Electronic Auctions (E-Auctions)

FOR IMMEDIATE RELEASE
Bengaluru, Karnataka, India, Republic of (Free-Press-Release.com) February 9, 2012 -- An auction is a competitive process in which either a seller solicits consecutive
bids from buyers or a buyer solicits bids from sellers. The primary characteristic
of auctions, whether offline or online, is that prices are determined
dynamically by competitive bidding. Auctions have been an established
method of commerce for generations, and they are well-suited to deal with
products and services for which conventional marketing channels are ineffective
or inefficient. Electronic auctions generally increase revenues for sellers

by broadening the customer base and shortening the cycle time of the auction.
Buyers generally benefit from e-auctions by the opportunity to bargain
for lower prices and the convenience of not having to travel to an auction site
to “attend” the auction. Additional benefits of electronic auctions are shown
in Online File W4.2.
The Internet provides an efficient infrastructure for executing auctions at
lower administrative cost and with many more involved sellers and buyers (see
Kambil and van Heck, 2002). Individual consumers and corporations alike can

participate in this rapidly growing form of e-commerce. There are several types
of electronic auctions, each with its motives and procedures. Auctions are
divided here into two major types: forward auctions and reverse auctions.
FORWARD AUCTIONS. Forward auctions are auctions that sellers use as a selling
channel to many potential buyers. Usually, items are placed at a special site
for auction, and buyers will bid continuously for the items. The highest bidder
wins the items. Sellers and buyers can be individuals or businesses. The popular
auction site eBay.com is conducting mostly forward auctions.

According to Gallaugher (2002) there are two types of forward e-auctions.
One is to liquidate existing inventory, the other one is to increase marketing efficiency.
Customers in the first type seek the lowest price on widely available goods or services; customers in the second type seek access to unique products
or services. Online File W4.3 graphically demonstrates these two types of forward
auctions.
REVERSE AUCTIONS. In reverse auctions, there is one buyer, usually an
organization, that wants to buy a product or a service. Suppliers are invited to
submit bids. Online bidding is much faster than conventional bidding, and it

usually attracts many more bidders. The reverse auction is the most common
auction model for large purchases (in terms of either quantities or price). Everything
else being equal, the lowest-price bidder wins the auction. Governments
and large corporations frequently mandate this approach, which may provide
considerable savings.
Auctions are used in B2C, B2B, C2B, e-government, and C2C commerce,
and they are becoming popular in many countries (see Minicase 1). The Internet
opens many opportunities for e-auctions. Auctions can be conducted from

the seller’s site, the buyer’s site, or from a third party’s site. For example, as
described in IT at Work 4.1, eBay, the best-known third-party site, offers hundreds
of thousands of different items in several types of auctions. Over 300
other major companies, including Amazon.com and Dellauction.com, offer
online auctions as well.

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