The Positives and Negatives of Online Auctions

Internet auctions have become increasingly popular over the years for a number of reasons, from their broad geographical reach to their absence of time limits. If you are contemplating moving into this area of selling there are a wide variety of attractive benefits to consider, but also some negative aspects to take account of. Here is an outline of some of both the pros and cons:

Cost-effective

Auctions can be one of the most cost-effective ways of selling goods online. There’s a plethora of cost saving measures sellers and auctioneers can take. It is considerably cheaper to organise an online auction than an offline auction event – with an offline auction money needs to be spent on a venue, a professional auctioneer, item storage and various other necessities. There are comparatively few expenses to worry about online… Auctions can also be an excellent way of liquidating old or excess stock. Selling these items by auction tends to bring in significantly higher profit margins than selling them off at a fixed discounted rate. Marketing is another area in which Internet auctions can save on costs. Marketing materials in the offline world can be costly and time-consuming to produce and distribute. Online marketing is relatively cheap, and has numerous other advantages.

High profits

Online auctions are open 24 hours a day, 7 days a week. They can go on for weeks (or even months). This is in contrast to physical auctions, which typically last for no longer than a few hours. This lack of time constraints is a great asset. It means that bidding can carry on for longer and thus lots are likely to sell at a higher price. Bidders find the competitive environment of auctions exciting and exhilarating. This is true of Internet auctions just as it is of auctions in general. This atmosphere can encourage participants to bid for items at significantly higher prices than they would in other situations. It is not surprising that online auctions have often been compared to gambling. As in gambling, participants can become caught up in the excitement of the event and become increasingly reckless with their money. This can lead to prices being driven well above and beyond market value.

Wide reach

Whereas in the offline world auction attendance is limited to those who can manage to physically be present at the event, auctions on the Internet can potentially be accessed by a vast and diverse audience of people from every corner of the globe. Items can be sold to people sellers would never have had access to previously. The larger the number of participants in an auction, the higher the prices that items are likely to sell for. There can also be a larger number of products up for auction. The increased reach of online auctions can allow sellers and auctioneers to create new specialist markets within their sector. Online auctions provide an astonishing degree of access to unusual or niche items that rarely turn up for sale in normal circumstances. For example, in the offline world machinery tools may become available for sale only occasionally and go for a high price when the do come up for sale. There is a wide geographic market for these items online. If marketing is targeted effectively, you can make lucrative sales.

Efficient marketing

Trading online offers the opportunity to market products in an exceptionally efficient and effective way. Data from your website can be used to identify customers’ and visitors’ buying and viewing habits. This means you can make highly informed decisions based on your customers’ interests and tendencies, and target your marketing activities more accurately. Social networking and blogging are very useful tools for anyone with an online business. Social networking can provide a steady stream of contacts and sales leads, as well as allowing you to publicise your auction site in a general way. If you frequently take part in online discussions relevant to the goods you sell you can offer your advice and expertise in the area and encourage people to put their confidence in you as an auctioneer or business partner. Writing a blog can also provide excellent publicity and customer interaction, as well as another route to your site for search engines.

Downsides

However, Internet auctions can also have their downsides…

• All websites are vulnerable to technical glitches. Technical glitches could cost you significant amounts of money, and customers who encounter a glitch when using your site may be permanently put off from buying from you.

• Criminal activities are something else to which e-commerce websites can be susceptible. If customers pay for items through your own site it is important that you scan the server for any potential security risks and comply with PCI DSS requirements.

• It shouldn’t be forgotten that there is still a significant number of people (particularly older people) who are not adept at, or not enthusiastic about, using the Internet to buy goods. Basing all commercial activity online may cause companies to lose these customers.

• Online auctions tend to lack the bustling, highly-charged, highly competitive atmosphere of auctions in the real world. This could lead to less competitive bidding and thus lower prices. Online auctions tend to see a dramatic surge in bidding activity towards the end of the auction, rather than sustained competitive bidding throughout the auction.

• Some bidders engage in a practice known as “sniping” – not placing any bids until the very last moment of an auction (when it is impossible for other participants to place competing bids) so as to avoid a bidding war that will drive the price higher. Naturally, this is not very beneficial for sellers and can result in lots selling for well below market value when in a physical auction they would have sold for a higher price.

Overall, the benefits of online auctions tend to outweigh the risks and downsides. However, it is important to research and consider all aspects of online auctioning before making the decision to move into this area of commerce.

What Are the Advantages of Hiring an Online Auction Service Provider?

Online auction service providers are doing wonders to non-profit organizations and cause marketers. Their solutions are internet based. Hence, they are free to use and do not require any set-up fee or monthly subscription charge. Online auction service providers help to arouse maximum interest on your items for auction. Any auction-related news can reach out to the global audience, easily, 24×7. The online auction service providers also enable instant promotion of your items on Facebook, Twitter, and such other popular social networking sites.

Some key advantages of hiring an online auction service provider include the following:

Creation of Multiple Auction Sites

They help you set up as many auction sites as you want. You can easily launch an auction with set prices. Non-profits can also upload different banners and imagery on their site using a web-based auction platform.

Customized Solutions

The web-based auction service provider offers customized solutions to promote a particular auction to supporters, while using a dedicated domain name and preserving your brand identity.

Easy Accessibility

The online auction service providers offer a site toolbar that is accessible from any page on the site. It contains the name, logo, and information about the organization. It also provides a link to an existing organizational website.

Seamless Integration into Web or Social Media Platforms

Online auction platforms also enable seamless embedding of auction interfaces into third-party websites and blogs. In this way, they maximize your site’s exposure by simultaneously importing information on social media platforms, such as Facebook.

Secure Payment Management Solution

The system provides diverse payment options to the buyers of auction items. You can pay using your credit cards, PayPal, and so on. The PCI-compliant payment management solution offers multiple gateways to provide you the highest security.

Easy Accounting Service

The auction service providers feature an integrated accounting solution to process funds in multiple currencies. They include a fully integrated mechanism for managing auctions, both live and silent.

High Visibility

Your site is expected to get maximum exposure once you start using any of the online auction platforms. Potential bidders and buyers will get to view your auction items 24×7. Besides, the platform also helps the auctioneers connect with the bidders online.

Option of Uploading Videos

The Cloud-based auction platform features pre-recorded promotional video presentation capabilities. You can upload videos to promote a charitable cause to individuals and companies.

Thus, the online auction service provider brings in a user-friendly platform to connect and interact with the bidders. They enable the clients to raise funds through the auction of items and extend their reach to supporters outside their immediate audience.

Online Auctions

Online auctions have become an increasingly accessible way of shopping via the internet. They offer a huge variety of products which are available at consumers’ fingertips, and in the comfort of their own homes. Sellers can sell unwanted items that might otherwise be thrown away.

This type of consumer buying continues to evolve, and is extremely popular and successful in today’s competitive marketplace.

There are two main attractions to online auctions. Firstly, the consumer is often able to secure an item at a lower price than it would be made available for in high street chains. Secondly, online auction sites offer an exciting and stimulating way of shopping. ‘Bidders’ enjoy the competition for products; a ‘win’ can be exhilarating, as well as being conveniently carried out without having to drive to an external location. In today’s society, competitive online shopping is becoming ever popular.

The most successful internet auctions are those that are easily accessible, are open to as many bidders as possible, and are straightforward to follow. An online auction is often active for a number of hours, during which bidders ‘bid’ for the product they want. They are usually allowed to withdraw from the proceedings at any time if they desire. Bidders who are more experienced can place bids at several sites at once, and will use software that tracks their status at each online auction.

There are basically two main types of auction process: Forward and Reverse.

Forward Auctions

In forward auctions, bidders who offer the highest bid win the item. The seller will put up the items available to buy and bidders will begin competing for these, thus driving the price up. Sellers might fix a reserve price so that sales do not fall below this. These types of online auctions are well known for selling and buying collectibles but also may sell business to business.

Auction sites have their own rules, such as whether sellers need a certain business accreditation to take part and whether to set a registration fee before use. Another consideration will be how payment is made; either between the parties involved or through the site itself. Seller profiles are established and rewarded by the more they sell and the more reliable they prove themselves in terms of delivery and quality.

Reverse auctions (Dutch Auctions)

In this type of auction, bidders who offer the lowest bid wins the item (the ‘item’ in reverse auctions is usually a contract for business). The event itself will last for a matter of just a few hours. Reverse auctions are important for supply chains (particularly electronic) and are viewed as a money saving exercise. These reverse auctions are becoming an increasingly popular way to do business through the internet.

Auction Sites

There are numerous auction sites currently operating online.

Many of these sites are not geared towards a particular specialised area; they can be visited and used to buy and sell almost any general item imaginable. Products are stored within categories, alphabetically, or consumers have the option of using the search tool to locate an exact match. Once the product is found, information, as well as numbers in stock, will be displayed.

Some auction sites will conduct the bidding on a buyer’s behalf if instructed to. They may also include a ‘Buy Now’ feature that allows the buyer to opt out of the auction and purchase the product immediately at the displayed price.

Dedicated sites will offer a more specialised service for direct-niche items, for example if buyers are looking for products such as artwork, guns, coins, jewellery or vintage clothing etc, these can be easily located through the internet’s search engines. Again, consumers are able to search through categories or enter keywords to find a niche product quickly, which they are then able to bid on. Many direct-niche sites also offer the option to purchase items without bidding.

Penny Auctions

Also known as ‘bidding fee’ auctions, these sites offer an exciting way of buying and selling online, providing the consumer with a retail incentive as well as entertainment value. Penny auctions enable consumers to often get products that are very popular at low prices.

Bidders pay a non-refundable fee and receive a pack of bids before the auction begins, at a set price (a fixed step to ensure fairness). They then place their individual bids and hope to be the player with the last wager before time runs out. With each bid placed on an auction, the timer increases. When the clock stops, the last person to place their bid wins the product and pays the final price for it, which is often very low.

Many consumers enjoy penny auctions because of the competition involved in the bidding process, as well as the sealed end product, approved by a company.

Products that can be bid on in these auctions range from laptops, phones and home appliances to gift vouchers and more. Savings of 70%, and sometimes more, can be made on items.

The success of the penny auction lies within its clear competitive shopping element, and the time it takes to place a bid. Bidders may send short numbers by text message to place their bid (effectively reducing the time it takes) or they may visit the penny auction site and place their bid this way. Many of the sites offer automatic bidding systems to save further time.

By visiting different sites and watching auctions in action, as well as reading reviews on specific sites, consumers will gain a good understanding of which penny auctions are the best to take part in.

Pay-Per-Bid Auctions

These offer bidders the chance of paying for an individual bid before the auction commences, then to add additional bids if they wish, to increase their chance of winning the product. A display will let bidders know their progress within the auction and further bids can be entered. With each bid placed, the value of the product increases as well as the countdown.