Seller heterogeneity in electronic marketplaces: A study of new and experienced sellers in eBay

Most online auction studies focus on the buyer side of the marketplace. To bridge the imbalance gap, we investigate seller behavior in this research. Specifically emphasized on seller heterogeneity, an area that has not been well studied in the electronic marketplace literature, this study classifies sellers into new and experienced seller groups and compares their auction performance based on three outcome measures: success rates, ending prices, and feedback ratings. We find that the performance of new sellers is worse than that of experienced sellers in all three measures, namely, lower auction success rates, lower auction ending prices, less likely to receive positive feedback ratings and more likely to receive negative feedback ratings. We also show the dynamics of these auction performances while new sellers evolve into experienced ones. Our empirical analysis reveals structural differences in auction success and price determinants between new and experienced sellers. That is, the determining factors for auction success and ending prices are significantly different between the two seller groups. We also identify several key factors for non-positive (i.e. neutral or negative) feedback ratings received by the two groups and find no significant difference between these factors for both new and experienced sellers. We believe our findings in this study have significant implications to the online auction house and sellers, and contribute towards building more effective and efficient electronic marketplaces.