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fundamentals:marketplaces:auction_sites
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Auction Marketplace

Definition

Auction marketplaces are special market places, where buyers and seller trade their goods and services. The special thing is that the seller doesn´t price his goods or services. If at all, the seller sets a lowest bid. The buyer can bid as much as he is willing to pay. An auction is limited in time, so that at the end the bidder with the best bid will get the acceptance of the bid.

Different types of auction market places

A distinction is drawn between C2C market places where only private persons can sell by auction and B2C market places where retailers and wholesaler sell by auction. In practice most of the auction market places are mixed forms where you can find both types of auctions 1). Beside these main types there is a small growing market for B2B market places.2) (E.g. at www.surplex.com you can find old machines) Because of different law, buyers need to know on what kind of auctions they place their bids. German law regulated warranty only for commercial offers. Private persons can place there offers without warranty.3)

eBay and other players

The most popular auction site is eBay (www.eBay.com). eBay revolutionized the retail market in the internet. Starting in 1995 it is today the world’s biggest auction marketplace. eBay made trading by auction suitable for daily use. Today eBay has more than 90 million registered members worldwide. Beside eBay there is no comparable competitor.

The List below shows the biggest players in Germany 4):

Factors for success

The advantages of auction market places for sellers

  • Low marketing cost
  • Sellers meet many potential customers on the auction sites
  • There is a market for almost everything
  • Economies of scale 5)

The advantages of auction market places for buyers

  • A wide range of products
  • Not much time required (with software agents - not even required to be present)
  • Chance of bargain buy
  • Offers of products that are hard to find (often only on auction sites)6)

Auction Fever

Beside these hard facts there is another reason for the great success of auction marketplaces: the human factor. If people bid for something they want to get the acceptance of a bid. For a short moment they don´t act rational they act affective. “They want to win the fight”. So at the end, they even pay more as they would be willing to pay in a posted price setting.

Fraud

The main disadvantage is the high level of fraud. E.g. the result of an investigation of the BSA (www.bsa.org) was that 90% of software offered in auction market places is illegal. 7) Also a lot of the offers are curious and a lot of them are not serious. Find some of these offers in the following Link:

http://digitalleben.t-online.de/-/id_12975358/sid_15618570/si_0/index

Perspective

Auction marketplaces are changing. More and more not only auctions are their main business. On the auction sites you find fixed price sales as well. At the biggest auction market place eBay, fixed price offers already accounted for 60 % of total sales. 8) Auction market places change more and more to online-shops.

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fundamentals/marketplaces/auction_sites.txt · Last modified: 2012/04/30 11:09 (external edit)