Let me start with the figures of the behavior of on-liners.
Buy a product 71%
Participate in an online auction 26%
Sell something online 15%
Now when so many people are participating in online buying and selling, this article becomes important where I explain the types of online auction concepts and online auction websites.
Below are how different types of online auction websites or online auction concepts work or online buying and selling work.
(i) Straight auction There are Online auction websites eBay, ebid with a process, that sellers upload their auction for sale at a fixed price, buyers come and buy the item at that price. For the same auction, sometimes the buyers may also bid for a higher price and the highest bidder wins when the auction ends.
In such auction websites the sellers has to pay fees as below
(i) Item posting fees (free for limited items)
(ii) Final value fees (4% for any website)
(iii) Payment gateway fees (3.9% for paypal)
So an Item sold for $10, seller gets near to $3.5 because most of that money goes to charges.
So how does the seller earn more net profit from the same sales selling online in such destinations.
Now think of a buyer – a buyer bids higher to win an item or simply buys the item at the price stated on the website.
How many times do you go to a store and negotiate saying you want to pay a higher price for the product.? OR alternately how many times do you buy the product without expecting a discount on a product?
(ii) Lowest unique bid, Highest unique bid.
Here buyer buys bids, uses them to bid on the products. An auction is started and the buyer has to place his price of the product. i.e bid a value for the product. Each time the member bids it costs the member. The member may place multiple prices for the products.
Depending on the logic used i.e. unique lowest bid or unique highest bid, the respective member will win. Meaning if you have bid a value ‘X’ which no other member has bid and if its the lowest any one has bid the product is yours at that ‘X’ value
In such types of auction the chances of wining the product are very low. Also you are dependent on chance for wining the product.
so to buy a product from such auction websites you really need not to be a serious buyer and have lot of money to spare in bid cost because you do not control your buying decision.
And here the most important is that sellers do not upload auctions, the sellers are the website only. So the profit from the bid cost is all going to the website owners. so more the people are biding more is the profit to the sellers.
There are quite a few websites you will find if you search lowest unique bid auctions or highest unique bid auctions.
(iii) Penny Auctions. This is an auction websites like swoopo, etc are where the auction starts with the price of the product as zero and increases with every bid. To participate in this auctions you have to buy the bids and use them. Each bid will increase the price of the product. Then the count down starts, before the timer comes to zero if there is no other buyer biding the product is yours for that price. however that does not happen. There is always some one who outbids you. To participate in such auctions you have to have lot of money and time to spare. Here again the sellers are not in control their buying decision but depend on chance or luck. Here too if you see with each of his bid the price increases. So the question still remains would the buyer love to bid for increasing the price of the product.
Here the seller is the website. All products are listed for sale by the website itself. All proceeds from your bid cost goes to the website as profit. However there is much debate on such penny auction websites that they indulge into fraud by out biding the members just keep them biding. More the members bid more the website earns money. Such penny auction websites are not interested in selling products but they want you to keep biding.
You will get a list of penny auction website if you search the term penny auction website.
(iv) Reverse Auction
This is my favorite. You have seen auctions that ask the buyer to bid for increasing the price of the product, you have seen auctions that have hurt net profit of the seller. Reverse auction works to benefit both buyer and seller. In reverse auction the price of the product falls all the time until someone buys it. The auction starts with the retail price of the product and the price of the product falls. The current price is hidden from the buyer. The buyer pays a small amount to view how much the price of the product has fallen to. The buyer then has a certain time to decide if he wants to buy the product at that reduced price. He may keep checking back at the product’s price. Here the buyer is always ion control of his buying decision and does not depend on any chance or luck. if he is a serious buyer he can always buy the product at any price lower than the retail price.
Here the seller lists the price of the product. The sellers also benefits from this in a way that his price of the product increases each time the buyer view the current price.
While the buyer’s price reduces the seller’s price increases.
This increased price which the seller receives helps to increase the net profit for the seller.
This unique concept is found on http://www.bestebazaar.com/contents.php?show=howitworks currently and not seen on any other website. But I am sure there will be more to follow this concept as it benefits the many online sellers and buyers.
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