bidsbids
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posted on September 19, 2001 12:37:11 PM new
I've been watching the stock market's major decline this week and have wondered what the effect of a recession would be on online auctions in general. I have lived through the major recession that occured at the end of the Vietnam Conflict and saw its effects on the US economy. It would seem to me that online auctions are vulnerable to 'pocketbook tightening' of its buyers and a recession could create more sellers which could depress auction item prices. People tend to get very cautious with their purchases in recessionary times and that could effect collectibles and other non-essential items. Fears of possibly losing their job can cause people to really reign in their spending and spending habits.
It would seem to follow that there should be a major decline in online auction sales and a shakeout of the lesser auction sites that have hoped for capital investment to get them rolling.
Does anyone else feel this way about the current economic situation in regards to online auctions?
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deichen
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posted on September 19, 2001 01:40:06 PM new
I am shocked! I actually agree with you 100% on this topic. I do think there will be a decline, it already has been declining for me for about 2 years. I do not think the online auctions will dry up, but we will see some declines in spending. JMO
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stavecards
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posted on September 19, 2001 03:21:00 PM new
If there is a signficant recession, you would have to expect that online auctions will be affected similar to any other retail segment. Whether it is more or less than other retail segments remains to be seen since there has not been an economic slowdown since the birth of online auctions. In my opinion, what may cloud the issue is that I believe that online auctions are already going through a significant change in the maturation process. For a lack of a better term, auctions are leaving the "euphoric" stage. This was a stage characterized by many bidding wars over collectible items. I believe that many of these were caused by newcomers getting caught up in the excitement of the bidding. That thrill has worn off for many people, particularly when they discovered that they significantly overpaid for an item. I see more and more buyers looking for a fixed price format, particularly as more mainstream items enter the online auction arena. I believe that you will see more sites incorporate some type of fixed price format in addition to auctions.
As for the number of sites, I believe that many of the current smaller sites will eventually fold their tents. I believe this will happen regardless of the direction of the economy. Disregarding sell-through rates, the small number of actual listings on many sites shows that the seller pie has been stretched too thin and that there are too mnay sites for the market.
I don't believe that Ebay will be immune to a recession. As sales decrease, some to many Ebay sellers may be looking to reduce their cost of selling and look at other sites. Also Ebay management has never had to encounter an economic downturn. How will they react if revenue growth slows or even starts to decrease?
Good thread and many interesting thoughts to ponder about the direction of auctions in the near and longer term. These are just my opinions. If I had a crystal ball, I would have already used it and be sitting on my own tropical island at this moment.
[ edited by stavecards on Sep 19, 2001 03:23 PM ]
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bidsbids
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posted on September 19, 2001 04:59:16 PM new
Great responses! I realize that smaller auctions sites will come and go even in very good economic times, with mismanagement and poor site layout being possible reasons for failure.
I certainly agree that the 'euphoric' initial phase theory that online auctions went through a few years ago and now has evolved into more of a want of fixed priced items plus there are many more savvy bidders now. Those were the 'good old days' for sellers, with frequent bidding wars and sale prices that were oftentimes well above the current prices that the same items currently bring at auction.
Perhaps some auction users will be semi-forced to become sellers or cut-throat sellers as economic pressures are placed on them in an economic recession. Perhaps some auction users will be forced to sell collections or cut back on collecting. If the recession is deep many people may be forced to limit auction purchases to only needed items. These things tend to feed on each other and that compound matters.
The online auction world may have some new challenges awaiting them.
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siskabobg
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posted on September 21, 2001 12:29:27 PM new
I could not agree more with the comments of bidsbids and stavecards. The only thing constant in life is change. And things are a 'changing' in the auction world.
I posted on this subject many months ago suggesting that major changes of how auctions do business would occur. At the time I analogized it to my experience in the Art/Craft fair venues. My wife and I spent over 10 years traveling West coast cities. The early 90's up to about '97 it was fun and profitable. It then began to slide and has been declining ever since, though I believe we have reached a near bottom. Buyers need to 'see' and 'feel' their purchase. Too, we must see a new wave of buyers who become familiar with the Fair venue. The buyers of the 90's have moved on to other pursuits for their purchases. Another anology would be the Tech "irrational exuberance" bubble that has recently deflated. Not all of those companies that have seen their stock values plummet are going to go away. There are good opportunities today. Not all will survive but many will. It might be a good time to think which company will still be there on the next upturn. I know I am looking at this intently. The auction 'thing' is now going thru the same cyclical wave. This is, of course, being exacerbated by the current terrorist situation. But it too will continue to exist. I do think that stavecards suggestion that a 'fixed price' model may be the big winner. An open bidding market will continue to exist but not in the model that eBay pioneered. In fact, it seems they have already begun the transition. Stay alert and stay tuned.
Just my thoughts. Thanks for your time.
Bob
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wallypog
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posted on September 21, 2001 10:12:33 PM new
Excellent thoughts--especially about keeping an eye open on which companies are likely to survive this. Right now I don't have two nickels to rub together but was wondering which ones would be good investments.
Now I'll put some of my perspective on this whole thing. Keep in mind I'm no financial guru, just an ordinary housewife who earns a little extra money from selling on-line.
As we see a decrease in sales (and I'm sure we will) it will mean a decrease in spending for me as well. I know there are many who're in the same boat I am--they sell to support their buying habits. As that money lessens so does our spending.
I'm hoping that there will be some serious collectors who will have enough good fortune to be able to look upon the next while as a golden opportunity--as in the opportunity to invest money into the future. If they can afford to and think of it that way they may be able to get some bargains that will help to keep the sellers afloat.
If consumers have less money to spend they're going to shop harder for a good deal on non-essentials. Hopefully some of the auction sellers will be able to cater to their needs. On the other hand, maybe some of us sellers need to start hawking more 'necessary' items. Just a thought.
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http://www.wallypogsbog.com
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dman3
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posted on September 23, 2001 05:07:23 PM new
I have news manufactureing and other sectors of the economy has been in recession since last june.
and online auctions have endured, I think they will continue what people are buying and investing in will change for a time..
the stock market is only a few days away from a turn around and will be back on the rise..
the Key to the economy will be how Travel does around thanksgiveing and Xmas if people dont travel and fly some sectors could be in for a long hard recovery.
but online auction will do well while everyone is staying close to home, also while more families have member over seas in the build up the computer will be popular as its low cost comunication world wide..
http://www.Dman-N-Company.com
Email [email protected]
[ edited by dman3 on Sep 23, 2001 05:12 PM ]
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toollady
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posted on September 23, 2001 05:20:34 PM new
dman,
In case you haven't heard, the military has cut off email communication between the military and their families as of the other day.
This was mentioned on FOX news channel on Thursday or Friday. I will try to find the appropriate link and post it.
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bidsbids
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posted on September 23, 2001 10:44:45 PM new
I wish the stock market would turn around in the next few days but all I personaly see in the near future is a decline of at least another 1,000 points from the Dow as Joe Average bails out of the market with his 401K stock funds. I can also easily visualize eBay having only one million listings in the near future as even the "only game in town" auction has very little bidding or selling. A whole generation has grown up in a recession-less economy and they may soon get a lesson in Economics 101 .
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commentary
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posted on September 24, 2001 06:24:50 AM new
The sellers without the money or inventory will drop off. They simply cannot handle the downturn.
The ones selling mass-produced collectibles will have trouble. Everything becomes strictly a pricing issue as buyers know there is always another one coming up for bid.
The ones selling true collectibles should do okay. There will be less sellers and usually collectors of true collectibles are fairly financially stable. If it is really a collectible, they will continue to bid.
I think recessions tend to hurt the lower/middle income folks far more than the higher echelon.
Finally, this is an unusal recession. Interest rates are so low that certain traditional investments are offering very little return. Some collectors may actually view highend collectibles as a good investment. Especially since the stock market is in such turmoil.
Since most ebay sellers are into fairly common collectibles, the community as a whole will get hurt pretty bad. But I think some niche sellers will continue to do very well.
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eSeller004
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posted on September 24, 2001 06:58:02 AM new
I read an article that stated about 50% of Americans aren't directly impacted by the stock market collapse since they don't own stocks and are oblivious to the fallout. Maybe they're the ones still bidding on eBay.  They won't feel the pain until unemployment rises or the housing bubble bursts.
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bidsbids
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posted on September 24, 2001 08:31:42 AM new
I believe owning stock has nothing to do with it. If you have fears that you may lose your job you get cautious. If a good friend or relative gets laid off you get cautious. When the overtime or backlog at work stops you get cautious. When you read the newspapers or watch TV and see the massive layoffs occuring you get cautious. Etc, etc.
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eSeller004
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posted on September 24, 2001 09:18:01 AM new
Yikes! That must mean the Malls are empty! No Christmas shopping this year.
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wallypog
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posted on September 24, 2001 09:03:47 PM new
Hmmm. I'll still be doing my normal Christmas shopping--that is unless DH suddenly loses his job at the dairy. Unless they just stopped milking and shot all the cows, though, that doesn't seem real likely real soon. Things on a farm are always breaking down and someone has to fix them.
I hadn't thought about it, but yes, we have just raised the first recession-free generation, haven't we? I'm glad my kids are still at home--and have learned to do without a lot of things their whole lives so far.
I remember my parents and grandparents telling me about times during the Depression. My mom's folks moved all the time so Grandpa could find work. For a while he was on the west coast and drove truck. One of his jobs was dumping huge Hershey candy bars into San Francisco bay. That set of grandparents were always fairly poor and never had much but the Depression had a huge affect on them.
My dad's folks, on the other hand, were dirt farmers. They lived in a sort of rugged area and were used to raising everything they needed. My grandma never wasted a thing her whole life (I still have a jar of old buttons she took off of dresses to sew on to other clothing as well as the old pressure cooker she bought in the 1940s at an auction after their house burned and gobs of her old canning jars--coffee jars that take those little bitty jar lids you can't find anymore [63's]. These are constant reminders to me what it was like for my grandparents). When the Depression was over they basically said, 'What Depression?' There were other people like that my folks told me about, too. These were folks who never had anything to begin with. They 'got by' and their lives weren't any worse for the wear.
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http://www.wallypogsbog.com
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bidsbids
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posted on September 24, 2001 10:54:15 PM new
My mother grew up on a poor ranch in the Great Depression too. She said that to them there was positively no difference in their poor living standard before, during and after the depression except that they had trouble bartering for sugar during the depression. "When you've got nothing, you've got nothing to lose."
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wallypog
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posted on September 25, 2001 09:16:42 AM new
"When you've got nothing, you've got nothing to lose."
My thoughts exactly.
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http://www.wallypogsbog.com
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quickdraw29
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posted on September 26, 2001 03:10:45 PM new
Online auctions are diverse, if people stop buying collectibles, maybe they'll buy more videos and toys. You'll also be surprised what people consider essentials-women may keep buying perfume because it's essential they smell good. They may buy a new tv because the old one picture doesn't come in clear anymore.
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beecandles
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posted on October 4, 2001 06:19:36 PM new
Wherever there is an item for sale...there will be a BUYER! Just a question of getting the "two" together without a lot of BS and Lies!!
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CAgrrl
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posted on October 12, 2001 12:03:02 AM new
In times of recession, quality used items like clothes, toys, movies and books do well. People don't stop needing these things. Especially low-cost entertainment- people need the "escape". Sellers of these items will do just fine.
BTW I was at the mall last weekend and it was a zoo.
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bearmom
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posted on October 12, 2001 04:50:59 AM new
Bidsbids, the stock market is in trouble, but it's not Joe Blow's 401k that is causing the problems. Joe won't pull him money out of the market, he can't afford to.
We have one 403b that has dropped from 18T to less than 3 this year. We'd have to be insane to cash it in. We will just wait for it to go back up again. In fact, the smart Joe Blow is putting as much money as possible into the market right now. Buy those mutual funds cheap and wait for them to go up. Even our 19 year old had the sense to start investing right now.
It's not the Joe Blows who are responsible for the stock market problems, it's the big players. Blame it on the mutual fund managers, not the little guys. They are the ones manipulating the market.
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bidsbids
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posted on October 12, 2001 09:41:40 AM new
Most of today's 401 funds give the members a choice of investment options. There are stocks, bonds, mutual funds, money markets, etc. The member can shift his money among the options. With stocks, many members are contributing many thousands of dollars each year, just to see the value of their 401K shares go lower and lower, year after year. The shift to money market options guarantees thems at least some increase in their funds and no loses. In most 401K plans you don't buy individual stocks but rather buy into pools of various stock funds so there is no risk in shifting your monies into the safe money market type of investment options. America's workfore and baby boomers are getting gray and most are nearing retirement age and the gamble of the stock markets is not in their best interests in many cases. These are the people I refered to in my earlier post.
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