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Dressing Your Online Auction Business for Success: An Experiment Comparing

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 Gregg & Walczak/Online Auction Success

RESEARCH NOTE

DRESSING YOUR ONLINE AUCTION BUSINESS

FOR SUCCESS: AN EXPERIMENT COMPARING
TWO EBAY BUSINESSES1

By: Dawn G. Gregg sented that examines two online auction businesses utilizing
Business School different company names and auction listing styles to sell
University of Colorado, Denver items in parallel over the course of one year. The findings
P.O. Box 173364 suggest that increasing the quality of an auction business’s
Campus Box 165 e-image does increase consumers’ willingness to transact
Denver, CO 80202 with the business, and increases prices received at auction.
U.S.A. The study also demonstrates the ability to use eBay as an
dawn.gregg@cudenver.edu experimental laboratory for testing a variety of hypotheses
about purchasing behavior online.
Steven Walczak
Business School Keywords: Signaling theory, website quality, reputation,
University of Colorado, Denver price premiums, online auctions, empirical research, e-image
P.O. Box 173364
Campus Box 165
Denver, CO 80202
U.S.A.
Introduction
steven.walczak@cudenver.edu
Websites serve as an important (and frequently the only) point
of contact for most e-businesses. They are used to convey
information about the company, its products, and the level of
Abstract service the consumer can expect to receive. Information
signals provided within websites are used to influence con-
Businesses can choose who they want to be online. Product sumers’ overall perceptions of value, which can be a driving
and company attributes that are directly perceivable in the factor in e-business success (Lohse and Spiller 1998). These
real world can be manipulated to make a favorable impres- signals can include the presentation and quality of product
sion on online buyers. This study examines whether creating information and background information provided about the
a more professional online e-image can signal consumers business and its policies. Even the name can reflect on the
about unobservable product or company quality, and whether appearance of professionalism of the business. Taken
this signal influences their willingness to transact with the together, these factors create an online e-image for the busi-
company, and ultimately the prices they are willing to pay for ness.2 Businesses need to create positive e-images by pro-
the company’s goods and services. An empirical study is pre-

2
1 The term e-image is used to distinguish the construct from online image,
Vivek Choudhury was the accepting senior editor for this paper. which is more often used to refer to online graphics or photographs.

MIS Quarterly Vol. 32 No. 3, pp. 653-670/September 2008 653

Gregg & Walczak/Online Auction Success
viding the type of information and interaction necessary to
satisfy website users and potential customers.
An e-image is the electronic image presented by a business or
individual. Research suggests that the choice of an e-image
is often consciously made to create a distinct online identity
(Hesketh and Selwyn 1999; Sand 2007). E-image is com-
posed of a variety of factors, which for online auction
businesses include identity (username), website appearance
and information content, reputation rank from the reputation
systems, and any reputation feedback. This study examines
how the selection of a username and improving website
quality affects the success of online auction businesses.
Research suggests that the quality of a company’s website
may influence consumer impressions of the company (e.g.,
Barnes and Vidgen 2001a; Kim and Stoel 2004; McKnight et
al. 2004; Shchiglik and Barnes 2004) and their willingness to
transact with the company (e.g., Park et al. 2004; Ranga-
nathan and Ganapathy 2002). However, this prior website
quality research has assessed user’s intention to buy without
measuring actual purchasing behavior.
Past empirical research on the relationship between intentions
and behavior (e.g., Adams 1974; Clawson 1971; Ferber and
Piskie 1965; Granbois and Summers 1975; Jamieson and Bass
1989; Juster 1966; Mittal and Kamakura 2001; Morwitz and
Schmittlein 1992; Spiekermann et al. 2001; Warshaw 1980)
indicates that, although intentions are often used as a proxy
variable for actual behavior, not everyone behaves as they
claim they will. Studies seeking respondents’ intentions of
future behavior or how they would behave under certain
hypothetical conditions can suffer from several different kinds
of bias. These biases include common methods bias, a prob-
lem not eliminated by evidence of validity (Fiske 1982;
Podsakoff et al. 2003); and distortion, either because respon-
dents tend to maintain a consistent line in a series of answers
(consistency motif) or because certain responses are more
socially desirable (Podsakoff and Organ 1986). In addition,
there can be error in measuring intentions caused by changes
that occur between the time intent is measured and the
purchase occasion (Young et al. 1998). Thus, measuring
intentions may conceal important characteristics of the
phenomenon under study, limiting the external validity of this
type of research (West 1986).
The purpose of this study is to determine if creating a pro-
fessional e-image can have a significant impact on con-
sumers’ willingness to transact with and the actual prices
received by an online auction business.3 This study uses a
3
The term business is used to denote any individual, group, or actual business
entity engaged in selling any quantity of items through any online auction
provider (Walczak et al. 2006).
654 MIS Quarterly Vol. 32 No. 3/September 2008
controlled experiment that measures the impact of e-image on
actual purchases instead of using intentions as a proxy for
purchase behavior. Online auction businesses were chosen
for this experiment because they represent a large and
growing sector of the online economy (Schonfeld 2005),
auction businesses are relatively easy to establish, auction
sites like eBay provide a built-in customer base for newly
established businesses, and online auctions can easily be set
up such that real customers are exposed to the listings for
different experimental conditions in a real-world setting.
The experiment involved establishing and running two online
auction businesses for one year. All aspects of the businesses
were kept identical except for the e-images of the two busi-
nesses. Both businesses were new auction businesses with
reputation scores less than 40 and 100 percent positive com-
ments. One business was given a professional e-image by
selecting a professional sounding user identity and main-
taining a high quality website that provided clear return and
shipping policies and a professional looking listing style. The
second business’s e-image appeared to be a more casual busi-
ness with a less than professional user identity and a much
lower quality website that provided only limited product
information, no shipping or return policies, and a simple
listing design. Actual sales of identical products were used to
answer the following research questions:
(1) Does e-image affect willingness to transact with the
online auction business?
(2) Does e-image affect prices received at online auctions?
(3) Are these e-image effects influenced by risks associated
with different product types?
This study evaluates the tangible effects that e-image can
have at online auctions. It shows that presenting a positive
e-image increases willingness to transact and price premiums
in a real-world setting in which consumers are actually
charged for the items they purchase. This indicates that indi-
vidual choices with respect to e-image can significantly affect
the revenue generated by online businesses. This has not
been investigated in prior literature, and represents a
contribution to research on online auctions as well as a
contribution to research on website quality.
The rest of the paper is structured as follows: the next section
reviews the current literature on information economics and
website quality. The subsequent section discusses theory and
includes our hypotheses. We then present a field experiment
that explores the relationship between the online auction
business’s e-image and willingness to transact and price
premiums. The paper concludes with a discussion of the
contributions of this research.

Literature Review
Information Economics
The nature of online auction markets makes them especially
useful for studying purchasing behavior where there is
incomplete or asymmetric information. In most online
auctions, the consumer is entirely dependent on the business
for information related to the product, its quality, and its
condition. This information asymmetry (Akerlof 1970;
Mishra et al. 1998) makes it very difficult for consumers to
assess product quality before purchase. In addition, online
auction transactions usually occur between unknown parties
(Resneck and Zeckhauser 2002), which leads to uncertainty
about the service the business will provide, as well as whether
the business will actually deliver the purchased product
(Gregg and Scott 2006). In this setting, consumers would like
information that allows them to distinguish the business that
will provide high quality goods or a high level of service from
the business that will provide lower quality goods or a lower
level of service.
In environments with incomplete information, consumers
must rely on signals provided by businesses to evaluate their
ability to produce (and deliver) quality products (Shapiro
1982). Signaling theory (Spence 1973) states that in situa-
tions where there is information asymmetry (the level of
quality is known by the business but not by the consumer), a
signal is an action of the business that credibly relays infor-
mation about unobservable product (or company) quality to
the consumer (Rao et al. 1999). The more difficult it is for
consumers to assess quality prior to purchase and the less they
know about the business selling the product, the more likely
they are to rely on signals to form expectations about quality
(Kardes et al. 2004; Rindova et al. 2005; Spence 2002).
E-image is one of the primary means e-commerce businesses
have of signaling quality to consumers.
Website Quality
Researchers studying online environments have found that the
context in which a product was being sold is statistically a
better predictor of customer attitude than the actual product
being sold (Lu and Lin 2002). How the product is being
offered for sale is important in acquiring customers online.
This is supported by website quality research, which confirms
that information content, design, security, and privacy are
useful in discriminating between low and high purchase
intention of shoppers (Park et al. 2004; Ranganathan and
Ganapathy 2002).
Gregg & Walczak/Online Auction Success
Research on website quality can be classified into two
different research streams: identifying the attributes that
contribute to website quality, and quantifying the effect of
website quality on consumer perceptions and intentions. The
first stream has resulted in the development and testing of
instruments to measure website quality (e.g., Aladwani and
Palvia 2002; Barnes and Vidgen 2001a, 2001b; Loiacono et
al. 2002). These instruments have been tested on a variety of
selling and non-selling sites using experienced online
shoppers, student web users, and web developers. Table 1
summarizes the primary website quality dimensions: infor-
mation quality, ease-of-use, aesthetics, and service quality as
found in 12 prior studies.
Researchers assessing perceptions about website quality have
found website quality has a significant impact on perceptions
of the abilities and trustworthiness of e-businesses (Barnes
and Vidgen 2001a; Kim and Stoel 2004; McKnight et al.
2004; Park et al. 2004; Shchiglik and Barnes 2004). This, in
turn, affects consumers’ assessment of website credibility
(Fogg et al. 2003), and their expectations about the quality of
service that they will receive (Iwaarden et al. 2004). Interface
issues such as information quality, usability, and attractive-
ness all have a significant influence on perceptions about a
business and increase the percentage of those who intend to
purchase from or use a website (Belanger et al. 2002; Fung
and Lee 1999; Hassan and Li 2005; Kim and Moon 1998; Lin
and Lu 2000; Nielsen and Norman 2000; Palmer 2002; Park
et al. 2004; Ranganathan and Ganapathy 2002; Roy 2001;
Shneiderman 2000; Venkatesh and Ramesh 2006).
Website quality at online auctions has received limited atten-
tion from researchers to date. Some secondary data studies
have found that providing clear images of the auction items
serves to reduce the information asymmetry and increase
auction revenue (Kauffman and Wood 2006; Ottoway et al.
2003; Vishwanath 2004). Other studies assessing consumer
impressions of online auction provider sites (such as eBay)
found that the layout of information, the accuracy of
standardized information, and website security influenced
user impressions of website quality and their intention to bid
(Barnes and Vidgen 2001b; Kwon et al. 2002). However,
these studies provided no information on the importance of
e-image quality to individual online auction businesses.
Researchers studying website quality have attempted to
quantify its impact on purchasing behavior (Park et al. 2004;
Ranganathan and Ganapathy 2002). However, they relied on
self-reported usage and on the perceptions of subjects to
measure purchase intention, which may not reflect actual pur-
chase behavior (Young et al. 1998). This study adds to this
literature stream by using a real-world experiment in which
MIS Quarterly Vol. 32 No. 3/September 2008 655
Gregg & Walczak/Online Auction Success

Table 1. Website Quality Dimensions Found in Prior Studies

Source Website Quality Dimensions
Aladwani and Palvia 2002 Data quality, organized, attractive, technical adequacy
Barnes and Vigden 2001a, 2001b Data quality, usability, interaction reliability
Iwaarden et al. 2004 Reliability, responsibility, tangibles, assurance and empathy
Lin and Lu 2000 Data quality, response time
Liu and Arnett 2000 Data and service quality, organized and use, playfulness, security and transaction
Loiacono et al. 2002 Data fit to task, understandable and response time, emotional and visual appeal, trust
Muylle et al. 2004 Data quality, ease of use and response, layout
Ranganathan and Ganapathy 2002 Completeness, navigation and response time, security
Webb and Webb 2004 Information quality, perceived usability, service quality
Zhang and von Dran 2001 Accuracy and completeness, navigation, privacy
Zhang et al. 2001

consumers are charged for the items they purchase. The real-
world experiment will validate previous research, extend
previous research to examine the influence of e-image on
price premiums, and demonstrate the efficacy of performing
real-world experiments at online auctions.
Theory and Hypotheses
This study is concerned with assessing the impact of choices
made by online auction businesses with respect to their
e-image on consumers’ willingness to transact and on price
premiums—holding all other auction factors constant. The
two e-image factors examined are user name/identity and
website quality attributes that can be controlled by the online
auction business. Website quality attributes examined include
information quality attributes (e.g., accuracy and complete-
ness of product data), attributes related to the presentation of
the data (e.g., organization, usability, understandability),
aesthetic attributes (colors, fonts, and layout), customer
service policies, and availability of contact information. This
study determines whether these e-image attributes can be used
by online auction businesses to signal consumers that they
possess appropriate business skills to successfully complete
transactions.
Willingness to Transact
Prior website quality research has found that the website
quality does impact the purchase intentions of consumers
(e.g., Park et al. 2004; Ranganathan and Ganapathy 2002).
This is consistent with studies related to information dis-
closure in accounting and auditing that have found improved
information disclosure reduces the information risk to inves-
tors, providing a motivation to transact (e.g., Elliott and
Jacobson 1994; Jahmani 2003). Exchange theory supports
this, suggesting that individuals favor exchange relationships
that are more likely to be successful (Thibaut and Kelley
1957). Since e-image can signal consumers about unobserv-
able product or company quality (Rao et al. 1999), exchange
theory suggests that improving e-image will increase a
consumer’s willingness to transact with the online businesses.
H1: There is a positive relationship between e-image
and willingness to transact
Price Premiums
The relationship between e-image and price premiums has not
been investigated in prior research. Prior research has looked
at the relationship between reputation scores (an attribute of
e-image held constant in this study) and price premiums but
did not account for business name or website quality.
Economic theory suggests that price premiums are justified in
situations where businesses provide a higher quality product
or service (Klein and Leffler 1981). It also suggests that the
price–quality correlation increases with information (Tellis
and Wernerfelt 1987).
Price premiums help compensate preferred businesses for
reducing transaction risks (Rao and Monroe 1996). In-
creasing e-image quality can improve the information avail-
able for consumer decision making and help to remove

656 MIS Quarterly Vol. 32 No. 3/September 2008


uncertainty surrounding the transaction and consequently
reduce perceived risk. A positive e-image is likely to have a
corresponding positive effect on prices consumers are willing
to pay because it increases their confidence in the quality of
the business’s goods and services (Rindova et al. 2005).
Thus, on the basis of extant theory,
H2: There is a positive relationship between e-image
and price premiums.
Product Risk
Perceived risk can be thought of as a consumer's belief
regarding the probability of gains or losses associated with a
particular transaction (Mayer and Davis 1995). In online
transactions, consumers find it more difficult to assess the
quality of certain types of products, creating a risk that the
product delivered will not meet their quality expectations (Ba
and Pavlou 2002; Gregg and Scott 2006). Theories from
economics of information (Nelson 1970) have been used to
identify product characteristics that increase online product
risk. These characteristics include high product description
complexity (De Figueiredo 2000; Jahng et al. 2000), and
variability in functionality (Akerlof 1970; Bakos and Kemerer
1992; Resnick et al. 2000). For example, used products are
believed to have higher transaction-specific risks because
there is the increased possibility that the condition or func-
tionality of the product being sold will not be captured com-
pletely in the product description (Scott and Gregg 2004).
Perceptions of risk can influence online transactions in two
ways. First, prior research has found that increased percep-
tions of risk decrease consumers’ willingness to transact
(Jarvenpaa and Tractinsky 1999; Jarvenpaa et al. 2000;
McKnight et al. 2002; Pavlou 2003). Second, perceptions of
risk can increase consumers’ price sensitivity. Businesses
that reduce transaction-specific risks may receive price
premiums (Rao and Monroe 1996), but these premiums are
dependent on the perceived risk associated with the trans-
action (Ba and Pavlou 2002). Therefore, product risk will
have a moderating effect between e-image and both consumer
willingness to transact and price premiums.
H3a: The relationship between e-image and willing-
ness to transact is stronger for high-risk pro-
ducts (e.g., used goods) than for low risk
products (e.g., new goods).
H3b: The relationship between e-image and price
premiums is stronger for high-risk products
(e.g., used goods) than for low risk products
(e.g., new goods).
Gregg & Walczak/Online Auction Success
The proposed research model for this study is presented in
Figure 1.
Research Methods
An experiment was conducted in which two online auction
businesses using different e-images (one positive and one
negative) were established and run in parallel for the period
of one year. The experiment explores the relationship
between e-image and both willingness to transact and actual
prices received for two online auction businesses.
E-Image Design
This experiment controls for two specific factors of e-image:
professionalism of user identity and website quality, speci-
fically through the listing quality of information content
controlled by the businesses. The business user names were
chosen to portray an e-image that was consistent with the
listing quality attributes, so that the e-image would be
uniformly positive or negative. The eBay username for the
positive e-image business was selected as “CollegiateSales”
to convey a professional image—consistent with that of an
established business. The eBay business ID for the negative
e-image seller was “NotAPro2003.” It was chosen to reflect
the type of less professional name chosen by many sellers on
eBay (e.g., junkrnot and new2unow, which were eBay seller
identities at the time of the experiment).
The two listing styles were designed to mimic the two
extremes of listing styles found at the actual eBay online
auction site. A total of 100 actual online auction listings were
reviewed and sorted by the researchers into better than
average (28 listings), average (33 listings), and worse than
average (39 listings) groups. The listings in the better than
average group contained the information and style attributes
that were consistent with high quality websites and the
listings in the worse than average group were missing many
key quality attributes identified in prior website quality
research (e.g., Aladwani and Palvia 2002; Barnes and Vidgen
2001a, 2001b; Lin and Lu 2000; Liu and Arnet 2000;
Loiacono et al. 2002; Muylle et.al. 2004; Ranganathan and
Ganapathy 2002; Zhang and von Dran 2001). The common
characteristics of the better than average listings were iden-
tified and used to create a high quality online auction listing
for the positive e-image business. Actual product descrip-
tions, terms of sale, and customer service policies were taken
from several of the better listings identified during the sorting
process. In addition, attributes related to the organization of
the data and to the attractiveness of the listing mimicked attri-
butes found in many of the better listings. Similarly, the in-
MIS Quarterly Vol. 32 No. 3/September 2008 657
Gregg & Walczak/Online Auction Success
E-Image
Product Type
(New/Used)
Figure 1. Research Model
formation for the negative e-image business was taken from
auction listings in the worse than average group. The nega-
tive e-image listing included minimal product information, no
sales or service polices, and no aesthetic features. Since prior
secondary data studies have already found that including a
picture in the online auction listing does impact the bids
received (Kauffman and Wood 2006; Ottoway et al. 2003;
Vishwanath 2004), both the positive e-image auction listing
and the negative e-image auction listing included product
images (example listings are shown in Appendix A).
Even though eBay offers businesses the opportunity to use
templates when creating their online auction listings, the low
quality listing style is very common, especially for less
popular products and new businesses. Following the experi-
ment, 25 additional listings were examined to determine if
low quality listings were still prevalent on eBay. Of the 25
listings examined in 2007, ten could be classified as low
quality listings. Nine of the low quality listings were pro-
duced by businesses with eBay ratings between 2 and 37 (new
businesses) and one of the low quality listings was produced
by a business with a rating of 887 (an experienced business).
Before beginning the experiment, a survey was conducted to
assess whether users perceived a noticeable difference
between the online auctions using the positive e-image and
the negative e-image. The survey was given to a group of 42
graduate and undergraduate students with prior experience
buying or selling at online auctions. The survey asked the
subjects to view the sample auctions with the two e-image
styles (shown in Appendix A).4 Subjects were then asked to
indicate to what extent they agreed with 22 different
statements about the e-images (primarily focusing on the
4
The listing styles were presented in random order.
658 MIS Quarterly Vol. 32 No. 3/September 2008
Willingness
to Transact
Price
Premium
website quality). The survey items were from validated
website quality instruments (listed earlier) that pertained to
the auction listing quality attributes that can be controlled by
an individual business. Items from prior website quality
literature that pertained to overall site quality (e.g., naviga-
tion, use of SSL, search features, etc.) were not included
because these quality attributes are controlled by online
auction service providers, not the individual auction business,
and thus are not relevant when comparing businesses using
the same auction provider. The questions used in the survey
are presented in Appendix B.
Key descriptive statistics from the e-image survey validation
are summarized in Appendix C. Appendix C includes results
of a paired sample t-test, which found subjects perceived the
positive e-image to have significantly higher quality (p <
0.001) for all of the questions except for the presence of
contact information. This is likely because, although the
positive e-image listing included the business’s e-mail address
and the negative e-image listing did not, all businesses can be
contacted through eBay and this contact information is found
on every auction listing. Overall, the subjects perceived a
significant difference between the positive e-image style and
the negative e-image style, indicating the two listing styles
could be used to assess the impact of e-image on willingness
to transact and price premiums.
Experiment Design
The empirical study utilized data obtained from actual trans-
actions conducted at the eBay auction site over the course of
one year. The CollegiateSales online auction business sold
items using the positive e-image listing style and the
NotAPro2003 online auction business sold items using the
negative e-image listing style, as shown in Appendix A. Both

auction businesses were started on the same day at eBay. All
attributes of the businesses and of the auctions were kept
identical over the course of the experiment except for the
e-image. This includes the starting price of the auction, the
availability of other products for sale at the time of the auction
(identical for matched pairs), the relative position of the
listings in the search results (auctions were timed so that the
listings would be next to each other but the position within the
search results would alternate from trial to trail), the duration
of the auctions (7 days), and the closing day and time of the
auctions (kept the same for the matching pairs of products).
Both businesses had reputation scores that started at 0 and
increased to 39 by the end of the experiment. There was
some slight variation in the user reputation scores for the two
businesses during the study. This variation was due to timing
of the feedback left by the actual buyers; however, throughout
the study, the business ratings were less than 40 (indicative of
a new/inexperienced business), both businesses had 100
percent positive feedback, and the feedback comments were
very similar. A paired sample t-test performed for the feed-
back ratings shows that the variation between the ratings for
the two businesses was not significant (p = 0.320).
The products sold as a part of the study ranged in price from
$1.99 to $66.00. The products sold included new and used
cinematic DVDs, new JumpDrives, and used Zip drives.
Ninety auctions were conducted over the course of one year
(45 per selling identity). Sales of identical item pairs were
spaced at least 7 days apart so as not to reduce the price
received by saturating the market. Starting prices for items
sold by the two businesses were identical and were set based
on the current market for the item. At the conclusion of each
auction the closing price, number of bids received, number of
bidders, timing of the first bid, and reputation score were
recorded. Six of the auctions conducted did not result in a
sale (three auctions each for both businesses). All of the
auctions that did not result in a sale were for the same product
(an “Austin Powers Goldmember” DVD). These no-sales
appeared to be due to declining demand for this product
(many copies of this DVD from other businesses also went
unsold) as opposed to being due to consumer perceptions of
the businesses. Following the unsuccessful auctions, the
products were listed again and sold at a lower price.
One consequence of using actual transaction data is that it
makes it impossible to directly measure the consumers’
“intention to transact” with the different e-image businesses
as had been done in prior survey-based studies (e.g., Ranga-
nathan and Ganapathy 2002). Instead, online auction data
was examined to determine if buyers demonstrated an
increased willingness to transact based on their bidding
behavior. Willingness to transact was inferred based on the
time from the beginning of the auction to the receipt of the
Gregg & Walczak/Online Auction Success
first bid, the total number of bidders participating in an
auction, and the total number of bids received. The timing of
the first bid shows increased willingness to transact since at
this time both auctions have identical auction characteristics
(except for the listing quality). The number of bidders and the
number of bids provide an indication of how many bidders
choose to transact with a business and how motivated they are
to buy from them, also indicating they intend to transact. In
research examining online auction reputation scores, price
premiums have been measured as the difference between the
price received by an individual seller and the average price
received by multiple businesses (with different reputation
scores) for a matching product (Ba and Pavlou 2002). For the
purposes of this research, price premiums are the monetary
amount a business with a positive e-image receives above a
matching business with a negative e-image selling an identical
product at the same time.
Results
A repeated-measures ANOVA was used to determine if there
were significant differences between the dependent measures
both within and across the two different online auction
e-images.5 Even though the consumers bidding at both auc-
tions were not necessarily identical, the repeated measures
analysis of variance was appropriate because this research
involved a matched sample measured across two conditions.
In a repeated-measure ANOVA for a matched sample,
measurements across treatment conditions are treated like
repeated measures (Stevens 1996). Roy’s largest root statistic
was calculated to estimate the effects of e-image, new/used
product group, and the interaction of e-image × new/used
product group on closing price, first bid time, number of
bidders, and number of bids. The test statistic shows signi-
ficant main effects for e-image (p < 0.001) and for new/used
product group (p < 0.015). In addition, it also indicates that
there is significant interaction effect between e-image and
new/used product group (p < 0.013).
Evaluation of the individual dependent variables show that
e-image had a significant effect on the timing of the first bid
(p < 0.001) with positive e-image businesses receiving their
first bid 1.26 days sooner than negative e-image businesses
(on average). Willingness to transact was also evaluated
using the number of bidders and the quantity of bids received
for each e-image type. These values, shown in Table 2, indi-
cate that e-image had a significant impact on the number of
5
The evaluation of Levine’s statistic for the repeated measures ANOVA
showed the analyses met the homogeneity of variances requirement
(minimum p = 0.083).
MIS Quarterly Vol. 32 No. 3/September 2008 659
Gregg & Walczak/Online Auction Success
Table 2. Bidders and Bids Received by E-Image Type and Product Risk Type
Product Risk
E-Image Value
103 bidders
New Product
107 bids
169 bidders
Used Product
262 bids
bidders bidding at the auctions, with 21 percent more bidders
bidding at the positive e-image business’s auctions than at the
negative e-image business’s auctions (p = 0.006). The
business with a better e-image received 20 percent more bids
than the negative e-image business (mostly for new products);
however, this difference was not statistically significant (p =
0.113). The fact that the positive e-image business receive
first bids significantly sooner than the negative e-image
business (when starting prices for both businesses are
identical) and more bidders bid at the positive e-image
auctions clearly indicate that consumers have an increased
willingness to transact with businesses with positive e-images,
supporting hypothesis 1.
E-image had a significant main effect on closing price for this
analysis (p = 0.012) with the positive e-image business
receiving an average closing price of $17.19 and the negative
e-image business receiving an average closing price of $14.62
(see Table 3). This produced an average price premium of
17.61 percent, supporting hypothesis 2.
It is interesting to note that the interaction between e-image
and new/used product group was not significant with respect
to the timing of the first bid (p = 0.894), the number of
bidders bidding at the auction (p = 0.249), and the total
number of bids received (p = 0.117). This indicates that con-
sumers prefer purchasing from positive e-image businesses
regardless of the perceived product risk, causing us to reject
hypothesis 3a. However, there was a significant interaction
effect between e-image and new/used product type with
respect to closing prices (p = 0.007). Table 3 summarizes the
mean prices received by the different e-image businesses by
new versus used product type. It shows that when the product
being sold had a higher risk of not working (used computer
products and DVDs) the positive e-image businesses receive
38.69 percent more than the negative e-image businesses.
However, for new products, where the risk of product
malfunction was lower, the price premium for the positive
e-image business was only 2.67 percent. This indicates that
positive e-image businesses do receive significantly more
660 MIS Quarterly Vol. 32 No. 3/September 2008
Positive E-Image Negative E-Image
149 bidders 123 bidders
238 bids 198 bids
60 bidders 43 bidders
107 bids 67 bids
89 bidders 80 bidders
131 bids 131 bids
when selling their products at online auctions but these price
premiums are highly dependent on product risk, supporting
hypothesis 3b.
While empirical evidence from real world practice has been
gained to support three of the four research hypotheses, some
limitations of the research design should be kept in mind.
One limitation of the study is that the listings were
constructed to be maximally different as opposed to providing
the complete range of e-images currently seen on eBay.
A second limitation is that the experiment does not allow us
to distinguish the effects attributable to the various elements
of e-image: choice of business names versus auction listing
quality. Previous research suggests that increased willingness
to transact and price premiums could be due to the increased
website quality (e.g., Park et al. 2004; Ranganathan and
Ganapathy 2002). However, the choice of a reputable
sounding business name may create a reputation effect that
leads the buyer to believe that the listing is for an existing
business that would already know how to conduct transactions
effectively. Thus, any or all of the e-image attributes varied
in this study could have been responsible for the signal(s) that
generated the willingness to transact and price premiums.
However, separating these effects would have required a more
complex experiment with a larger number of listing attribute/
business name combinations than was feasible in this initial
study.
Finally, this study examined the impact of e-image for a few
types of items, external drives and cinematic DVDs, which
may all be considered commodity items. Research has indi-
cated that bidder strategies differ between commodity and
collectible online auction items (Kazumori and McMillan
2003; Strader and Ramaswami 2002) and consequently the
needed information cues and expectation of professionalism
may also differ. However, a review of collectible auction
listings on eBay shows a wide range of e-images including
differences in listing styles, business identity names, de-
scription information, and policy information. This suggests

Table 3. New and Used Product and Average Selling Prices
Number
Product Name Pairs
Average New (DVD and JumpDrive) 27
Average Used (Zip Drive and DVD) 18
Overall Averages 45
e-image and the corresponding willingness to transact and
price premiums are likely to be issues for this type of auction
item as well, representing an opportunity for future research.
Discussion and Conclusions
The goal of this study is to better understand the impact
e-image, specifically business user name choice and listing
quality, has on willingness to transact and price premiums for
online auction retailers. Our hypotheses are largely supported
and suggest that e-image has a significant impact in the online
auction domain. Consistent with signaling theory (Spence
1973), the results indicate that increasing the positive per-
ception of a business’s e-image contributes to an increased
willingness to transact with these online auction businesses as
inferred from the timing of the starting bid and the number of
unique bidders bidding at the auctions. A positive e-image
also results in price premiums especially for used products.
This suggests that a business’s e-image signals potential con-
sumers that the business also has the other abilities necessary
to be a successful online auction business. This has important
implications for businesses in the online environment, which
must have the specific abilities to complete transactions
successfully (e.g., process payments, package the item appro-
priately, and ship in a timely fashion).
A second finding that product risk (e.g., new versus used
products) does not moderate the relationship between e-image
and willingness to transact demonstrates that consumers have
a clear preference for purchasing from positive e-image busi-
nesses even when the product risk was very low (a new DVD
or new USB drive). One potential reason for this is that there
are other risks associated with purchasing from an unknown
online auction business, including risks associated with the
location, size, and quality of the businesses selling goods at
auction. Online auction sites do nothing to screen new
businesses, only requiring an e-mail address and a credit card
to set up a business identity. The only information potential
customers have about the business is the information provided
in the auction listing and feedback posted by prior online
Gregg & Walczak/Online Auction Success
Average Selling Price Average Selling Price
CollegiateSales NotAPro2003
$14.64 $14.26
$21.02 $15.16
$17.19 $14.62
auction buyers. Thus, the additional information provided by
positive e-image businesses helps mitigate these business
quality risks, creating an increased willingness to transact that
did not diminish regardless of the product being sold.
While willingness to transact is not changed by product risk,
the price premiums realized by positive e-image businesses is.
The difference between the price premium for new products
(2.67 percent) and for used products (38.69 percent) shows
that, although buyers prefer transacting with the positive
e-image business, they are not willing to pay significantly
more if the risk associated with the product is very low. This
is surprising since prior research has found that the greatest
risk consumers face at online auctions is that the business will
not deliver the product (36.2 percent of complaints) and not
that the product will not meet their quality expectations (30.6
percent of complaints) (Gregg and Scott 2006). It is possible
that consumers on auction sites have different risk profiles.
Consumers willing to assume greater risks still bid on higher
risk products but expect a low price in order to compensate
for those risks. On the other hand, the lower risk consumers
will only bid at high-quality sites. However, this is highly
speculative and additional research needs to be conducted to
see how variations in consumer risk profiles affect willingness
to transact and price premiums.
Implications and Future Research
A primary contribution of this research is that it demonstrates
the ability to use eBay as an experimental laboratory for
testing hypotheses about purchasing behavior online. Vir-
tually all published studies on consumer purchase behavior
have used purchase intention as a surrogate for actual pur-
chase behavior. While this strategy is efficient because inten-
tion data are easier to collect, intentions have been shown to
be a poor predictor of actual behavior (Young et al. 1998). As
researchers attempt to make their research more relevant to
practitioners, they need to focus on frames of reference that
are meaningful to practitioners (Benbasat and Zmud 1999).
Thus, it may not be enough to measure purchase intention; it
MIS Quarterly Vol. 32 No. 3/September 2008 661
Gregg & Walczak/Online Auction Success
may be necessary to measure actual purchase behavior. eBay
and other online marketplaces provide researchers with plat-
forms that can be used to demonstrate the real-world value in
dollars of alternative e-image factors such as website designs,
product attributes, and information content to practitioners.
The ability to conduct controlled real-world experiments
using the large pool of online consumers as subjects could
potentially be a great asset to researchers wishing to avoid the
potential biases of laboratory or survey research and the
limitations of secondary data studies.
This research also contributes to our understanding of the
e-image aspects of website quality and identity selection. It
suggests that e-image can relay information about unobserv-
able business quality in an environment where there is
uncertainty about the products and services a business will
provide. Interestingly, although eBay has a fee-based tem-
plate service, as of spring 2007, many eBay businesses
continue to use unprofessional sounding names and/or a very
low quality listing style,6 which is associated with negative
e-images. The finding of this study suggests that it is impor-
tant for online auction businesses to spend the time and
resources necessary to present themselves and their products
using positive e-images. All online auction businesses have
the potential to improve their e-image (e.g., by developing
high-quality auction listings) and reap the benefits of the
increased quality signal it generates. However, additional
research is needed to determine the reliability of these signals
and to see if these signals continue to be effective in
environments where more information is available about the
business (e.g., the businesses have a high eBay reputation
score or are established businesses).
Prior research has found contradictory information regarding
the reliability of website auction listing quality as a signal of
business quality. MacInnes et al. (2005) found that the
amount of information an online auction listing contained
about the product was not a significant predictor of whether
or not there will be a transaction dispute. Future research
could be undertaken to assess which specific e-image factors
or combination of factors are the best predictors of online
auction success and how these factors interact. These e-image
factors should include improving the aesthetics of the auction
listing, choosing a professional company name, providing
detailed product descriptions or product benefits or warnings,
providing product reviews, and including warranty informa-
tion or a return/refund/exchange policy.
6 content attributes of an online business’s e-image contribute
Forty percent of auctions examined in March 2007 had a very low quality
listing style including one for an experienced business with a reputation score
of 887.
662 MIS Quarterly Vol. 32 No. 3/September 2008
While only two maximally different e-images were evaluated
in this experiment, actual online auction businesses have
e-images spanning the entire continuum. Future research
could also help determine how willingness to transact and
price premiums are affected throughout this continuum by
presenting mixtures of user names and different listing quality
styles to produce multiple e-images from very positive
through intermediate (slightly positive or slightly negative) to
very negative. Additionally, reputation scores and comments
in the presented research were consistent with those of a new
business. Future experiments that allowed website quality
and reputation to be varied simultaneously would help
researchers answer which e-image factor is more likely to
produce price premiums. Post-buying surveys could also be
sent to consumers to determine which e-image factors they
consider most important when making their buying decisions.
This research also has implications for those studying pricing
at online auctions. There have been a number of studies
investigating online auction purchasing behavior. Prior
research has found that a variety of online auction charac-
teristics do influence purchase prices at online auctions
(Bapna et al. 2001, 2003; Hahn 2001; Kauffman and Wood
2006; Klemperer 2002). These characteristics include the
availability of a specific item at competing auctions, the bid
increment, and the inclusion of pictures in the auction listing.
Previous research on online auctions and price premiums has
also focused on the use of reputation systems for building
trust in online auction businesses and to generate price
premiums. While a business’s online reputation from a repu-
tation system is an aspect of their e-image, these studies have
been inconclusive regarding price premiums associated with
reputation, with some research indicating that reputation
systems do affect price premiums (e.g., Ba and Pavlou 2002;
Lee et al. 2000; Ottoway et al. 2003; Standifird 2001, 2002)
and other research indicating they do not (e.g., Gilkeson and
Reynolds 2003; Kauffman and Wood 2000; Resnick and
Zeckhauser 2002). None of the prior studies examining
pricing at online auctions controlled for the relative ranking
of the business’s e-image specifically through the quality of
the auction listing and user name. One implication of our
research is that studies examining pricing at online auctions
will need to account for the e-image factors of website quality
and user name selection.
Finally, while these results are specific to the online auction
domain, it is possible that they can be extrapolated to more
traditional e-commerce businesses. To date there has been
limited research on which website design and information
the most to online profitability. One way to address this
deficit would be to conduct experiments to determine which

e-image attributes are the most important to all businesses and
which attributes are important in specific domains (e.g.,
including information on ingredients might be very important
to food businesses and emphasizing data security privacy
might be important for an information aggregation service).
The experimental methodology applied in this paper could be
extended to other e-marketplaces (e.g., Amazon’s zShops) to
examine the relative importance of e-image on website types
and determine whether websites with higher perceived quality
can charge more than sites with lower quality.
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About the Authors
Dawn G. Gregg is an assistant professor of information systems at
the University of Colorado, Denver. She received her Ph.D. in
Computer Information Systems and her M.S. in Information
Management from Arizona State University, her M.B.A. from
Arizona State University West, and her B.S. in Mechanical Engi-
neering from the University of California at Irvine. Her current
research seeks to improve the quality and usability of Web-based
information. Her work has been published in journals including
International Journal of Electronic Commerce, IEEE Transactions
on Systems Man and Cybernetics, Communications of the ACM, and
Decision Support Systems. Dr. Gregg is also a cofounder of
MIS Quarterly Vol. 32 No. 3/September 2008 665
Gregg & Walczak/Online Auction Success
Developing Minds Software, a company that provides software
services that allow for the collection and analysis of special
education data.
Steven Walczak is an associate professor of information systems at
the University of Colorado, Denver. He received his Ph.D. in
Artificial Intelligence from the University of Florida and his M.S. in
Computer Science and B.S. in Mathematics from the Johns Hopkins
Appendix A
Business Controlled Area of Auction Listing Designs for the Experiment
Figure A1. Positive E-Image Online Auction Listing
666 MIS Quarterly Vol. 32 No. 3/September 2008
University and the Pennsylvania State University respectively. His
current research interests are in knowledge management,
e-commerce applications, applied intelligent agents, and neural
networks. He has over 90 peer reviewed publications including
articles in Journal of Management Information Systems, IEEE
Transactions on Systems Man and Cybernetics, IEEE Transactions
on Knowledge and Data Engineering, and Decision Support
Systems.
 Gregg & Walczak/Online Auction Success

Figure A2. Negative E-Image Online Auction Listing

Appendix B
Auction Listing Quality Questions

Question Source
The information on the auction listing is pretty much what I need to carry out Barnes and Vidgen (2001a, 2001b)*
my tasks Loiacono et al. (2002)
Lin and Lu (2000)*
Liu and Arnett (2000)*
Webb and Webb (2004)*
Zhang and von Dran (2001)*
The content of the auction listing is accurate Aladwani and Palvia (2002)
Barnes and Vidgen (2001a, 2001b)
Lin and Lu (2000)*
Liu and Arnett (2000)
Muylle et al. (2004)
Webb and Webb (2004)
Zhang and von Dran (2001)
The information in the auction listing is not presented clearly Aladwani and Palvia (2002)*
Muylle et al. (2004)*

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Gregg & Walczak/Online Auction Success

Question Source
The information in this auction listing is sufficiently detailed. Aladwani and Palvia (2002)
Barnes and Vidgen (2001a, 2001b)*
Muylle et al. (2004)
Palmer (2002)
Webb and Webb (2004)
Zhang and von Dran (2001)
I feel safe in my transactions with this auction seller Barnes and Vidgen (2001a, 2001b)*
Loiacono et al. (2002)
Webb and Webb (2004)
The auction listing design is innovative Loiacono et al. (2002)
In the auction listing, one can find details about products and/or services Aladwani and Palvia (2002)
Barnes and Vidgen (2001a, 2001b)*
Liu and Arnett (2000)
Ranganathan and Ganapathy (2002)*
The information in this auction listing is not precise. Muylle et al. (2004)
The auction listing information is easy to understand. Barnes and Vidgen (2001a, 2001b)
Hassan and Li (2005)*
Loiacono et al. (2002)*
Muylle et al. (2004)
Webb and Webb (2004)*
The information in this auction listing is to the point. Aladwani and Palvia (2002)*
Barnes and Vidgen (2001a, 2001b)*
Muylle et al. (2004)
Webb and Webb (2004)*
Zhang and von Dran (2001)*
In the auction listing, one can find information related to customer service Aladwani and Palvia (2002)
In the auction listing, one can find contact information Aladwani and Palvia (2002)
(e.g. e-mail addresses, phone numbers, etc.) Ranganathan and Ganapathy (2002)*
Webb and Webb (2004)
I can rely on the information in this auction listing. Barnes and Vidgen (2001a, 2001b)*
Lin and Lu (2000)*
Muylle et al. (2004)
Webb and Webb (2004)*
The auction listing displays visually pleasing design Barnes and Vidgen (2001a, 2001b)*
Loiacono et al. (2002)
Webb and Webb (2004)
Zhang and von Dran (2001)*
The information in this auction listing does not help me at all. Aladwani and Palvia (2002)*
Lin and Lu (2000)*
Muylle et al. (2004)
Webb and Webb (2004)*
I am not sure I trust this auction seller deliver the auction product Barnes and Vidgen (2001a, 2001b)
Webb and Webb (2004)*
The information within the auction listing is easy to read Loiacono et al. (2002)*
The layout of the auction listing is annoying Muylle et al. (2004)
Webb and Webb (2004)*
The content of the auction listing is not complete Aladwani and Palvia (2002)*
Lin and Lu (2000)*
Muylle et al. (2004)*
Webb and Webb (2004)*
Zhang and von Dran (2001)*

668 MIS Quarterly Vol. 32 No. 3/September 2008

 Gregg & Walczak/Online Auction Success

Question Source
The auction listing looks organized Aladwani and Palvia (2002)
Webb and Webb (2004)
Zhang and von Dran (2001)*
The auction listing's use of fonts and colors is pleasing Aladwani and Palvia (2002)*
Loiacono et al. (2002)*
Zhang and von Dran (2001)*
Which auction would you be more likely to bid on? (New Item)
(1 prefers positive e-image listing 5 prefers negative e-image listing)
*The question addressed the same issues as the question found in this source but was adapted to either better fit the online auction domain or
to align it with question(s) from another source.

Appendix C
Web Quality Validation Survey

Table C1. Demographic Statistics

Percentage
Variable Range (n = 42)
Gender M 57%
F 43%
Age < 22 26%
23 – 40 62%
41 – 64 12%
65 and older 0%
Education High School 0%
Some College 60%
Bachelors 33%
Graduate 7%

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Gregg & Walczak/Online Auction Success

Table C2. Key Descriptive Statistics for the Web Quality Validation Survey
Which auction would you be more likely to bid on?
1.31
(1 prefers high quality listing 5 prefers low quality listing)
High Low Sig.
Quality Quality t 2 tail
_
The information on the auction listing is pretty much what I need to carry out my 1.60 3.62 8.358 .000
tasks.
_
The content of the auction listing is accurate. 1.79 3.14 7.837 .000
The information in the auction listing is not presented clearly.* 3.67 2.55 3.737 .001
_
The information in this auction listing is sufficiently detailed. 1.83 4.05 9.962 .000
_
I feel safe in my transactions with this auction seller. 2.10 3.86 7.556 .000
_
The auction listing design is innovative. 2.40 4.07 8.076 .000
_
In the auction listing, one can find details about products and/or services. 1.93 3.79 8.633 .000
The information in this auction listing is not precise.* 3.74 2.62 3.976 .000
_
The auction listing information is easy to understand. 1.83 3.29 6.987 .000
_
The information in this auction listing is to the point. 1.86 3.19 6.292 .000
_
In the auction listing, one can find information related to customer service. 1.93 3.50 6.940 .000
_
In the auction listing, one can find contact information (e.g., e-mail addresses, 2.05 3.33 5.268 .053
phone numbers, etc.).
_
I can rely on the information in this auction listing. 2.26 3.62 6.233 .000
_
The auction listing displays visually pleasing design. 1.88 3.81 9.254 .000
The information in this auction listing does not help me at all.* 3.93 2.95 3.880 .000
I am not sure I trust this auction seller deliver the auction product.* 3.50 2.90 1.990 .000
_
The information within the auction listing is easy to read. 1.81 3.12 6.450 .000
The layout of the auction listing is annoying.* 3.71 2.60 4.799 .000
The content of the auction listing is not complete.* 3.43 2.19 4.737 .000
_
The auction listing looks organized. 1.81 3.64 8.623 .000
_
The auction listing's use of fonts and colors is pleasing. 2.02 3.33 7.199 .000
*Reverse coded items

670 MIS Quarterly Vol. 32 No. 3/September 2008

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