Academic journal article Journal of Electronic Commerce Research

Risk-Reducing and Risk-Enhancing Factors Impacting Online Auction Outcomes: Empirical Evidence from Ebay Auctions

Academic journal article Journal of Electronic Commerce Research

Risk-Reducing and Risk-Enhancing Factors Impacting Online Auction Outcomes: Empirical Evidence from Ebay Auctions

Article excerpt

ABSTRACT

This research investigates eBay auction features that influence auction outcomes: likelihood of transaction or whether the item was actually sold in the auction (auction success) and value of the last bid (auction effectiveness). Specifically, we study several seller options available to the seller to increase the final price and successful end to the auction. We investigate the effectiveness of the term "New In Box" in the auction's heading, the use of an actual or cut picture, the initial price set by the seller, use of a reserve price and acceptance of a credit card in increasing the likelihood of the auction ending successfully, and at increasing the final price. Along with other independent variables, the impact of factors dealing with the auction pictures is examined. Hundreds of auctions (423) for two financial calculators were examined in this study. Findings show that utilization of certain risk-reducing auction features positively influence outcomes of these eBay auctions. These features include level of the starting bid, mention of "New in Box," inclusion of a real picture of the unit being sold, and the inclusion of a stock picture. In addition, findings indicate that certain risk-enhancing auction features negatively influence eBay auction outcomes. These features include the presence of a reserve price and the mention of "Wear" in the auction.

Keywords: Online purchasing, eBay, e-commerce, consumer risk, online auction

1. Introduction

This research presents the results of an empirical testing of the assumptions that peripheral cues influence purchase decisions. Consumer-to-consumer (C2C) e-commerce, on-line auctions allows the analysis of behavior. It allows testing of theory without regard to the population demographic or attitude characteristics. Our goal was to determine the variables that influence the success and affect the final price in online auctions. Unlike the collectable United States Indian Head pennies in Lucking-Rieley, Bryan, Prasad and Reeves' [2007] data set, or the functional but expensive items like the Palm Pilots used in Standifird's [2001] research, we used business calculators because they are inexpensive, homogeneous, functional items that consumers would use rather than collect, and would consider a relatively low risk purchase. We believe that the standardization and lack of need to inspect the calculators to evaluate the quality of their manufacture meet the qualifications of a "low-touch" product described in Levin, Levin and Heath [2003] and Levin, Levin and Weller [2005]. Regression analysis was performed on the set of completed auctions allowing us to quantify the influence of various peripheral cues.

2. Related Literature

2.1 Consumer behavior

A review of academic publications from the past fifty years would readily indicate the interest concerning consumer purchase behavior. Much of the research has involved the development of measures for ascertaining relationships among the product attributes, the consumer's attitude and the consumer's behavior associated with shopping at a "brick-and-mortar" store. Marketers have readily accepted many fundamental aspects of consumer decision-making, such as the role of risk perception upon the assessment of value. This study attempts to offer a better understanding of the factors that influence a consumer's actions in regard to assessing the value of products with methodology that does not involve a researcher's attempt to develop attitude measures or the manipulation of environmental factors.

A common research trend for marketers has been and continues to be the consumer's process for assessing risk and how their risk perception influences behavior. In 1983 Petty, Cacioppo and Schumann proposed that purchase behavior is impacted by the consumer's perception of risk. An abundance of research indicates that the consumer's perception of risk is associated with willingness to buy: as risk increases, the willingness to purchase decreases. …

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