As reported by ZDNet Australia last month, eBay will remove the option to set a hidden reserve price for auction items from August 10. The online auction giant's German operation is its only other subsidiary which doesn't allow reserve pricing.
Cars, motorcycles and boats will still be allowed to have reserves set after the changeover, but that policy is also under review. In a recent online workshop to promote the new approach, officials remarked: "The analysis for Motors is in progress and we will be continuing to monitor the category and make changes as appropriate."
The removal of reserves has provoked protest from a number of local eBay users, who argue that unscrupulous sellers will cancel auctions if they don't reach the desired price. "What steps will be taken to police the inevitable increase in auction cancellations in the closing stages of an auction?" one workshop attendee asked.
eBay maintains those concerns are unfounded. "Our aim is to make the community of buyers and sellers more successful," officials responded. "Our research shows that removing reserves will do this and this view was backed by consultation with the community. Having no reserve encourages bidders and will increase the sell through rate of existing sellers."
I'm tending to feel that removing Reserve Prices will result in more auction cancellations and an overall drop in buyer/seller satisfaction. One key part of encouraging healthy bidding for items is competition. Having a low starting price, even with a reserve, tends to get bidders started early and is more likely to secure a good price for the seller. The bidders not only get the excitement of bidding against (more) other bidders, but also of seeing who is first to meet the reserve. Bidders with less money to spend are more likely to stretch their budgets this way. If items just have a high starting price, it will only be buyers who have more money that will place bids.