Splat | WiseTome.com

Talk about Online Auction and the multi colored eBay logo pops up in our mind. Since it’s introduction in 1995, Online auction has become a popular business model. But the concept I would say, is not something very innovative or radical.

Think of a bazaar in some remote countryside, may be a century ago, where people from all nearby places come with their goods to sell, and to buy the stuff they do not grow in their fields, or they do not make with their own hands. Online auction business model is the same, just a lot more advanced version of this basic principle; facilitating people a convenient platform to buy and sell their goods.

If you want to sell a trinket that you found from your granny’s jewelery box or if you are searching for a StarWars or StarTreck comics or DVD, or the first printed edition of a book you love or a sports collectible, this is the place to seek for. These Online auction sites provide the buyers an unlimited range of merchandise to choose from in terms of price, variety and for the sellers a merchant who would accommodate a novelty to day to day usable object or even valuables.

And as far as the online auction sites are concerned; they have zero manufacturing or production cost. They merely act as an interface for both the the buyers and sellers facilitating the listing, displaying, and the billing shipping of goods. The packaging and transportation cost also goes to the buyers or sellers as per their convenience.

There exist several types of online auctions; English Auction and Dutch Auction being the major models followed in today’s market. An English auction usually starts with a low bid and buyers go on bidding for higher prices, winner being the highest bidder. But a Dutch auction is usually done for a set of similar article or goods and all of those are sold at the same price; the highest price that have been offered. Most current online auction follow English model. Dutch model is used for auction of treasury bills or similar stuff.

So how convenient it is for people, both buyers and sellers and what are the risks involved? And what are the modes of transaction? And how does an Auction site make profit from these deals.

All this will come up in next couple of posts in future.