E-commerce online auction is one of the most successful types of electronic markets in 2022. They help connect buyers and sellers on a massive scale. The internet has made a lot of things possible, from ordering a mobile device, to sharing a picture on social media with friends and families. One of the things the internet has made possible is an online auction. Online auction isn’t something new, it started a few years back.
However, they are more popular nowadays because of the opportunity to buy and sell rare and valuable goods at a bargain price. Currently, there are several online auction websites dedicated to online auction practices.
In this article, we will talk about everything you need to know about online auctions. So, let’s get right into it.
What is Online Auction?
An online auction is a type of e-commerce business that allows users to sell or bid for products and services via the internet. E-commerce auctions have been a popular form of auctioning for many
years dating back to 1995. As the year went by, online auctions grew more popular allowing sellers
to reach larger audiences, in different locations and geographical areas.
Online auctions are almost the same as the physical traditional auctions. The only difference is that an E-commerce auction takes place online. However, they both involve multiple bidders and sellers buying and selling tangible and intangible products and services. In an online auction, potential buyers place bids on items ranging from artifacts to sculptures and other valuable products. The starting bids are always low but they often increase at steady rates to meet market demand and item popularity.
Benefits of Online Auction
1. Larger audience
Bidding on commodities online can help expand the global reach of a small business,
thereby exposing them to the international markets that would have been impossible to reach via
normal marketing channels. Furthermore, online marketing has always attracted a larger audience
because of its convenience and not being restricted by geography and location. Furthermore, the auctioneer can leverage PPC and social media paid campaigns to get the word out. This way, a lot of people are informed about the auction.
2. Convenience
An online auction is much more convenient than an in-person auction because you don’t have to worry about a location or parking space. You can make offers no matter your location. You can put up products for bid at any time and anywhere. Buyers don’t have to wait for hours for an auction to end before they can make a bid.
3 Help reduce distribution cost
One advantage of online auctions is that they can help businesses reduce their distribution costs. Auction products can be stored in one place until they are bought and packaged for shipping. This reduces inventory, time, and money. It eliminated the idea of intermediaries and retailers. It also helps eliminate the problems of damaged and missing goods. Most items are auctioned, sold and picked up from the same location. This helps you save money that would have been used on moving costs.
4. It operates 24/7
Another benefit of online auctions is the fact that offers take place on the internet and you can place
offers at all hours of the day. There are no restrictions on bidding since it takes place online and it is
accessible 24/7. This means that the seller can be on vacation in Dubai, while you are bidding from
somewhere in North America. You can log in anytime and start bidding for the best deals or you can list your commodity.
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Types of Online Auction
1. English Auctions
The English online auction is the most common form of an online auction that takes place both online and in-person within established auction houses. In an English auction, one single item is put up for bid at a time. The first item is presented and the auctioneer announces the starting bid. The individuals who are interested in this item then make their bids. The starting bid can be zero or greater than zero. Bidders present their bids, with each bid amount being higher than the last bid. The Bidders accept offers of increased pricing one at a time until no one can outbid the last bidder. The person with the highest and unmatched bid wins possession of the item.
2 Penny Auction
This is another E-commerce online auction that involves a fee to bid. This type of bid comes
with a time constraint or time limit in which bids must be placed. So instead of bidding until nobody can outbid a particular bid price, the Penny auction works with a time frame. For example, let’s say people are bidding for a Toyota Venza from 12 AM to 12 PM. This means that people will start to bid from 12 AM to 12 PM. When the time is up, the highest bidder pays the final bid price and wins
the item.
So the winner may only pay a couple of thousand for the car instead of the original price. But the seller, which may be an individual or a business ends up making a lot more than what the car itself costs. This is because each bidder has to pay a bidding fee for every bid that is placed.
This is a good business model for e-commerce businesses that are good at promotion and getting a lot of engagement on their auction website. Both English and penny auctions require a lot of traffic and users for them to work. There has to be enough interest, or the auction can become detrimental to the seller.
3. Dutch Auction
A Dutch auction operates in an open descending price system which involves the auctioneer starting
with a high price and then continuing to drop the price until a buyer bids on it. The person willing to
buy at the highest price wins the auction.
A Dutch online auction works well where multiple items are offered at once, such as perishable goods. In a case where the first bidder doesn’t purchase all the items, the price will continue to decrease until all the items are claimed or when the seller’s reserve price is met.
For example, when the highest bidder selects their items, the second-highest bidder goes for their item, the third bidder, and so on. Note that this type of business works for certain types of products, especially perishable goods.
4. Sealed bid auction
In this online bid, bidders don’t know what others bid. A sealed bid auction can involve several rounds or just a single round of bidding, One variation of a sealed-bid auction is the first-price sealed-bid auction which involves a single round of bidding. In this type of bidding system, the bidder with the highest bid wins and pays their bid price.
This type of business model is common with large and expensive items. Bids can come from multiple
suppliers or just one supplier selling a single item to many potential buyers. With multiple sealed bids, bidders can make an offer and go through another round where lower offers get eliminated.
5. Reverse Auction
A reverse auction is just the opposite of the normal auction feature. The reverse auction involves the buyer putting up a request for their required item. The sellers in turn bid for the products which they are willing to sell. The seller who had bid the lowest price would win that deal. In a normal bidding process, the seller fixes a price and buyers can bid on that price the highest bidder wins the item but in a reverse auction system, the buyers fix up a price and the sellers can bid.
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Features of an online Bidding Auction
1. Bidding Fee
To effectively run an online auction business, you must set a bidding fee. The bidding fee will help you attract serious bidders. To make a profit in this kind of business, buyers must pay a bidding fee to participate in the auction. A business that sells expensive items like cars, pieces of jewelry, artifacts, and sculptures must pay a bidding fee. You can decide if the fee will be refundable or not. Paying a bidding fee ensures that only serious buyers visit your website. It also helps you cover the risk of losing money if the item is bought for less than it was originally worth. You can also cover your administration expenses with your handling fee.
2. Incremental Bidding
Incremental bidding is a percentage price increase that you set for each product that you publish
for an auction. For example, if you want to sell a piece of jewelry and the minimum price of this jewelry is $600. If you set an incremental price for this product at $50, the bidders will be able to bid their price only in the multiples of $50 such as $650, $700, $750, and so on. This will ensure that you don’t receive ridiculously prices in your bidding system
3. Time extension
Another thing you need to take note of when starting your online auction business is time extension. With time extension, bidding can extend automatically to accommodate other bidders and
ensures that your product always gets sold at the best possible price. It is better to automate this process to ensure a seamless bidding process without interruption.
For example, if a bidding process is going to end in 20 minutes and the highest bid was at $5000 and then a new user bids for a new price at $10000, you can extend the time by one or two hours to get the best price possible. If you automate this process, the time will be automatically extended by the software.
4. Set a buying price
A buying price is a price you want to sell a particular product. The price might be hiked depending on the kind of bidding system you are operating. Some of your customers might not vibe with the whole online auction thing and might be willing to pay you the desired price just to avoid the stress of bidding. So if any buyer is interested in buying the product right away and don’t want to wait for the bidding to end, they can pay for the item and grab the product.
For example, If you are selling a smartphone at auction and the starting price to bid is $500 with a
buying price of $800. So if anyone is interested in buying the phone for $800, they can simply pay for it and grab the product. Once the customer pays successfully, the auction listing for that product will no more be available on the website.
5. Incorporate bidding by Proxy
The proxy bidding strategy allows users to bid for a product by entering the maximum price that they
are willing to bid for. The proxy bid is kept confidential and is not visible to the other users. As the bidding price of the product increases, the bidding price of the user also increases automatically, however, they are always lesser than the user’s maximum bid.
For example, David wants to buy a smartphone that has a minimum bidding price of $500 and David
enters his bidding cost at $550 however at the same time, he also adds a proxy bidding at $650. It
means that David is willing to raise his bidding from $550 to $650 depending on the next biddings.
If another buyer bids for the same smartphone for $600, the software will increase David’s bidding price above $600 but less than $650 so that David has a higher chance of winning the auction.
Strategies For Running an E-commerce Auction Business
To run a successful E-commerce auction business, there are some strategies you need to put in place. Here are some strategies you can leverage for your online auction
1. Choose a platform to carry out your auction
This is the most important strategy when it comes to online auctioning. There is no way you can put up products for bidding if you don’t have a platform to host that product. To have an effective platform, you need to have a functioning website. This website is where you buy or sell a product based on a bidding system. You can either build or develop a website or bid through an E-commerce auction site like eBay. Note that self-hosted websites usually need you to purchase a domain name and hosting.
Most online stores make use of CMS platforms like WordPress and Magento. While hosted websites like eBay are usually ready-made with a monthly or annual subscription fee. Note that any auction website you choose should be user-friendly including a responsive design technology (the site should be fit for any kind of device). The site should also have a good reputation, the shopping and bidding experience must be top-notch, and should have features that align with your business goal. The platform should also have an effective advertising strategy to help you get your
product to the right people
2. Find a product to sell
After successfully setting up your website or registering on an online auction site like eBay, you
need to find a product or a list of products to sell. You can write out this list and do keyword research
on each of the items on some popular auction, websites to get an insight into how many others sell similar products. You can use keyword research tools like SEMrush, Google trends, and keywords.io to see how those particular keywords trended over time and how many people are searching for them. The data or information gotten from these analyses will help inform the type of product you will sell. So if a particular keyword yields little or no result, you can easily flag those items. The goal here is to make a profit, so focus on products that will give high returns.
3. Research your competitors
In the business world, researching or investigating is no crime. This will help your business by keeping you focused. You also get insight into what your competitors are doing right or wrong. The data gained from your analysis can be used to improve your business. Think of what you can do differently than your competitors. Visit their online stores to view their sales approach. Look at what they are not doing and try to do something better.
4. Optimize product pages
Writing a detailed product description, title, and meta description on your product pages will go a long way in attracting customers. This will also help your product rank high on the search result pages of various online auction websites. Ensure that your product images are of high quality. Get a good digital camera or hire a professional to help you take high-quality pictures. Take picture of your product in broad daylight.
5. Invest in paid advertising
The goal of paid ads is to help your business achieve some marketing objectives like brand awareness, driving traffic, generating leads, and making sales. Investing in PPC campaigns like Google ads and social media ads like Facebook and Instagram ads will help you promote your auction website by serving ads to your target audience. You can use Facebook retargeting strategy to target people that have interacted with your website previously. Some auction websites already have a large well-established audience that users can leverage.
Additionally, this website also invests in paid campaigns. They combine their vast digital marketing expertise and their large budget to run targeted ads to their audience. When they do, there is a high chance that your product will be featured. That’s why you need to optimize your product page
using strategic keywords.
Best E-commerce Auction websites
1 eBay
eBay is one of the oldest auction sites online with 142 million active buyers worldwide. The website
offers different varieties of items including collectibles and art, electronics, fashion, real estate,
sporting goods, and baby essentials among others. Buyers can bid or buy instantly, and sellers can use eBay to get rid of unwanted items.
eBay allows users to list 25 products for free, and then pay $0.35 per listing.
2. Etsy
Etsy is an online auction site for arts and crafts. It offers items like art, Jewelry, house products, and more. To get started with Etsy, you simply need to create your unique username and select an online shop that you’ll use to sell your products.
Every product you list on Etsy will cost you $0.20. One advantage of Etsy is that it allows you to set the prices for your products. Buyers also need to register with an email address and a password to start buying.
3. eCrater
Although eCrater is an e-commerce website, they allow users to hold online auctions. One advantage of eCrater is that sellers can import eBay and Google Shopping products into eCrater, giving it a wide range of items users can select from. You don’t need to register to buy an item. Buyers can add items to their cart and proceed to checkout. Note that eCrater does not offer buyer protection, so buyers are responsible for their transactions.
4. Listia
Listia is an online auction site where users use credits to bid instead of cash. Credit is offered to users based on referrals or by selling their items. For example, a user displays an item they don’t want anymore on the site and other users bid on that item with credits they earn from referring friends or selling an item. The user who bids the most credits wins the item while the person that sold the item earns credit for the item sold. This auction site is like a trading system, but since not all items are equal in value, you’re given credits to use for other trades.
5. Copart
Copart is an online auction store that deals in automobiles. Users can buy vehicles or their parts online and have the vehicle shipped to them. Many of its listings don’t require you to have a dealer’s license to purchase, which means ordinary buyers can bid on a vehicle.
There are more than 175,000 vehicles on Copart operating in 11 countries. This is a good site for
automobile auction for individuals, businesses, or dealers who wants to buy and sell used and wholesale cars.
To bid on the site, a basic member must deposit 10% of the desired bid amount and premium members must deposit just $400.
Conclusion
Investing in the online auctioning business can be of tremendous benefit for both the buyers and the sellers. They are incredibly popular and easy to set up as users don’t have to worry about things like location or overhead costs. So if you want to get started on an online auction, now is the time. With the above guide, your e-commerce online auction business should start thriving in no time.
