E-Auctions

E-Auctions

•  An auction is a market mechanism by which sellers place items for buyers to make bids on or buyers place RFQs for specific items and sellers place bids to win the jobs.

•  Auctions are characterized by the competitive and dynamic nature by which a final price is reached.

•  The internet provides an infrastructure for executing auctions at  lower administrative costs and with many more participating sellers and buyers.

•  Many major manufacturers and e-tailers are using auctions to sell products and services (Dell, Amazon.com) or to buy products and services (GE, GM, Boeing).

Benefits of e-Auctions

Benefits to sellers:

Increased revenues:

  Sellers can reach the most interested buyers in the most efficient way possible and sell more at a price equal to buyer valuation of the product. This eliminates the risk of pricing items too high or too low.

Optimal price setting:

  Sellers can make use of the information about price sensitivity collected in auctions to set prices in fixed price markets.

Removal of expensive intermediaries:

  sellers can gain more customer dollars by offering items directly rather than going through an expensive intermediary or by using an expensive physical auction.

Better customer relationships

  Buyers and sellers have more chances and time to interact with each other that creates a sense of community and loyalty.

  By making use of info. Gathered on customer interests, sellers can improve the overall e-commerce experiences of buyers and can deliver more personalized content.

Liquidation

  Sellers can liquidate large quantities of obsolete or surplus items very quickly (liquidation.com)

Lower transaction costs

  Compared with manual auctions and liquidations, e-auctions offer lower transaction costs.

  Cost of selling via e-auctions can be much lower than cost of selling via e-tailing

Benefits to buyers:

•Buyers can trade from anywhere.

•Opportunities to find unique items and collectibles like stamps, coins, barbie dolls, Pez dispensers etc.

•Instead of buying at a fixed price, buyers can use the bidding mechanism to reduce prices.

•e-auction buyers can remain anonymous with help of a third party.

•Participating in e-auctions can be entertaining and exciting. Competitive environment as well as the interaction between buyers and sellers may create goodwill and positive feelings.

Benefits to e-auctioneers:

  Higher repeat purchases

  Comparative repeat purchase rates across some of the top e-commerce sites.

  Auction sites like eBay and uBid tend to garner higher repeat purchase rates than the top e commerce sites like amazon.com

 Stickier web site

    Auction sites are frequently stickier than fixed priced sites. More advertising revenue can be generated because of more impression and longer viewing times.

   

Limitations of e-auctions

Possibility of fraud

  Auction items are in many cases unique, used or antique. Because buyers cannot see the item, they may get a defective product.

Limited participation

  Some auctions are by invitation only; others are open only to dealers.

Security

  Some of the C2C auctions conducted on internet are not secure and some potential participants are scared away by the lack of security

Equipment for buyers

  Buyers need a PC to engage in electronic auctions and they also need to pay for internet access.

  These requirements have somewhat limited the number of potential auction participants.

Order fulfilment cost 

  Buying at an auction site means that the buyer will pay shipment and handling cost plus any extra insurance cost.

Phases of the electronic auction process

Searching and comparing 

•Many web sites offer links to hundreds of auction sites or provide search tools to locate specific sites.

•The searching utility not only helps sellers find suitable locations to list their items but it also enables buyers to browse available auction sites with comparison efficiently.

•Buyers can use search engines to look for a single term, multiple terms or keywords.

•To conduct an advanced search, buyers can fill in a search form to specify search titles, item descriptions, sellers’ ID, auction item numbers, price ranges, locations, closing dates, completed auctions etc.

Getting started at an auction

•To participate in a third party managed auction site, both the buyers and sellers need to register at the selected site.

•Sellers can list, feature, schedule and price their items on the site.

•Buyers can check sellers’ profiles and other details such as the minimum bid amount, the auction policy and the payment method allowed and then places their bids.

•Advertisement wizard (illumix.com) helps users create attractive auction postings. With a simple to use, fill in the blank interface, users can create great looking advertisements for e-auctions.

•Auction Assistant (tucows.com) and Ad Studio (adstudio.net) can be combined to create auction listings. This enables users to manipulate fonts, backgrounds and themes on their listings.

Bidding

•In the bidding phase buyers can submit bids themselves or can make use of software tools that place bids on their behalf.

•They also can use software tools to view the bidding status and to place bids across different sites in real time.

Bid watching and multiple bids

•Buyers can visit their personalized page at an e-auction web site at any time and keep track of the status of active auctions.

•Buyers can review bids and auctions they are currently winning or losing or have recently won.

•Tools provided by Bid Monitor (bruceclay.com) enables bidders to view their bids across different auction sites in an organized way.

Post auction follow up

•Post auction activities take place once an auction is completed.

•These activities include e-mail notifications and arrangements for payment and shipping.

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•Sellers and winning bidders can arrange payment to be made by paypal.com, cash on delivery, credit card, electronic transfer or through an escrow service.

•To complete the auction process the purchased goods must be shipped from seller to the buyer.

•Most e-auction sites provide a feedback and rating feature that enables auction community members to monitor each other. This feature enables users to rank sellers or bidders and to add short comments about sellers, bidders and transactions.

•An invoicing tool can email and print one or all invoices, search and arrange invoices in a number of ways, edit invoices and delete incorrect invoices.