In the traditional brick-and-mortar world, a customer walks into your store, selects an item from a shelf, and brings it to the checkout counter. He may ask you a question about the item, and to help close the sale, you may tell him that if the item doesn't fix his problem, he can bring it back for a refund, as long as it hasn't been damaged. During the transaction, you and he may also have a brief conversation about the weather or a recent news event or discover that you both attended the same high school.

Levels of trust can be created quickly when buyer and seller are face-to-face in a well-kept store. Afterward, the buyer may tell a friend: “They had exactly what I needed at the XYZ Store. It was on sale for ten percent off, and they were very helpful. I'm going back next Saturday to look at their power tools.” Your store has just gotten some positive feedback, but the only way you may find out is if the customer does return to shop again or if his friend drops in and says: “I hear you're having a ten-percent-off sale.”

Positive Feedback in the Online World

Transactions generally are much more anonymous in the online world. You go to a Web site, click on an item to read its description, click on another a link to buy it, then key in your credit card information and shipping address, and finally click on a sales confirmation link.

You may be buying from someone on the other side of the planet or on the next block in your neighborhood. In any case, the digital store you are visiting is simply a collection of images, text, and data-entry boxes, all floating in cyberspace. You can't walk through the front door and touch the merchandise. You can't watch the merchant's face and body language and how she handles other customers and get any sense of whether she is trustworthy or not. You simply must trust that the store is “there.” Unfortunately, cyber-thieves sometimes have set up virtual stores that do nothing but steal money and credit card information.

At online auction sites, positive feedback postings help buyers trust that they can get an honest deal from a particular seller. They can send e-mail to the seller and try to get a better feel for how he runs his business and treats his bidders. But the clearest measure of an online auction seller's reputation is what his previous customers have said about him.

Meanwhile, astute sellers know that having a good feedback score can often help them get higher prices for their auction merchandise. Buyers feel more confident about bidding when the seller has a strong positive percentage and many dozens of winning bidders have left glowing reviews.

Buyer feedback ratings are also important to sellers. Good, positive scores give them confidence that their winning bidders will be honest customers who meet the sales terms, pay on time, and don't make outrageous demands or false claims.

The Power of Positive Feedback

Your reputation as an auction seller or buyer absolutely will depend on how others rate their dealings with you. Two negatives never make a positive in the online auction world. Each negative simply lowers your posted score as a seller or buyer. Each negative also makes others wary of doing any transactions with you. Experienced buyers typically do not place a bid until they have checked a seller's feedback score and carefully read the comments previous customers have posted.

Cautious sellers, meanwhile, are equally mindful of bidders' feedback scores. On some sites, such as Yahoo! Auctions, a seller can set up an auction to reject bids automatically from any buyer whose feedback score is below a predetermined level.

For a buyer, building or rebuilding a high feedback percentage is quick and easy. Just make a few winning bids on small items where the listings have drawn almost no interest and are about to expire. The grateful sellers will give you good feedback. Have the items shipped the cheapest way possible to hold down costs. Of course, it is best to do this with merchandise you actually want or can put to use, but you could put the items up for auction. You could try to turn a profit from them by creating better photos or more interesting descriptions than the previous seller used.

The Perils of Retaliation

One of the key flaws of feedback systems is that they are usually wide open to retaliation. Suppose you post negative comments and a negative rating for a seller who has taken two months to ship your purchase and who sent it in a box with inadequate padding. In return, the seller may post negative feedback for you, claiming that you didn't provide correct shipping information and didn't answer e-mail or were rude and refused to use his preferred payment method. When other sellers and buyers become aware of this exchange, they may not be able to judge who is right and who is wrong. So, they try to avoid both of you.

Sometimes, for a buyer, it is safer to walk away from a bad encounter and post no feedback at all, particularly if the troubled transaction was small. For a seller, meanwhile, it is often better to head off negative feedback by reaching some kind of agreement with the buyer. Will a partial refund satisfy her? Or does she want a full refund? Offer to buy back the item and pay for the return postage as well, particularly if small amounts of money are involved.