Teaching case. This case is a composite based on typical Nepali businesses. Names are withheld and the figures are illustrative, chosen to make the calculations realistic.

Overview

To handle variable supply and condition, the collective launched timed auctions with starting bids based on grade (A/B/C), battery health, and accessories.

Background

Several small shops in Kathmandu bought used phones and laptops, repaired them, and resold them. Each device was different in condition and battery health, so fixed prices were often wrong: some items sold too cheaply, others sat unsold for weeks. Buyers distrusted second-hand electronics because sellers described condition in vague terms. The shops formed a collective to sell through one weekly online auction.

Key Moves

  • Auction platform with proxy bidding; KYC for bidders; deposit to reduce no‑shows.
  • Standardized grading + photos; warranty options for Grade A.
  • Payments via wallets/cards; pickup or courier with insurance.

Outcomes

  • Faster clearance, better price discovery than fixed‑price listings.
  • Reduced disputes through transparent grading and warranties.

Lessons (Unit 7 lens)

  • Auctions fit uncertain value/supply; success hinges on trustable inspection data.
  • Deposits and KYC reduce platform friction and post‑auction failures.

The Numbers

  • Fixed-price listings: average 21 days to sell; 15% of buyers raised a dispute about condition.
  • Weekly auctions: 80% of lots sold within the week; disputes down to 4% after A/B/C grading and photos.
  • A Rs. 1,000 refundable bidder deposit cut “winner does not pay” cases from 10% to 2%.

Case Questions

  1. Why are auctions suitable for refurbished electronics? Refer to price discovery and uncertain value.
  2. Explain proxy bidding with a simple example.
  3. How did grading, photos, and warranties reduce information asymmetry between sellers and buyers?
  4. What risks of online auctions (for example, shill bidding or non-payment) should the collective control?
  5. Compare the auction model with listing the same devices on a classifieds site.

Chapters covered

Use the unit notes below to review the theory this case applies in practice.