An online auction is a service in which auction users or participants sell or bid for products or services via the Internet. Virtual auctions facilitate online activities between buyers and sellers in different locations or geographical areas. Various auction sites provide users with platforms powered by different types of auction software.
An online auction is also known as a virtual auction.
Online auctions mirror traditional auctions and usually involve multiple bidder participation. In both scenarios, bidders and sellers buy and sell tangible and intangible products and services. Starting bids are low but increase at steady rates to meet market demand and item popularity. The time span of an online auction ranges from one to 10 days for items offered 24/7 worldwide.
Online auctions are a widely accepted business model for the following reasons:
- No fixed time constraint
- Flexible time limits
- No geographical limitations
- Offers highly intensive social interactions
- Includes a large numbers of sellers and bidders, which encourages a high-volume online business
Online auctions include business to business (B2B), business to consumer (B2C), and consumer to consumer (C2C) auctions. Ebay is the best example of an auction site that uses all three methodologies.
The online auction business model continues to evolve according to market needs. Examples include eBay, WebStore, OnlineAuction and Overstock. Ebay and other providers encourage legitimate bidding activity through bidder block lists. EBay also offers Dutch auctions for large inventories, where auction bidders pay according to an item’s highest sale price.