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Research Merchants

If buying from an individual or merchant at an auction site or even one of the discount marketplaces, look at the business's feedback rating. This concept was pioneered by eBay, and all the sellers have a feedback rating. The idea has caught on for other markets. In essence, it allows buyers and sellers to make an assessment of one another before they even perform a transaction, based on a record of comments posted by previous customers.

Here's how it works: Following each transaction, the buyer and seller rate each other's performance, positive or negative. These ratings are combined to form an aggregate score or feedback rating. A user's overall rating is then included with each of their listings or any listing in which they participate. This enables buyers and sellers to review each other's reputation and evaluate whether they should do business together. If the seller has more than 1% or 2% negative feedback, the buyer probably shouldn't bid. Likewise, if the buyer has negative comments that indicate he or she is a deadbeat bidder (nonpaying bidder), the seller might consider refusing the bid. Feedback can also be a valuable form of advertising, strengthening a seller's overall business and brand. Best of all, feedback systems enable marketplaces to be self-regulating.


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