Online auctions take place over the Internet with the help of specialized websites that use software specially created for the task. This specific software can basically handle an unlimited amount of auctions and has none of the limitations of real life auctioning, like: time, location or storage space. All the tasks that would normally require hired staff and would increase operational costs are performed by the software.
The software categorises items, provides means of communication, handles bids, payments and shipping or, in short, regulates all the processes afferent to auctioning and does this without any time constraints. The auctioning takes place 24/7 available all around the globe. All this Automatism inevitably leads to a reduced price for the product compared to a face to face auction whilst still providing the seller with a nice profit.
Online auctioning has also given a new perspective on the idea of Garage Sale, meaning, anyone can sell anything to anyone all over the world. But the seller is not the only one generating income from this, the ones that probably have most to gain are the enablers of this process: the site owners. An online auction website can charge fees for practically anything: new account, number of items available for sale, bids, commissions, extended picture gallery, etc.
Another great feature of online auctioning is the user profile, users create personal profiles with information about their location, means of contact and other relevant data. Buyers can even rate specific sales giving other users a perspective on the buyer, reducing the chance of fraud. The software keeps track of all sales just like a registry.
A forward auction, developed from the English auction, is the most common form of online auctioning. This type of auction is also the simplest form of auctioning, you have a seller, a product and multiple bidders (buyers). The seller offers a product with a set price and time period in which to bid, bidders start competing by placing subsequently higher bids, the highest bid when the timer ends is declared winner.
Some forward auctioning features and methods:
Buy it now (Buyout): besides the regular bidding, the seller can set a fixed price at which the item will sell instantly and close the auction.
Reserve price: the seller sets a minimum price at which the item will sell, if this price is not met then the auction ends without a winner. The reserve price may be hidden from the bidders.
Proxy bidding: bidders can set a maximum price they are willing to pay for a specific item and the software automatically bids for them until the auction is won or the price limit is reached. This allows users to keep bidding on items even when they are unavailable. The real life equivalent would be a friend that would go to the auction and bid on your behalf.
Reverse auctions are a great way to reduce company costs when purchasing services or finding clients when selling multiple services. In reverse auctioning a buyer puts up a contract and the sellers bid on the contract, the aim of the buyer is to get his required service or product at the lowest cost possible. As the auction moves on, bids decrease as sellers compete for the contract. This leads to a dynamic bidding process and creates competition between the sellers, bringing down prices.
Online reverse auctions allow buyers to save time by avoiding the search for service providers, in reverse auctioning the sellers come to you.
As a supplier in reverse auctioning it becomes essential that you know your market, competitors and costs in order to generate a profit.
Since going online, auctions have evolved as the software became more and more complex, giving birth to new types of auctions that would otherwise be too difficult to organize and control in large numbers for long periods of time.
One of these new types are Bidding Fee auctions otherwise called, Penny Auctions.
The name comes from the fact that users buy the bids separately at a higher price and use them on items, each bid adds 1 penny to the item’s price and resets the timer on the auction, this time may vary from seconds to minutes, depending on settings or the real value of the item. The last bidder before the timer expires is the winner and must pay the price reached by the item which is usually significantly lower than the retail price. When the auctions ends, the auctioneer receives the value reached by the item and also the money from selling bids related to his item.
This type of auctioning is not for everyone, you can end up spending a lot of money without winning anything, it takes patience and experience to actually win anything.
Online auctions are definitely an important part of online commerce, the main auctioning website, eBay, had a revenue of over 9 Billion Dollars in 2010. These days creating and maintaining a website has never been easier, all you need is the right software.
The Factory has the best joomla online auctioning suite available . All you need is a web server, Joomla! which is free, and one of their specific components designed to be easy to install and use, they will even install and configure it for you.
For forward and reverse auctioning they offer the Auction Factory and Reverse Auction Factory components which are ideal for starting you new online auction business.
We have all the features needed in order to start and generate income:
BIN (Buy it now)
Payment gateways like PayPal, Monebookers, or 2checkout (check full list!)
8 different Modules: Popular Auctions, Most Valuable Auctions, Latest Auctions, Category Tree in two flavours, Random Auctions, Featured Auctions, Tag Module
Community builder integration
You can generate income from features like pay per bid, pay per contact and many more
...and many more.
These components come with full support, free upgrades and optionally they can install and configure them for you.