Why Online Auctions
Auctions have been taking place since around the early fifth century – this practice has continued into modern times and, in recent years, has been adapted to the internet to become what is known as online auctioning. This concept has taken the online world by storm – by 2006 online auctions are expected to generate an estimated $48. ... Online auctioning is used in a variety of business relationships, more traditionally in the consumer to consumer (C2C) and business to consumer (B2C) markets. ... In the context of online auctions, the word “seller” does not necessarily refer to an individual – these terms encompass a wide range of participants ranging from large multi-national corporations to SME’s (small-medium enterprises) right through to a single person selling home-made goods from their own residence. ... As with any new and innovative concept, there are pros and cons that need to be considered by both buyers and sellers before participating in online auctions. Although convenient, there is an element of risk involved in participating in such auctions. This essay discusses and evaluates the positive and negative aspects of online auctioning for consumers and businesses alike with a view to answering the question – why online auctions? There are a number of different types of online auctions – the most common of these is the ‘english’ auction as used by sites such as eBay. ... Other forms of auction include Dutch (multiple item sales), sealed bid auctions (similar to the tendering process used commonly in real estate sales) and reverse auctions. Auction giant eBay participates in the ‘demand-based’ or ‘dynamic pricing’ segment of online commerce (Bunnell, 2000) - prices are determined entirely by buyers. According to Elliot (2000), the least common form of auction used online is the private auction. Such auctions are conducted with bidder’s identities remaining anonymous and are generally used when a seller “believes that his potential customers would be more likely to bid if they can do so anonymously” (Elliot, 2000). Auctioning goods online has many advantages over traditional methods such as live auctions and retail sales. ... com have provided a virtual marketplace with millions of people online at any given time. ... Another such prominent feature of the online auction model is the global reach of the internet – instead of having customers shopping at physical stores or gathering at a pre-determined venue and time for a live auction, sellers have the advantage of being able to sell to anybody in the world who has access to an internet connection. ... Online auction sites are offering small businesses a much greater opportunity to make money than ever before. ... 4 million small businesses sold goods online in 2003. ... According to eBay Business general manager Jordan Glazer, online auction sites such as eBay “give small businesses a chance to get volume discounts typically enjoyed by bigger companies” (McKay, 2004). ... For a lot of small businesses, $60,000 a year can be the difference between success and failure – subsequently, benefits of purchasing by online auction can be huge.