FWIW, I purchase very little wine on auction anymore. With 15% - 30% vigs plus shipping it doesn’t take long to surpass what you’d pay at an online retailer. But, it’s still possible to snag a good deal sometimes.
So, do you expect everyone to wait until the last few minutes of a auction to bid? The purpose of placing an initial bid is to show interest. Some bidders will move on if they see a lot already has a bid but most who are interested will play. If you get outbid, you now know you either need to place a high limit or walk away.
I’ve bid on thousands of items on Ebay, Winebid and live so IMHO, I have some experience with auctions.
Let me explain the bidding against yourself in simple terms.
In a competitive situation, if you bid first, then your competitor bids, you must bid at least one more time to win. Thus at least 3 total bids.
If you wait for your competitor to bid first, you potentially have to bid only once, for a total of 2 bids.
It is based on probability, not certainty, so your reality may vary.
Wine opens at $50. Mr. X wants it and values it at $100. Mr. Y wants it and values it at $110.
Scenario 1: Mr. X bids early, $50 as soon as the auction opens with a max bid of $100. Current bid: $50. Mr. Y bids on Monday, $60 with a max bid of $110. Current bid: $110. Mr. X is sad, spends the rest of the week reading Wine Berserkers. Sunday night result: Mr. Y wins, $110.
Scenario 2: Mr. X decides to wait until the last minute. Mr. Y bids on Monday, $50 with a max bid of $110. Current bid: $50. Mr. X spends the rest of the week refreshing the Winebid auction page to see if he’s still in the running. Sunday night, Mr. X logs on at 9:59 and bids $60, with a max of $100. Result: Mr. Y wins, $110.
Scenario 3: Both Mr. X and Mr. Y decide to try and beat the system and wait until the last minute. They both log in at 9:59 and bid $50, with Mr. X’s max at $100 and Mr. Y’s max at $110. Result: Mr. Y wins, $110.
Scenario 4: Mr. X thinks he’s got it figured out now. Bids $50 as soon as the auction opens, but doesn’t set a max bid. Mr. Y is thinking the same thing, bids $60 as soon as he logs in Monday but doesn’t set a max bid. See, this way it looks like neither one of them is willing to bid it up any higher! Mr. X and Mr. Y log on at 9:59 on Sunday to put down their real bids… aaaaaaaaaand Mr. Y wins, $110.
Scenario 5: Mr. X signs up for a correspondence school, takes Econ 101. Comes back the next week with a rock-solid plan to win the bottle this time: he bids $120. Success! (Winner’s curse to be covered in Econ 102.)
I haven’t taken part in online auctions in a while, but I was always happy to bid with the max limit that I would want to spend early on. That way, I either got the wine for what I wanted to pay (or less), or someone decided to pay more than I wanted. Either way, I was fine with the outcome.
It seems that bidding late makes it far more likely for ego and the thrill of the hunt to get involved and cause someone to pay more than they otherwise would have. That’s the why live auctions are so successful, right? As David said, there is always more wine. Unless maybe you’re bidding on something you’re unlikely to ever see again, like SQN Queen of Hearts, but I don’t play in that territory.
If I have nothing to do on a Sunday night I might drop in and see if I can make a late steal. Not gonna happen tonight, two emergencies in the past day or so and I had to pronounce a trauma last evening so I am not getting involved today!
I bid on mainly older wines, many of them hardly come up more than a couple times a year so it’s important to wait til the last minute to bid on them. If I were bidding on young wines that come up every week I’d be more willing to say what the heck, if I bid early and get it fine, if not no worries.
So when I see early bids on hard to get wines I ask myself, does this guy really expect to win this? All he’s doing is making the next bidder pay a little more.
I’ve only used WineBid maybe twice (not for a couple of years), and I probably haven’t participated in an eBay auction in over five years (I’ve bought some “buy it now” stuff). So I’m far from an expert on this stuff. But based on my experience on eBay, the flaw in Keith’s analysis is that he assumes all bidders are rational and bid their maximum on their first bid.
While I can’t get into other bidders’ heads, I’ve seen very strong evidence that people will bid some amount that they think is a good deal, and then when they see that they’ve been outbid, they’ll come back and bid a higher amount. I’d see that the current bid was $60 with Mr. Y being the winning bidder. I (Mr. X) would bid my true maximum of $100, which pushed the current bid up to, say, $80 because Mr. Y had set his maximum to $70. An hour later, Mr. Y comes back and ups his bid to his true maximum of $110 to outbid me. Yes, he obviously valued the item more than I did, so theoretically he should have it. But it’s also clear that if this scenario had happened 5 seconds before the auction closed, it’s likely he wouldn’t have had time to come back and place his second bid, and I would have won at $80.
You can talk all day about how this is not rational, how it’s not the way it’s supposed to be done, but I’ve seen it happen time and time again. When someone sees they’ve been outbid, it seems to often convince them that the item is worth more than they’d originally bid (or they just don’t like losing), so they come back and increase their bid. If you wait until the last few seconds to bid, you can cut this off at the pass. If the person had already bid their true maximum and it’s higher than your maximum, you lose. But you’d have lost anyway. If they were playing games (or likely to get caught up in the heat of the moment and over-pay), you’ve left them no time to come back and up their bid. You win, when you otherwise wouldn’t have. It’s one way to take advantage of the stupidity of people in online auctions.
To prevent sniping one of the auctioneers I use extends the auction if there is heated bidding at the horn, which certainly works well for the house as it allows people to keep bidding emotionally at the end to win a desirable bottle.
From experience I personally bid early and forget about it. I know what I am willing to pay, and like others I set my initial bid and cap accordingly. I gain the ‘first strike’ benefit of a tie and I find I am less prone to bid more than if I go in right at the close. I also get a chance to do some reading on particular bottles and can raise my max bid while I am still the leader if I feel it is prudent.
This also takes the least amount of time and mental anguish for me. I have sniped in the past on ebay with the help of third party services and that works pretty well, but my schedule does not tend to allow it for wine sites where I have to do it first hand on the website.
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