Process of Auctions

In an auction, sellers and buyers usually complete á four-phase process: 

Phase 1: Searching and comparing. 

Phase 2: Getting started at an auction. 

Phase 3: Bidding. 

Phase 4: Post auction activities. 

Each phase has several support tools (figure 2.10):

Phase 1: Searching and Comparing: Auctions are conducted on hundreds of sites worldwide. Therefore, sellers and buyers need to execute extensive searches and comparisons to select desirable auction locations. 

1) Finding when and where an Item will be Auctioned: Many websites offer links to hundreds of auction sites or provide search tools (e.g., see bidfind.com) 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 efficiently.

 

2) Auction Aggregators and Notification: The search to find what is being auctioned and where can be difficult; there are thousands of auction sites, some of which are very specialized. Auction aggregators are companies that use software agents to visit web auction sites, find information, and deliver it to users.

 

At these aggregation sites, buyers fill-out electronic forms specifying the item they want. Then the aggregators keep tabs on various auction sites and notify buyers by e-mail when the items they wish to bid on appear. There are two types of notification services; those that supply notification only for their own sites and those that report what is going on at many sites.

 

Phase 2: Getting Started at an Auction: To participate in a third-party-managed auction, both the sellers and buyers need to register at the selected site. After registration, 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 place their bids.

 

Registration and Participants' Profiles

 

Sellers and buyers must usually register their names, user IDs, and passwords before they can participate at a specific auction site. The user's page header (heading at the top of the screen) and the auction listing will display a basic description of sellers and their listings. Before submitting-a bid, buyers can check a seller's profile, including the seller's membership ID and previous transactions. If the auction site provides voluntary verified-user programs such as those at winecommune.com and eBay, buyers can check whether sellers are qualified auction community members, as verified by a third-party security source.

 

Phase 3: 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:

 

1) Bid Watching and Multiple Bids: Buyers can visit their personalized page at an e-auction website at any time and keep track of the status of active auctions. They can review bids and auctions they are currently winning or losing or have recently won. Tools provided in the United States by Bid Monitor (see bruceclay.com) enables bidders to view their bids across different auction sites in an organized way. Bidders also can use the tools to place bids at multiple auction sites using a single screen without switching from one window to another.

 

2) Sniping: The act of entering a bid during the very last seconds of an auction and outbidding the highest bidder is called sniping. Auto-sniping involves the use of electronic tools to perform the sniping automatically.

 

Occasionally, sellers use sniping in a fraudulent way: When the bidding price seems to be too low, they may enter the auction and bid for their own goods or services, pretending they are buyers. In this way, they hope to inspire other bidders to submit higher bids. (Being aware of this possible activity should help one avoid being caught-up in last-minute bidding frenzy and overpaying in an online auction.)

 

3) Proxy Bids: A software system can be used for proxy bidding, in which the system operates as a proxy (agent) to place bids on behalf of buyers. In proxy bidding, a buyer should determine the maximum bid he or she is willing to offer and then place the first bid manually. The proxy will then execute the buyer's bids, trying to keep the bids as low as possible. When someone enters a new bid, the proxy will automatically raise the bid to the next level until it reaches the predetermined maximum price set by the bidder.

 

Phase 4: Post auction Follow-Up: Post auction activities take place once an auction in completed. These activities include e-mail notifications and arrangements for payment and shipping:

 

1) Post auction Activities: Typical post auction activities include the following:

 

i) Bidding Notifications: Buyers receive e-mail, SMS messages, or beeper messages notifying them each time they are outbid or when they win an auction.

 

ii) End-of-Auction Notices: When an auction closes, the seller receives an e-mail (or SMS) message naming the highest bidder. End-of-auction e- mails provide seller and buyer IDs; seller and winner e-mail addresses (or cell phone numbers); a link to the auction ad, auction title, or item name; the final price; the auction ending daté and time; the total number of bids; and the starting and highest bid amounts.

 

iii) Seller Notices: After an auction ends, the seller generally contacts the buyer. The seller's notice typically provides the auction number and item name, total purchase price (winning bid plus shipping), payment preferences, mailing address, and so on.

 

iv) Postcards and Thank-You Notes: Sites such as vendio.com help sellers create a customized close-of-auction or thank-you note for winning bidders.

 

2) User Communication: User-to-user online communication provides an avenue by which auction participants can share information about goods and services being offered and about the process of online auctions.

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