eBay Australia goes it alone by dumping reserve

In an e-mail to customers this morning, eBay announced that from August 10, ebay.com.au would no longer allow customers to set a reserve on items sold through the site. Current listings are not affected, and in one unusual exception, cars, motorcycles, boats and other vehicles will continue to be allowed to use reserves.

Unlike starting prices, reserve prices are not normally made visible to customers browsing the site, though actual bidders are informed if the current price is below the reserve. Reserve prices are typically used by merchants who want to enforce a minimum cost but hope to stimulate early interest in their auctions with a low starting price.

eBay maintains that reserves actually put off buyers, citing an August 2003 study which found auctions without a reserve had a 34 per cent higher sell-through rate.

While eBay's local users are losing the reserve option, customers can still enforce a reserve by listing via one of its overseas operations. Since the auctioneer's local arm is now wholly owned by the US parent company, the auction fees will still end up in eBay's own coffers.

Having seen off a host of competitors in the dotcom era, eBay can effectively afford to pursue whatever policies it likes. Local users already face a number of restrictions compared to the US; for instance, Australians can't browse or sell material in eBay's adult categories.