April 25, 2008

Why would people purchase used items on ebay, but choose to shop in second hand stores?

I know quite a few people who purchase things online and do not think anything of it, but when you ask them if they shop in a store like Goodwill, their faces tend to say it all. So, why are we willing to purchase items online having never actually physically held them, versus looking and holding them in person? One very simple answer could be that if certain items go to Goodwill, then they might not have even been worth the person’s time to try to sell. They are just not good enough. If you’re willing to just donate it, then why would someone take the time to go in and purchase the item?

Another simple answer could be that since many people donate items to places like Goodwill so they are less likely to go in there because they know that they donated “junk.” I know that one man’s junk is another man’s treasure, but what makes the items online so much more worthy of our dollars? People’s preferences are given, and in that sense it is hard to change the way that people think about shopping second hand or shopping online for that matter.

There is also the issue of convenience. If you can just do a simple search online to find what you are looking for you have almost instant results but you have to wait for shipping, whereas if you are shopping in stores to find the items it may take a little bit more effort. Maybe the comparison of shopping online versus shopping in secondhand stores is too limited. In fact many people opt to just shop online over shopping in physical stores for a lot of different items, not just used ones.

One of the biggest drawbacks to shopping online is not knowing what kind of quality you will get when you actually receive the items. When you are in a store, you can very often easily tell if the quality is good or bad. When purchasing items online there is the issue of asymmetric information so there is very little certainty about the condition of the goods, and people often end up paying somewhat more money to try to help guarantee that they will be satisfied in the end. In dealing online people face the issue of adverse selection and moral hazard. If there are two items that appear to be completely identical online, and have very similar descriptions, some people who are risk averse will pay more merely because they think that they have a better chance at getting just what they were looking for. It seems that if you can buy any item in person whether it is at a second hand store or brand new, you will likely be better off in the end. But for those looking for the possibility of a better deal and a small gamble there is always eBay.

1 comment:

Tim Canon said...

I happen to think that Goodwill is quite possibly the greatest thing on the planet, and I must admit I shop there weekly, if for nothing else than something interesting to do. They have lots of random vinyls, sweet old sportscoats with plaid designs (from hippis, of course), and other random junk. And let me get this point across: you can find this crap nowhere else. No sir.

Goodwill is truly a "treasure trove" in the most literal sense, and ebay is cool too. But not as.