Note: John Howe has provided a report of Bob Emry's Rug and Textile Appreciation Morning program at the Textile Museum in Washington, D.C., 01 Nov 2008: Bob Emry on Buying Textiles on Ebay and the Internet More Generally. This report contains a lot of noteworthy observations regarding rug online auctions (and also, plentyful images of many good finds on Ebay).
Since I occasionally sell rugs on Ebay, I'd like to respond to the view that Ebay's online auctions of rugs should be avoided at all cost. It is quite clear (and therefore I state it here explicitly) that I have an interest that people trust that the Ebay auction format—or at least my own auctions—can work well, to both seller's and buyer's satisfaction. This does not mean there are no scams on Ebay; in fact there are many, and it is important that potential bidders learn about them and thereby become more cautious and discerning.
A succinct argument against online auctions is put forward by Edward Koch, owner of the Herat gallery. He relates a rug auction horror story according to which a rug worth perhaps USD 1,000.- (but that was 2004 - at today's exchange rate, that may be closer to USD 2,000.-) was sold for USD 12,110. He then suggests four reasons why online auctions should be avoided:
Let's look at these arguments one by one.
(1) At an auction, any auction, a determined underbidder, known or unknown, will increase what you ultimately pay for an object. This of course will only work if the buyer/bidder does not decide beforehand where to stop bidding. The possibility of shill bidding must be always reckoned with, even in bricks-and-mortar auctions. In some auction formats, it is actually legal for the seller to act as bidder. In case you are unfamiliar with the term: in shill bidding, the dealer conspires to have bids made for an item which are not genuine, in order to drive up the price. Theoretically, the dealer may use another Ebay account to bid for his own wares, but this could raise suspicions when investigative sellers research earlier bid histories and find the same 'unsuccessful' bidder in them. It may also not be sustainable because Ebay may have automatic mechanisms in place to sniff out whether bids on the same item come from the same IP range or from bidders with identical addresses, and trigger an investigation if either is the case. (Whether the folks at Ebay have the time to do this is another issue. Also, don't forget that they earn the more the higher the auction closing price, so incentives for investigation are certainly limited.)
More likely, the dealer has a network of friends / colleagues who may either do him a favour at his informal request (e.g., safely bidding below what they will be told to be the reserve price—safely, because with auctions ending below this reserve price, the bidder is not obliged to go through with the sale, even if he or she receives an offer by the dealer); or do him a favour on their own account and initiative, may be as a tacitly understood gesture, a favour that may be returned another time.
The intention of such bidding can be much more modest than driving a careless bidder to an insanely high price. The rationale can simply be to create more attention for the item listed. I know from my own experience as buyer on Ebay that I will usually look out for items that have received other bids, simply because this implies that any such item is considered desirable by someone else. (I may, for example, sort the section "rugs before 1900" by price, decreasing order, and then scan for those that have received bids at all.)
But there is more to it. Many of the Ebay user aliases in the antique rugs section will look familiar once you have spent a few years regularly scanning the offers. So the fact that aliases of people I know to be knowledgable or even in the rug trade (maybe I already sold them something and therefore know their identity) appear as bidders can increase my confidence that an item is worth bidding for.
It is clear that the mode of operation: bidding where others bid, applies particularly to the novice who is uncertain about the 'good stuff' and has no easy way of knowing at least roughly what a fair price for a particular item might be. I have in the meantime learned to look out for 'good stuff' without bothering whether others are bidding. In any case, the change of rules at Ebay so that bidders' names are now hidden to all but the seller has taken away this sort of intelligence and, of course, made shill bidding much harder to detect. Some Ebay dealers of quality rugs (Michael Philips, aka imokub2) therefore offer to send the full bidders list to the winning bidder (or all bidders? I can no longer find this offer in the only current imokub2 auction) as an assurance that no dodgy schemes were at work. (Whether the winning bidder will have the skills to read this list appropriately and then do some research based on its intelligence is another matter.)
There is, however, a grey area between legitimate interest in the item, and shill bidding. Recently, I bought a nice South-Persian gabbeh from Ebay seller equito, who I happen to know. I bid 144 Euro and firmly expected to be overbid. So did I engage in self-initiated shill bidding? In my opinion, the answer is no. Let me explain, why. I knew that a former colleague of mine likes this type of rug, with a simple design in undyed tans and browns. So I just took a low-risk gamble and bid for it, since I figured that that she would be interested. I just limited the amount I bid to the level which we might label "would- be- happy- to- take- it- at- that- price". In addition, this was a level at which I was pretty sure to be able to sell the rug on to my colleague, with a very modest mark up of, say, 20%. Then, the incredible thing happened: no one else seemed prepared to bid more for this beautiful item, so I won it (and sold it to her as planned—she was very pleased with the deal).
I think it is a strategy applied by some (may be not many) Ebay users to bid regularly, habitually, low amounts on many things in the expectation that they will most likely be overbid. In some cases, they are not, and then they enjoy a good deal. I would not call this shill bidding, although, if this practice was widespread, it would certainly raise Ebay price levels somewhat. It has to be said that many fine rugs are offered and sold at prices that are a very good bargain. That's why dealers scan Ebay to identify the very few good things they can sell in their own context at a substantial mark-up, sometimes after getting them restored in Turkey. Dealers who want to avoid the generally low price level can use reserve price auctions, but this incures a hefty charge and may not lead to a sale if the reserve was too high (or just adequate, as most dealers would say). The reserve charge occurs in any case, so this means either being patient and bleeding each time an item is re-listed, or lowering the reserve. The situation for dealers is pretty bleak; rug prices are depressed, and demand is certainly not strong.
Just to sum up: determined shill bidding engineered by dealers to drive up the price can happen, but an informed buyer/ collector can avoid this trap in several ways:
(2) if you make a mistake on an auction, there is virtually no recourse once the hammer falls. This is more straightforward. Check whether an Ebay seller has a good return policy. Of course this still requires trust that the seller will act as he/she told you and recompense you if you decide to return the item. Carefully reading a seller's feedback profile helps building such trust—or, as the case may be, make you suspicious. Look out also for 'neutral' feedback which is often a proxy for negative, and read even the positive ones (some choose positive feedback for fear of retaliaton, but relate their negative experience in the feedback text). The bad thing with returns is that you usually lose the shipping charge, but that will be the same with bricks-and-mortar galleries that offer to ship out a rug so you can look at it in the context of your home.
(3) to make an informed decision you need to see, touch and carefully evaluate before buying. Of course it helps to handle a rug before buying it; it is usually somewhat different from what you expected after looking at images and reading a description. Sometimes it can be better, more often it disappoints somewhat. While even the best description cannot replace the tactile experience, good photos and a detailed description can give a pretty good idea what you are going for, especially if you have handled similar types before. The mistake I have made most often as a buyer was to assume, after looking at less-than-ideal pictures, that the pile might still be decent, and then receiving a rather worn textile. Always count on the readiness of your unconscious to deceive you into believing that an item is in a better condition than you may be able to ascertain through requests for detailed images, condition questions, etc. I have sometimes simply 'forgotten' to ask about items, not wanting to ruin the illusion that they would be better than they actually turned out to be.
(4) do business with and establish a professional relationship with a knowledgeable and honest dealer who is motivated to serve your collecting interests. In the end, this works out best for both parties. There is no reason why the same thing cannot happen in the online world. Of course it is easier to build up trust (or become wary) in face-to-face communication. It is down to the quality of dealer-bidder interaction whether the seeds of trust take root. If you enquire and then receive no reply, or terse, late, shoddy answers, you may better decide to stay clear of an item.