I receive these emails, I tend to go online to see if I can ferret out the source.   I did a Google search for “Mr. Angry Ms. Calm” and I found this very illusion was a Digg front page post… 2 years ago!    Digg was pretty young back then, as you can tell from the comments that people left on the post, debating whether it merited “front page status” or not.

The original post is located here, if you are interested.

Interestingly, it was also on Boing Boing at the same time, and the original image creators actually commented:

The illusion works by manipulating the spatial frequencies of the image.  The low spatial frequencies (the rough, fuzzy shape information of an image) from one image (e.g. Mr. Angy) are combined with the high spatial frequencies (the sharp edge information of an image) from a different image (e.g. Mrs. Calm).  When viewing this hybrid image at a close distance, our perceptual system is able to extract and process the high spatial frequencies and thus we see the image where the high spatial frequencies were taken from.  When viewing the hybrid image at a distance further away, our perceptual system can no longer extract the high spatial frequencies meaning we only see the low spatial frequency information, thus we see the other image.  You can also get a switch in the hybrid image by squinting.”

For me, this is an interesting commentary on the speed and distribution of “unique content” around the web.  It took two years for a front page Digg post to make it to my inbox.

It’s also a really cool special effect. 🙂