What’s the point of Orion Blue Book service: determining the value of used and new equipment for wholesale, private party and barter transactions. From Econ 101, the value of such products is only as good as the most recent trade and market-based transaction. So, in fragmented markets with high transaction costs (finding buyers, inventory, uncertain information, quality issues) the volume is low and the information of actual undisputed trades is unavailable unless someone pays to discover it. That’s why a stock market works so well: it has a lot of volume, it has transparency (each share of equal quality), established transaction method which has lowered transaction costs. On the other end of the spectrum are computer equipment, unique valuables (instruments and antiques) and typically cars. It is hard to ascertain the quality of the equipment, hard to find buyers in 1 place, and hard to complete the transaction with good creditworthy parties. So, Orion Blue Book solved this problem by conducting surveys and compiling this hard to find information in a neat format to help car dealers and other pawn shop owners make sure they are paying less than needed on used stuff. Instead of getting actual transactions, this “blue book” stuff was based on estimates and these 3rd party evaluations. There’s clearly a bias here, but maybe I’m generalizing (or not!) This should have been adequate until about 1998 when eBay started growing.
At this point, eBay has the largest volume of private party transactions of new and used stuff . This means, eBay’s databases (I presume oracle, but god forbid mysql) contain unbeliveable wealth of information on these transactions. Just check out this search on Epson 1280 and find me a used $41 printer. If you take into account only valid transactions, like ones where seller claims X, highest bidder pays Y and doesn’t complain about the validity of X, then X’s value is Y. Aggregating these X’s or products by category (new, refurbished, used), age or a few other attributes, and then showing a simple distribution of cleared valid transactions (high, low, mean and median) along with volume, and even % aggregate positive and negative feedbacks in the transactions you have the most real-time eBay Blue Book service available. And here’s the kicker: this should be free online for us or at least available in a nice shiny book format to be sold to old-school insurance agents and claims adjustors.
In 1 simple move (ok, maybe 3-months work for a good web developer and DBA) eBay has displaced the Orion Blue Book crap value measure with something real that shows actual market transactions and the likelihood that your epson printer is worth what you claim it is.
Am I genius or what? Meg, are you there? We need you here, I’m sure you have someone at ebay working hard on this, but include me in as a volunteer on this project (i have heavy quant modeling skills with ability to create and market something like this, just a plug!). The biggest problem: selling to the insurance people and setting a court prescedent that ebay is true market information to be used as a substitute for the national surveys because it is based on sound economics, and since ebay makes money off sellers transactions, it has no other incentive to mess with prices except to increase overall transaction volume. Making this freely available would be another validation of this model.
Again, FedEx Ground insurance and declared value suck. Orion Blue Book sucks because working Epson 1280 can’t be found anywhere for $41 and eBay should close this gap NOW!