What Kinds of Online Auctions Are There?
Online Auctions have become increasingly popular over the past few years. They do not have the geographical limitations as traditional auctions and often increase the audience, hopefully promising a better return. Online auctions can have different formats and have positive and negative aspects depending on what you are looking to buy or sell.
These auctions are the most standard kind of auctions. The process is forward. English auctions feature a single item for sale, start with low price, and raise the price progressively as the desire for the item increases. This format allows sellers to secure the highest price they can get for an item.
Dutch auctions are also forward auctions. Instead of featuring just one item, Dutch auctions display a large block of items to be purchased together. Sellers in Dutch auctions often have a certain price range in mind and begin the bidding process at the higher end of their scale and adjust according to audience response.
First-price Sealed-bid Auctions
These auctions have multiple bidders for one item just as with English and Dutch auctions. All the buyers submit bids without knowing what other bidders are submitting. Whoever placed the highest bid wins and pays their noted amount.
Vickrey auctions are also called second-price sealed bid auctions. They function the same way as first-price sealed-bid auctions, except that the person who wins is the highest bidder, but pays the amount the second-highest bidder had placed.
Reverse auctions are the opposite of English auctions. Sellers compete for business by bidding for prices that they are willing to sell their goods and services. People selling raw materials usually use reverse auctions.
Bidding Fee Auctions
Also called penny auctions, bidding fee auctions make buyers pay a non-refundable fee each time they place a new bid. The new bids may be just a one-cent increase. This auction tends to turn out to be more of a gamble for buyers, but can be very lucrative for sellers because they are paid for each bid as well as the amount of the winning bid.