Most individual businesses are now virtualized with a growing online component, and similarly many auctions are conducted entirely online, changing the nature of the auction process. Like the ubiquitous internet giants of yesteryear, online auction platforms are becoming powerful enough that the rest of the industry is either getting on board or dying on the vine.
The online auction system differs from in-person bidding or at home bidding through a proxy sale or a sheriff’s sale. If the auction is online, anyone inside or outside the target community can bid. And that target community can be global in scope! Additionally, online auctioning is a perfect fit for e-Commerce and retail businesses. In the case of overstock retail items or retail product returns, online auctions have been growing in importance and can be used to manage items for which major retailers have run out of space for or did not sell (or did sell and were returned.)
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What are online auctions?
Online auctions can be an auction in and of itself or can be combined with live auctions or silent auctions, allowing visitors to bid online prior to the live auction, with the highest online bid being determined as the initial bid for the live auction. In live auctions, bids often approach or exceed the market value of an item, while silent auctions only bring in about half of the market value. Online auctions can offer all the possibilities of on-site sales, except sellers know the exact date and time their items will sale. That is a powerful thing, not having to guess if your products will sale today or not. For this reason, many auction sellers are willing to accept the risk that comes with the necessarily low starting price that generally comes with auctioning your products in an online auction.
Auction houses are required to show their bid increment table so you can prepare ahead of time. Sometimes a bidder can see the amounts offered by competitors, but some auctions are designed so that this is not possible. Buyers may also have to pay a Buyer’s Premium to the auction house, usually a percentage of the price of the hammer. This Buyer’s Premium typically goes to the continued operation of the auction website. Sellers will usually have fees as well. A good auction website will get a good price for an item, and it’s often better for a seller to sell an item at a high price and pay a slightly higher commission than paying a lower percentage and only get a low bid.
Why are online auctions so popular?
Price is a major reason people participate in online auctions. If you see different sellers selling the same item for roughly the same price, you can expect this to be the market price. If you look at online auctions, you’ll find the same items for better prices. Another reason for their incredible growth and popularity is that they make it easy to find great deals on hard-to-find items from around the world.
Online auctions are great for sellers and buyers due to their many benefits. Bidders who value their time, enjoy not having to travel somewhere to sit in front of everyone. Anonymity is a major plus to Online Auctions! We know this because we have spoken to many online auction participants, and they truly value their privacy. Participants in auctions are willing to bid more because they are anonymous, which is the advantage of online auctions, as they are freer to offer the highest possible price when social friction is removed.
Remember, unlike live auctions, online bidders cannot see or touch what they are bidding on. In fact, online auctions can have an advantage because people can click on a link in a digital ad and go directly to the auction when they want. You’ll hear arguments from auctioneers who don’t offer online auctions that not being able to touch the merchandise before bidding creates an unsurmountable obstacle for online auction houses. In the age of Amazon, eBay and e-commerce, we don’t see much value in arguing the point.
Who sets the price of an online auction lot?
In an auction, the final sale is usually the result of competition between bidders, although one bidder may buy if no other bids are made. An auction is nominally an offer by the owner to sell the items to the highest bidder without any restrictions unless the owner explicitly reserves the right to bid on the item or publicly announces this at the time of the sale.
All items or lots sold at auction in an online auction will have a starting bid. This means that a professional has done exploratory research to determine how much an item is worth by looking at many factors such as origin, history, manufacturer, what the item is made of, and many other factors. Bid First Auction appraisers are experts at helping you understand the value of the item you are selling so you can get the best price at auction.
Final thoughts on online auctions:
If there was only one piece of advice, we could give you about buying and selling at online auctions, it would be to always double-check the reviews of sellers you’re considering buying from. We have personally been scammed when participating in online auctions in the past, so we want to make sure you avoid these mistakes. At Bid First Auctions, we vet all our sellers before allowing them to join the platform. This protects both the buyer and our reputation. Click here to find out more about Bid First Auctions’ consignment, liquidation and returned and overstock auctions!
It’s also worth noting that many of the fears associated with online auctions apply to some extent to in-person sales: “used car salesman” was an epithet long before the invention of the Internet. In addition, because of growth, anonymity, and other factors, buyers tend to spend more on online sales than on in-person auctions. It’s a seemingly fun way to get involved in the buying and selling of goods and property. An auction expert once said that the true skill in auctions is not at the bidding stage, but at the investigation stage, when every opportunity is taken to learn as much as possible about both the goods being sold, the nature of the auctioneer and the other bidders participating.
With the advent of the Internet, the auction industry has changed a lot. In person auctions will always, I think, be a thing. However, the past few months and years have seen the growth, proliferation and development of numerous websites dedicated to online auctions. And we don’t see any end to this trend in sight. For that reason, and the benefit of anonymity, the ease of finding exactly what you want and continued benefit as an outlet for e-Commerce and retail markets, we have to say YES! Online Auctions are worth it!