Shoppers, beware of the eBay profiteer

Prices can soar on the online auction. Xbox 360, one of the hottest holiday items, is going for triple its retail price.

So you didn't wait three cold days outside an electronics store to be one of the first to fork over $300 for Microsoft's new Xbox 360?

Never fear. eBay is here.

This year's hottest holiday commodity can be found at the online auction site, for those willing to pay triple and quadruple the price.

It's nothing new. Since its inception a decade ago, eBay has become the sure cure for the sold-out blues.

Here you can find everything from those 50-yard-line Rose Bowl tickets to front-row seats to Cher's seemingly endless Farewell Tour.

Typically, the online auction exerts downward pressure on prices because of the increased competition, but occasionally - when supplies are tight - it becomes a venue for wild profiteering.

"Yes, there are opportunities to make money. But there are also opportunities to lose money," says David Stewart, professor of marketing and consumer psychology at the University of Southern California in Los Angeles. "If the supply on eBay exceeds the demand, you may find yourself with an Xbox when you didn't want an Xbox."

At this point, that's not likely. Demand for the new computer gaming console still far exceeds supply, with Houston's Best Buy, for instance, receiving only 145 units before Thanksgiving and no word on whether another shipment will be in before Christmas.

Limiting supplies is a trick that some companies employ to stir up fervor over a particular product, as was the case with the Cabbage Patch and Tickle-Me-Elmo dolls.

And for those speculators willing to endure long waits at stores to snatch up such goods, the Internet has increased access to buyers. But it has also led to an increase in the number of speculators.

In fact, marketing experts say eBay has actually caused a decline in the value of things such as collectibles - whether they be Barbie dolls, Elvis paraphernalia, or Pez dispensers - because the middle man has been cut out of the process.

Last year's must-have UGG boots, for instance, are currently being sold on eBay below the retail price.

While the Internet has greased the wheels of competition, it has also actively involved consumers in the marketing process.

"Consumers are becoming part of the system, taking over functions that marketers used to do," says Michael Solomon, a professor of consumer behavior at Auburn University in Alabama. "They are not just on the receiving end of things anymore."

For instance, renegade websites are popping up that prepublish stores' sale circulars so shoppers don't have to pay full price. Other websites provide consumers with online coupon codes and rebates.

In the case of eBay, says Dr. Solomon, consumers are taking the place of wholesalers. And this year's item is the Xbox 360.

Melinda Kinley, a Houston mother of two, had never heard of the new gaming system until a few days ago when she asked her teenage son, Spencer, what he would like for Christmas.

When he mentioned the Xbox 360, she filed it away for future reference. "I didn't think anything of it until I saw that long line on TV," says this doting mom, who has been known to stand in line for the hottest holiday item. Power Rangers and Pokémons come to mind.

She says she will probably "work real hard" to find her son the new Xbox, but shelling out any more than its retail price is not one of them. "I refuse to give in to that kind of stuff. It's not right."

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