Private auctions should be used when an item is highly collectible or expensive (to prevent another sellers from poaching a bidder) and to hide bidders identities on items that could be embarrassing if anyone viewed their recent bids list.
Example: I am selling a power drill. I noticed there was another seller selling the same exact power drill on eBay that has more bids than mine. I could look at the bidders on that other listing. I could click on the link: "Contact Member" to send that person an email and ask them to look at my listing. You could tell them you are selling the same power drill at a cheaper price than what they were willing to pay. You could generate more sales by doing this.
This is a way that sellers could steal bidders on other auctions and have them start bidding on their own auctions.
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