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Netropolis

My fiancée Audrey is addicted to eBay, the popular online auction site. It started off innocently enough: Five minutes on the Net every day searching for copies of the starburst-patterned drinking glasses I’d inherited from my grandmother.

It was my fault. I’d broken a couple of the glasses. The local garage sales were coming up empty. So I suggested we might find the treasured dinnerware online.

Audrey volunteered to look. Oops.

Perhaps the little yellow Post-it notes scribbled with item numbers and stuck all over the PC monitor were the first clue.

Or maybe it was Audrey’s mysterious disappearances. "Honey, the Fiestaware sugar bowl stops bidding in five minutes. I’ll be right back!"

But when the FedEx packages started to arrive – first the Fiestaware sugar bowl, then some Fiestaware plates, and finally a Fiestaware gravy boat (what the heck is a gravy boat?) – I knew I was in trouble.

In fact, I was beginning to suspect the word "eBay" might be pig Latin for "instant shop-o-holic."

For those who haven’t heard, eBay (www.ebay.com) is one of the Web’s rare undisputed financial successes. Started in 1995 by Internet enthusiast Pierre Omidyar and his wife (an avid Pez candy dispenser enthusiast), eBay was originally conceived as a place where buyers and sellers of collectibles could find each other and conduct business online. The idea worked brilliantly – today eBay boasts more than 2 million registered users and is the No. 1 online auction site.

Sure, there are other auction sites (including Auction Universe at www.auctionuniverse.com and the aptly named Auction Addict at www.auctionaddict.com). And some non-auction sites have added their own specialty auction pages (for example, www.prorec.com now offers online auctions of recording equipment). Amazon.com is even getting in on the action – its Auctions site became a stock market sensation when it was announced late last month.

However, item for item, eBay is still the king. With well more than a million auctions going on at any given time, there’s just no other place online you can find such unique items as an H.R. Pufnstuf lunchbox or the 40-hour Y2K candle or a clutch purse made from a real Hawaiian coconut. Even authentic English coins from the reign of Queen Elizabeth I.

Okay, I’ll admit it – the whole thing is kind of fun.

And surprisingly simple to use. Once users register online for a free password, the bidding can begin almost immediately. You can even enter a secret maximum bid so that while you’re offline enjoying your "real" life, the computer will automatically raise your offer should a competing bidder appear.

Each auction stays active for a set number of days before closing. High bidder at closing wins the item. In the unfortunate event you are outbid before the auction closes, eBay sends you an e-mail, giving you time before the auction ends to … er … reassess your financial priorities.

How does eBay make any money from this? Volume.

Once a user is registered, he or she can also sell items online; eBay takes a cut off the top of any sale – usually around 3 percent or 4 percent. The buyer and seller are then wholly responsible for completing the transaction – from sending the payment to arranging delivery.

In essence, eBay is just the middleman – they don’t police each transaction and there’s no guarantee that the seller will deliver the goods as promised. However, using a clever computerized rating system, interested buyers can find out if a given seller has an unreliable track record before they put their money down. It’s the database equivalent of good old-fashioned word-of-mouth: If a buyer is happy with a seller, they’ll post a glowing review.

In many ways, eBay is the Internet’s first grand experiment in "dynamic pricing." Unlike the familiar American shopping mall experience of nonnegotiable fixed prices, dynamic pricing functions more like a European market or Middle Eastern bazaar. The value of the item is determined by the amount the end buyer is actually willing to pay. It’s kind of like haggling; except you’re haggling with other potential purchasers.

So what’s the problem with this system online?

Human nature. Experienced eBay users eventually discover that the best way to ensure the lowest price on an item is to enter the auction just before it closes. By doing this, they don’t reveal what they’re willing to pay until the last possible few minutes. Obviously, this can make for some thrilling experiences. But worse yet, you begin to arrange your life around imminent auction closing times.

Still, Audrey reminds me that the good far outweighs the bad. Most of the items are used, so in a way it’s a form of recycling. Plus, you’re cutting out the huge corporate market distribution system entirely.

But it seems to me that eBay and the other online auctions are still essentially about acquiring more and more frivolous stuff. It’s as if we’re shifting our consumption addiction to more socially responsible venues, but in the end, it’s still all about shopping.

Audrey’s response? "Don’t worry honey. I can stop anytime I want."

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