Auction on the Internet. What ’ s Being Auctioned, and How? Chen Ge Xu Xin Liu Xue Tian Tian. Queen Ge Mohammed. Princess Candy Mohammed. 23. N/A. Middle East, Unknown. Merits to auction on the Internet. Lower cost More flexibility Classified advertisements. Demerits.
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What’s Being Auctioned, and How?
Queen Ge Mohammed
Middle East, Unknown
-- which would more likely have been seen at garage sales or flea markets rather than at traditional auctions
How to find
-- classify into categories and sub-categories
-- different sites offer different sets of category system
--offered by more than 60% sites
--accounted for at least 85% of listings and 75% of revenues in eBay
--improve matching of buyers to sellers
--high-priced collectibles still remain in “Sotheby”s.
Goods ought to be auctioned
--small and easy to ship
--goods in limited supply and demands is unknown
Goods ought to be auctioned in the future: SERVICES
--tickets, hotel reservations, etc.
--few site offer the auctions of services nowadays
--obstacle: local services vs. global internet
the length of time — average auction remain open
--mean 9.3 days per auction
--shortest: Onsale’s 60-mins “express auctions” and First Auction’s 3-mins “flash auctions”
--longest: 90-days at WW Sales site
--below which no bids will be accepted
--if the highest bid doesn’t exceed the amount of the reserve price, then no good will be sold
--indicated but not revealed to the bidders in most of the sites
Effects on the auction --low-minimum bids, high-reserve prices
--build bidding momentum
--more opportunity to observe the bidding of others
--more aggressive bidding
Effects on the auction --Overuse of high reserve prices
--make the winner upset sometime
--drive away bidders
Buyout price/maximum accepted bid level
--allow the buyer to buy an early end to the auction by submitting a sufficiently high bid
--gain and lose of the buyers and sellers in this kind of activities
Merchant Sites:offers its own merchandise for sale; happens to conduct its transactions through auction;
e.g. Onsale: http://www.onsale.com/onsale/
Listing-Agent Sites: agent for other sellers, allowing others to register and running the auctions on their behalf;
e.g. eBay: http://www.ebay.com/
Merchant sites derive income directly from the sale of their items
-Agent sites derive their operating revenues from fees charged to buyers and sellers;
Online fees are much cheaper:
-Sotheby’s , e.g. charges for about more than 30% of the final bid price;
while eBay charges only around 5%
-all fees paid by the seller,
-two components to the seller’s fees:
1) insertion fee for the auction listing, ranging from $0.25 to $2.00;
2) percentage of the amount of the final bid price, declines with the size of the sale: 5% of amount under $25, 2.5% of additional amount between $25-$1000, 1.25% of additional excess of 1000.
-Traditional English Auction: In a room, auctioneer: “going…going…gone!”
-English Auction on Internet: longer, geographically diverse, no auctioneer.
e.g. eBay, auctions end 7 days after they begin.
Find your interested item
-view the current high bid
-decide whether to raise it by filling out your own bid amount
-see the update status (whether you are the highest bidder now)
-(received “outbid notification” email)
Waiting until the last minute
-short “extension period”
Most are 5 minutes long, this damages the asynchronous bidding convenience
-“proxy bidding” mechanism
Everyone has a little elf, and he should tell the elf the most he wants to spend and wait it to outbid other elves.
most popular now, 65/142 use it.
1.First-price sealed-bid auction
winning bidder pays his bid amount. 7 sites and 8 more
2.Second-price sealed-bid auction
the winning bidder pays one increment over the second-highest bid received. In 5 sites.
-Price starts at some relatively high level
-Continues until the first bid determines the winner
-Price falls down as time goes by
-No observation of actual transaction.
Fast Parts-electronic components, only successfully on
Dallas Gold & Silver Exchange (DGSE)-jewelry
BidNask-no active trading floors
Listing of both “parts for sale” & “parts wanted to buy”
many people bid for one good.
many people bid for many identical goods.
Two pricing rules:
-Discriminatory or pay-your-bid rule
each winning bidder pays the amount of her own bid; mainly used at the merchant sites
-Uniform price rule
typically called a “Dutch auction” online; each winning bidder pays the amount of the lowest accepted bid; a fairly standard for multi-unit auctions at the listing sites
-The bidder will pay every unit the same price of the first price he bid for one unit, thus, there is possibility that he will lie that he only want less than what he really wants.
-A mechanism may solve this by making the bidder pays each unit different prices.
-Bidding on combinations of related items.
-the Wine bid online auction of wines: organizes the auctioned wines into groups which might be more valuable to some bidders.
An attempt by the seller to drive up the price of good.
“Overshoot” & “Retract”
2) Bid Shielding:
The bidders put in an early lowball bid (say $10), then gets a false ID to put in an extremely high bid (say $500) on the same item.
Retract before the end and win at $10.
Enforcement of “Bid Shielding”
How does a buyer know she can trust the seller?
How does a buyer know she can trust the seller?
Average transaction size is $300;
Sales volume grows at a rate of 25% per month.
Vs. eBay: average price of a good is $30 and the transaction volume is growing at 12% per month.
Yahoo!, Amazon Vs. eBay