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Why do people undercut?

Author
Doctorkaba
Brutor Tribe
Minmatar Republic
#21 - 2013-12-13 16:03:57 UTC
Eh I chalk it up mainly to people being buttes about the whole thing. I use to sell t2 drones in dodi and there was this one guy who would undercut me and reduce the profits by sooo much. Since his order was big enough and others were not very patient they .01 isked him and he would undercut by a large margin etc etc....

I sold some drones to him and found his name and sent him a mail and he said he was tired of .01 isk wars and was satisfied with lower profit at the cost of selling stuff. Now I dont think he actually sold much this way but i could be wrong.

A lot of the point brought up in this thread are valid, some i didnt even think about xD, can't ever know why a person does what he does, even if you ask. I like to compare it to regular pvp. It is a lot like bringing more numbers or off grid boosters or *insert non e-honor ship/tactic* to a "fair" fight. Did you have to? Maybe not, but its not about having a close fight for them, all they want is a killmail and a nice green line on the killboard. Its how duders play, can't do too much against that beside have an investment in a lot of other items and hope those duders dont multiply...

Want some pvp help? Like to fly small and fast frigates? Then join the in game channel Tenori_Tigers!

Sabriz Adoudel
Move along there is nothing here
#22 - 2013-12-14 04:13:11 UTC
Stealing a sale from a competitor is a small victory in market PVP. Like blowing up someone's Celestis.

Making your competitor fume and then drop out of the market entirely is a major victory, on par with stealing their Erebus.

I support the New Order and CODE. alliance. www.minerbumping.com

TheSmokingHertog
Julia's Interstellar Trade Emperium
#23 - 2013-12-14 04:59:45 UTC
Adunh Slavy wrote:


People are motivated by incentive. The motivation for cutting price is obvious, to make the sale and we see that RL all the time. The thing you don't see RL is the big crazy price changes we see in Eve.



Did you ever follow dayprices of palm-oil in Europe? They have such changes.

"Dogma is kind of like quantum physics, observing the dogma state will change it." ~ CCP Prism X

"Schrödinger's Missile. I dig it." ~ Makari Aeron

-= "Brain in a Box on Singularity" - April 2015 =-

Adunh Slavy
#24 - 2013-12-14 13:19:15 UTC
TheSmokingHertog wrote:
Adunh Slavy wrote:


People are motivated by incentive. The motivation for cutting price is obvious, to make the sale and we see that RL all the time. The thing you don't see RL is the big crazy price changes we see in Eve.



Did you ever follow dayprices of palm-oil in Europe? They have such changes.



Nope, never have. I suspect it is a rather small market?

Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.  - William Pitt

TheSmokingHertog
Julia's Interstellar Trade Emperium
#25 - 2013-12-14 16:23:07 UTC
Adunh Slavy wrote:
TheSmokingHertog wrote:
Adunh Slavy wrote:


People are motivated by incentive. The motivation for cutting price is obvious, to make the sale and we see that RL all the time. The thing you don't see RL is the big crazy price changes we see in Eve.



Did you ever follow dayprices of palm-oil in Europe? They have such changes.



Nope, never have. I suspect it is a rather small market?


Its a very depended market.

Table 1. Palm oil: production, export, import, and consumption (for food and non-food purposes) in 2011/12. All figures are million tonnes.

Production: 50.7 (Indonesia 25.9, Malaysia 18.2, Thailand 1.5, Columbia 0.9, Nigeria 0.8, other 3.4)
Exports: 39.0 (Indonesia 18.2, Malaysia 16.6, other 4.2)
Imports: 38.1 (India 7.5, China 5.8, EU-27 5.2, Pakistan 2.1, Bangladesh 1.0, USA 1.0, other 15.5)
Consumption: 48.9 (India 7.4, Indonesia 7.1, China 5.8, EU-27 5.1, Malaysia 3.0, Pakistan 2.1, Nigeria 1.3, Thailand 1.1, USA 1.0, Bangladesh 1.0, other 14.0)

When exports from Indonesia or other exporters have problems, you see it in the price immediately. Think about storms, piracy in the horn of Africa, or just a delayed oil tanker, tax changes, etc.

"Dogma is kind of like quantum physics, observing the dogma state will change it." ~ CCP Prism X

"Schrödinger's Missile. I dig it." ~ Makari Aeron

-= "Brain in a Box on Singularity" - April 2015 =-

Meilandra Vanderganken
Aliastra
Gallente Federation
#26 - 2013-12-14 18:06:24 UTC
They could do it for lulz, for the fast sell, for trying to force ppl out of the market or just out of plain stupidity. Doesn't really matter, what matters is how you deal with it.
Diomedes Calypso
Aetolian Armada
#27 - 2013-12-14 19:47:27 UTC
In the bitchin about it aspect of the thread (this thread comes up so often I think that it is a cathartic release of angst venting of frustration)

As I value my time more than the extra ISK, I like to put items up for sale in stations in a region where no other traders are operating.

I will purposely price my items higher than the other traders to show that I am not agressively competing with them.

It irritates me when they still come into "my" station, and put product for sale.

BUT, even though I am irritated, I do understand their motivation IF they are willing to spend lots of time trading.

They hope to drive me out of the region by wasting my time. They want to harvest all of the volume in the region.

-

However.. "them be fighting words" for me if I am playing the game actively .. and even if I'm just updating skill q's it is a matter of pride that I agressively check those prices.

If they get too cheeky about it, I'll bring in extra inventory and distribute it in many stations.

-

"Honor among thieves" - I think it is good etiquette to stay out of others stations in far flung regions. It is sort of prisoners dilemma: if traders decide to cooperate there is more profit all around.

Because the profits and turn-over are fairly slim in far off regions.. especially when you are drastically over pricing things... the practice is only worth the time when there is very little time investment (checking prices once a month ideally)


Most common Result - rather than me being driven from the market by their agressive attempts to take over "my" station, they end up losing interest in the region after a month and leave it back with me...

... it is a fruitless waste of time for them and hurts my profits and wastes my time too

AttentionBut, this is a PvP game an to be honest, it makes it more fun sparring with another human than making more ISK

.

Mr Pragmatic
#28 - 2013-12-14 20:29:36 UTC
I undercut b.c I can. Plus I want the short sale. I'm not marketing. I'm just selling mission loot. The buy orders are normally so low, it's stupid not to undercut and get the sale.

Super cali hella yolo swaga dopeness.  -Yoloswaggins, in the fellowship of the bling.

Sabriz Adoudel
Move along there is nothing here
#29 - 2013-12-16 01:20:35 UTC
Market tears, best tears

I support the New Order and CODE. alliance. www.minerbumping.com

Zosius
The Nordic Associates
Insidious.
#30 - 2013-12-16 14:24:23 UTC
I do this all the time. I check orders now once a week instead of daily updating. I cut it so much, put a lot of sells and buys at very small margin. Having big ISK reserves I can allow myself to keep large numbers of stock not to over supply market and use it as a short term investments. I often enough trade to loss particular items, because i don't care as long as i have goods moving in and out. Sooner or later market adjusts and you just have to be alert not to invest too much in big swings. Granted, market swings are the biggest threat to small margin trading.

Sadly I have never received any hate mail :(.
Careby
#31 - 2013-12-16 15:01:24 UTC  |  Edited by: Careby
Dixon Cutter wrote:
What is this frequent phenomenon, where someone would start rapidly undercutting the bids by large increments to the degree where it makes trading this item temporarily unprofitable?

The really interesting phenomenon is not that someone will undercut existing orders, but that the traders with the existing orders will follow the undercutter all the way to unprofitability.

When I want to buy or sell something quickly, I usually significantly outbid (or underbid) the best existing order. Splitting the bid/ask spread, instead of buying the ask or selling to the bid. Sometimes I get a quick fill and go on my merry way. But more often than not, I immediately get .01'ed. So I significantly outbid (or underbid) again. Often I get .01'ed again. And repeat. Sometimes I keep doing it just to see how silly the traders are. I have used single quantity buy orders to move multiple 1000's quantity buy orders all the way up to the lowest sell. Sometimes I will buy the lowest several sell orders, then run the buy orders up past where I bought, and then dump to them. Just for fun - and just to prove how ridiculous trader behavior can be (mine and yours).

When it's an item I really do want to trade in, I'll have positions buying AND selling, and I will have determined where I want the buy and sell price to be, and what I want the margin to be, and I will DEFEND my positions. I won't follow some single quantity order all over the map. If somebody splits the bid and ask with an order, I don't change my orders, I buy or sell their order, removing it from "my" market. The only way that can hurt me is if my initial numbers were wrong, and in that case I need to correct them.
Meilandra Vanderganken
Aliastra
Gallente Federation
#32 - 2013-12-16 16:25:10 UTC
Zosius wrote:
I do this all the time. I check orders now once a week instead of daily updating. I cut it so much, put a lot of sells and buys at very small margin. Having big ISK reserves I can allow myself to keep large numbers of stock not to over supply market and use it as a short term investments. I often enough trade to loss particular items, because i don't care as long as i have goods moving in and out. Sooner or later market adjusts and you just have to be alert not to invest too much in big swings. Granted, market swings are the biggest threat to small margin trading.

Sadly I have never received any hate mail :(.

Traders getting upset over their margin getting squeezed are doing it wrong :P .

With a wide portfolio of products I simply don't care if some of them are getting crushed, if I suspect someone is trying to muscle me and others out of the market I just respond with the 0.1 isking.

The only exception to that would be high volume volatile items. I don't like having to babysit orders for hours, so I mostly stay out of those, unless I see a historically low buy price combined with big margin.

Jenjuan
Amargosa Observatory
#33 - 2013-12-16 16:34:30 UTC
You really didn't show a good example, 1 order does not a market make. Sometimes, when I would want to aquire a BPO, I had time and didn't need it right away, so I'd put up a buy order for a couple hundred million less than whatever the going rate was. Sometimes I would get it and sometimes I wouldn't.

As for the .01 wars, well that's part of the price of selling something that everyone else is trying to sell. For the most part I don't sell in Jita, because I don't want to spend ALL my game time managing my orders. Instead I manufacture VAST quantities of items, (Dozens of Ships, Hundreds of Mid-ranged items, Thousands of Lower end items) and post them for sale at rates anywhere from 25 to 100% higher than Jita. Because of their high prices and out of the way locations, I usually don't have to replace the orders for anywhere from a month to 3 months, but almost all my orders sell out before they expire and I make quite a decent profit margin along the way. The best part is my TIME is freed to do other more interesting things than sit around and babysit orders from others who are trying to undercut me by a penny. Most of the places I sell in don't really have anyone else selling the same items. If I find that there's too much competition at a Station to where I have to start playing the undercut game, I simply more my wares to another station.
Jenjuan
Amargosa Observatory
#34 - 2013-12-16 16:41:50 UTC
TheSmokingHertog wrote:
Adunh Slavy wrote:
TheSmokingHertog wrote:
Adunh Slavy wrote:


People are motivated by incentive. The motivation for cutting price is obvious, to make the sale and we see that RL all the time. The thing you don't see RL is the big crazy price changes we see in Eve.



Did you ever follow dayprices of palm-oil in Europe? They have such changes.



Nope, never have. I suspect it is a rather small market?


Its a very depended market.

Table 1. Palm oil: production, export, import, and consumption (for food and non-food purposes) in 2011/12. All figures are million tonnes.

Production: 50.7 (Indonesia 25.9, Malaysia 18.2, Thailand 1.5, Columbia 0.9, Nigeria 0.8, other 3.4)
Exports: 39.0 (Indonesia 18.2, Malaysia 16.6, other 4.2)
Imports: 38.1 (India 7.5, China 5.8, EU-27 5.2, Pakistan 2.1, Bangladesh 1.0, USA 1.0, other 15.5)
Consumption: 48.9 (India 7.4, Indonesia 7.1, China 5.8, EU-27 5.1, Malaysia 3.0, Pakistan 2.1, Nigeria 1.3, Thailand 1.1, USA 1.0, Bangladesh 1.0, other 14.0)

When exports from Indonesia or other exporters have problems, you see it in the price immediately. Think about storms, piracy in the horn of Africa, or just a delayed oil tanker, tax changes, etc.


Forget Palm Oil, look at Crude Oil. I remember back in the Early 80's when Reagan was trying to destroy the Soviet Empire. He knew that 80% of the Soviet's cash reserves came from oil, so he hatched a plan to demolish the price of oil, thereby demolishing the Soviet Economy.
Step One: He worked with Congress to eliminate over 250 regulations on the Oil Industry, the end result was that even Dupont, which had been absent from the Oil business for nearly 50 years re-entered the Oil Drilling business, along with hundreds of other newcomers.
Step Two: He worked with the Saudi's to DOUBLE Oil production out of the Middle East.

Results: Tankers would come to the U.S. and were unable to unload because there was actually no place to store them! The ensuing oil Glut caused the price of Oil to go from $80.00 a Barrel to around $8.00 a barrel in a SINGLE year!

If the market is flooded with anything, your price WILL fall. Only shortages produce higher prices, which is why I don't sell in Jita.
Lfod Shi
Lfod's Ratting and Salvage
#35 - 2013-12-16 22:56:23 UTC
As long as I get value added I don't care how low I go. Since I gather most resources through time and missiles, not through pretend money investment, that price can go pretty low. Pirate

♪ They'll always be bloodclaws to me ♫

Paranoid Loyd
#36 - 2013-12-16 23:04:25 UTC  |  Edited by: Paranoid Loyd
Lfod Shi wrote:
As long as I get value added I don't care how low I go. Since I gather most resources through time and missiles, not through pretend money investment, that price can go pretty low. Pirate


MIMAF? Apparently your time is not worth much. Ugh

"There is only one authority in this game, and that my friend is violence. The supreme authority upon which all other authority is derived." ISD Max Trix

Fix the Prospect!

Lfod Shi
Lfod's Ratting and Salvage
#37 - 2013-12-17 02:24:34 UTC
Paranoid Loyd wrote:
Lfod Shi wrote:
As long as I get value added I don't care how low I go. Since I gather most resources through time and missiles, not through pretend money investment, that price can go pretty low. Pirate


MIMAF? Apparently your time is not worth much. Ugh


Depends on how that time is spent.

♪ They'll always be bloodclaws to me ♫

Lieutenant Severn
Caldari State Venture Capital
#38 - 2013-12-17 10:37:29 UTC  |  Edited by: Lieutenant Severn
It's actually pretty simple, I'll admit to doing this in many of the markets I work in too. Smart traders will do this for exactly the same reason you are posting here. It annoys the competition and when you undercut like this, only about 10% of the active traders will follow - meaning you get your order filled faster.

All your doing when station trading is charging for your time updating orders - As it is, assuming your one of the 770M orders you are trying to net circa 320M (minus taxes) for one trade but the guy flipping at 931/1090 in your example nets him 159M profit for one trade (minus taxes)

He's willing to facilitate the trade for less than you are. As a result he will see more trade than you and probably makes more money as a result. You sound like the sort of trader who is out to screw the buyer completely, which is probably why your not very good at it.
Boomhaur
#39 - 2013-12-18 04:45:17 UTC
Simple I have crashed prices down low enough in some markets all my competition picked up and left for Jita. This gave me a good week of having almost no competition and than slow competition compared to before for an additional 2weeks after that. So I made very little money at first, lost actually if you looked at isk/h compared to anything else I could have done. But made it up with the isk I made by being one of if not the only active seller for awhile. Pretty much if you bought that product that you bought it from me and I set the prices.

Welcome to Eve. Everyone here is an Evil Sick Sadistic Bastard who is out to get you. Anyone who tells you otherwise is either trying to scam you or use you.

Jenjuan
Amargosa Observatory
#40 - 2013-12-18 12:56:08 UTC  |  Edited by: Jenjuan
Boomhaur wrote:
Simple I have crashed prices down low enough in some markets all my competition picked up and left for Jita. This gave me a good week of having almost no competition and than slow competition compared to before for an additional 2weeks after that. So I made very little money at first, lost actually if you looked at isk/h compared to anything else I could have done. But made it up with the isk I made by being one of if not the only active seller for awhile. Pretty much if you bought that product that you bought it from me and I set the prices.


You've obviously never been in competition with me.

If you consistently sell below cost, I'll buy your entire inventory and resell it elseware, where people aren't so stupid. Just last month, I spent 2 Billion buying out everything some ID10T guy had posted, turned around and took the stuff to another system and after going through less than HALF of the inventory, got all my money back.

I mean, how DUMB is that!

I mean if you're going to sell SIGNIFICANTLY below cost, you might as well just refine back to minerals and sell that!
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