Disadvantages of Auctions

1) Possibility of Fraud: The fraud rate in e-auctions is very high. Auction items are in many cases unique, used, or antique. Because buyers cannot see the item, they may get a defective product. Buyers also may commit fraud.

2) Limited Participation: Some auctions are by invitation only; others are open only to dealers.

3) Security: Some of the C2C auctions conducted on the Internet are not secure, and some potential participants are scared away by the lack of security.

4) Auction Software: Unfortunately, auction software is limited. Only a few off-the-shelf software solutions that can support the dynamic commerce functionality required for optimizing pricing strategies and that can be easily customized to a company or industry are available. However, this situation is improving with time.

5) Long Cycle Time: Some auctions last for days, and in some cases sellers and buyers need to meet face-to-face or with an escrow agent to complete a deal. This may take time, and buyers and sellers may not want to invest such time.

6) Monitoring Time: Although in some cases buyers can use intelligent agents to monitor an auction and place bids, in others they have to do this time- consuming job themselves.

7) Equipment for Buyers: Buyers need a personal computer (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. These requirements are changing as people are starting to use their cell phones for auctions; however, this requires an Internet-connected cell phone.

8) Order Fulfillment Costs: Buying at an auction site means that the buyer will pay shipment and handling costs plus any extra insurance cost.

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