The Three Major Bidding Strategies
Incremental Bidding
Incremental bidding is placing a bid for the minimum amount possible on an auction item. This bid may or may not place the bidder in the lead - depending on the proxy amount place by the previous high bidder.
Advantages:
1.) You always know that any bid placed after yours will outbid you.
Disadvantages:
1.) You may have to bid many times one increment at a time in order to overcome a previously placed proxy bid.
2.) Any bid placed following yours will outbid you.
3.) Your bid history will be readily available to anyone doing a search by bidder.
4.) You must constantly watch the auction item to make sure you are still in the lead.
5.) You will have to be present, watching, and refreshing the auction page every few seconds during the last minutes of an auction to make sure you are not outbid.
6.) You may find yourself outbid, and not have time to place another bid before the auction closes.
7.) If you are bidding early in the auction - you are tied to this one auction item, and can not bid on another item like it until the auction ends (even if it's a better item at a better price). If you bid on more than one auction item - you may win both and have to pay for both.
Proxy Bidding
Proxy bidding is the backbone that eBay is built upon. You determine the absolute maximum amount you are willing to pay for the item and enter one single bid - eBay does all the bidding for you, they will use just enough of your bid to keep you in the lead - letting you win the item for as low a price as possible.
Disadvantages:
1.) Your bidding history is available to anyone doing a search by bidder. You may be used as a search engine for competing bidders.
2.) Your bid may be artificially raised by a less than honest seller bidding on their own auction item, in order to expose your maximum bid.
3.) You may be exposed to 'enemy' bidders whose only goal is to run up your bid.
4.) Your bid may be run up by an incremental bidders in a bidding war.
5.) You are committed to this single auction item for the remainder of the auction - you are not free to move on to bid on another item even if you are outbid (you may be re-instated as high bidder).
Advantages:
1.) You only have to bid once.
2.) eBay does all of the bidding for you
3.) The only auctions you will lose are those where another bidder was willing to pay more than the item was worth to you.
4.) You do not need to be present at the end of the auction and be ready to bid again.
5.) You do not have to constantly keep track of the auctions progress.
6.) You do not have to worry about being outbid at the end of the auction - because any bid that outbids you was placed for more than you were willing to spend.
Time Conscious Proxy Bidding
Time Conscious Proxy Bidding (sniping) is placing your maximum proxy bid in the very last seconds of the auction.
Disadvantages:
1.) You cannot bid again - you must live with the amount of your bid. If you place a bid that is not of sufficient amount to win the auction, you will lose. You cannot reconsider bidding more as the auction has already ended.
2.) A PC problem may prevent the bid from being recorded prior to the end of the auction.
3.) Internet slow downs and congestion may prevent the bid from being recorded prior to the end of the auction - you will not have time to bid again.
4.) An eBay server outage may prevent the bid from being recorded - you will not have time to bid again.
5.) An eBay software glitch may prevent the bid from being recorded - you will not have time to bid again.
6.) A mistyped password or user ID may prevent the bid from being recorded.
7.) You cannot retract their bid for an incorrect bid amount - they must live with any typographical error that is entered - even if it means bidding $2000.00 on a $20.00 item.
8.) A bidder must be very diligent in maintaining a watched item list - they may 'forget' the ending time of an auction - and fail to bid.
9.) You must be present or make arrangements for placing your bid at the end of the auction - sometimes these are at very unreasonable hours.
Advantages:
1.) You do not need to commit to a single auction item. You can watch many different items without having your money tied up into a single item for days on end. You may abandon an item at any time to bid on another item, or use a BIN.
2.) You can avoid 'bid shielding' - since a bid shielding scheme would require a retraction of the shielding bid prior to the last 12 hours of an auction - you can be sure that the proxy bids are the valid amounts for the bidders in the auction, and are not artificially inflated.
3.) You can avoid 'shilling' of the auction by the seller - you have almost the entire length of an auction to evaluate the full bidding pattern of the auction - and can identify any possible bidding irregularities.
4.) You can remain anonymous. You can avoid competing bidders researching their prior bidding habits and proxy amounts - and using this knowledge against you.
5.) You can avoid bid stalkers, enemy bidders, incremental bidders, and sport bidders.
6.) You will know almost immediately the result of your bid and whether or not you won the auction.
Explained perfectly by sir_snipes_alot
