What Matters and What Doesn't: Examining the Effectiveness of Surcharge Policies in C2C Online Auctions

This study examines the effectiveness of two prevailingly used sets of mutually exclusive surcharge policies in C2C online auctions. The first policy is the option of using an all-inclusive pricing strategy or a partitioned pricing strategy. The second policy entails the flexibility of shipping policies based on shipping destinations (domestic shipping versus worldwide shipping). The impacts of these surcharge policies on C2C participators, including sellers, buyers, and auctioneer, were examined with data collected from eBay. We found that sellers and buyers receive and pay approximately the same auction total prices regardless of the choice of the first surcharge policy. The online auctioneer however receives approximately 3% higher commission fees when C2C sellers adopt an all-inclusive pricing policy. The results also suggest that C2C sellers that are more flexible in their shipping destinations receive almost 8% higher auction final prices than those that are not. Theoretical importance and pragmatic implications are discussed.