what-are-forward-and-reverse-auctions

What are Forward and Reverse Auctions?

There’s still a lot of confusion about the multiple types of auctions. This blog is to clarify all the confusion. Mainly, there are only 2 types of auctions – forward and reverse auctions. Of course, there are many variations based on a number of factors, which include the progress of the auction and the basis on which the “winner” is decided.

What are Forward Auctions?

forward and reverse auctions

In the Forward auctions, a single seller offers an item for sale which is kept for auction. Buyers then bid to obtain this product by bidding a higher price. These auctions are more renowned and understood by people at a larger platform that reverse auctions. People know how these auctions function as they are widely used. Forward auctions are implemented when the goal is for the seller to gain maximum monetary benefits from the auctioned product. Forward auctions are thus only used in case the auction is being used to generate sales of the products, irrespective of the kind of service (online, offline or both).

What are Reversed Auctions?

forward and reverse auction
Other than Forward auctions, the only other major auctions are the Reverse auctions. A single buyer makes the prospective sellers aware of their intention to buy a particular product or service. When a Reverse auction begins, the sellers start bidding against each other to win the buyer’s product. This will drive the price downwards. So, the winner is the one who offers the lowest price. In most cases, Reverse auctions are used for procurement of private companies, nonprofit organizations, and public sector agencies.
This form of the auction has been proved to be extremely useful when it comes to a longer association of indirect spend and delivering savings and process efficiency.

Forward and Reverse auctions are the only major forms of auctions and are the most used forms of auctions too.
Forward and Reverse online auctions can be set up using the WordPress Auction plugin – WPAuctionSoftware. 

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WP AuctionSoftware Release Log

This blog is a release log for WPAuctionSoftware. We keep updating this blog as soon as we release a new version. This will help you keep a track of all the updates.

WPAuctionSoftware Version 5.5.9 Released

With this release, you can now import auctions to your auction site.

Import Auctions to your auction site

WPAuction Software Version 5.5.8 Released

With this release, now you can get an instant email notification for any bid that has taken place on your auction website.

All you need to do is set the email id on which you want to receive the notifications.

WPAuction Software Version 5.5.7 Released

With this release, you can re-list the item which was sold out during the auction. So, if any of your items are popular then you can re-list it on your item bidding list. The re-listing of the item will be for the same period as it was before.

WPAuction Software Version 5.5.4 Released

With this release, admin panel has been redesigned. Also added help text at the back-end.

WPAuctionSoftware Version 5.5.2 Released

With this release, we have enhanced the product by changing the look and feel of the Admin Screen and the layouts in the front-end too.

mam_auction

WPAuctionSoftware Version 5.5 Released

With this release, you can now prevent sniping. For each bid that is placed within the last 5 minutes of the auction, you can extend the auction’s end time by another ‘n’ minutes (you can decide this via settings).

WPAuctionSoftware Version 5.4 Released

Post this release, WPAuctionSoftware uses WordPress cron job. So, you are no longer required to setup a server cron job.

WPAuctionSoftware Version 5.3 Released

With this release

– An issue that used to occur when two or more auctions had the same name has been fixed

– Auction names can now have special characters like dash or dollar sign

WPAuctionSoftware Version 5.2 Released

With this release,  it is possible to show/hide the reserve price for auctions.

WPAuctionimage

WPAuctionSoftware Version 5.1 Released

This release fixes some bugs introduced in the last version related to start & end date.

WPAuctionSoftware Version 5.0 Released

WPAuctionSoftware now lets you set the start date and time and end date of the auctions. This feature makes it possible to schedule auctions.

Adding a new scheduling feature in WPAuctionSoftware

So now the auction period can be set in hours which means you can choose to run an auction for a couple of hours too.

WPAuctionSoftware Version 4.0 Released

Version 4.0 makes it possible to deliver digital products right through the dashboard.This release places a direct download link within the users’ dashboards in case of digital products.

WPAuctionSoftware Version 3.0 Released

WPAuctionSoftware is now WordPress Multisite Compatible.

WPAuctionSoftware Version 2.9.2 Released

WPAuctionSoftware Version 2.9.2 was released on 11th July.

FancyBox Library has been updated with this release. Also, the auctions tab has now been set to display the latest listings by default.

WPAuctionSoftware Version 2.9.1 Released

WP AuctionSoftware upgraded. The length of description text has been increased from 255. You now have the freedom to write pages of text to promote and explain your auction in a better manner.

WPAuctionSoftware Version 2.8 Released

We have just released an update from the previous version of the auction software for WordPress. This new version of the WordPress Auction Plugin has a few fixes as well as a change to the Penny Auction function. We had a few people ask us to make the Penny Auction default if it’s the only auction type selected. So, that’s what we did. Now when you activate only the Penny Auction, you don’t have to worry about users not selecting in during their listing setup. It’s now automatic.

We also replaced the way large images were being opened. We thumbnail the listing image and when a user clicks the image, it opens to the original image. In the past if a image was of a large size like 2000×2000 then it would take up the whole screen. Now if there is a photo over 800 pixels then it will resize it to a set size so that it doesn’t take up the whole page.

That’s what’s in version 2.8 so all you existing customers can get the update from the Updates page.

WPAuctionSoftware Version 2.7 Released

Auction Software 2.7WPAuctionSoftware is pleased to announce the release of version 2.7 of the WordPress Auction Plugin. With new features and functions you’ll just love this new version of the WordPress Auction Software.

New features include new SEO Friendly Permalinks for all menu items as well as new auction listings. We’ve also added a new Penny Auction Feature so you can now run a profitable Penny Auction website. We’ve also optimized all the pages so that they now load a lot faster. We’ve also added Authorize.net Payment Processor so you now have PayPal as well as Authorize.net.

WPAuctionSoftware Version 2.5 Released

Auction Software 2.5WPAuctionSoftware.com is pleased to announce the release of the WordPress Auction Plugin version 2.5. The new version of the Auction Software has had a complete overhaul. We’ve completely removed all the tables and replaced them with div tags making it load faster and work with just about any WordPress Theme out there.

Not only did we make it faster but we added some new features. Some of the new features include Admin Only Ads. This allows only the admin to post ads and lets all registered users bid on the admin items. We also added a new Featured Category and Featured Ads listing at the top of the auctions page. We also made a change where you don’t have to supply your PayPal email to submit a listing. Of course all these features can be turned on and off via the Admin Area.

WPAuctionSoftware Version 2.3 Released

We are pleased to announce the launch of WordPress Auction Software version 2.3. Our WordPress Auction Plugin ver 2.3 is now available for demo via our Auction Software Demo page.

The Auction Software is full of exciting new features that include an internal payment invoice system. There is no need for Sellers to wait to send their payment link information to Buyers. It’s all built in. Buyers are sent an invoice that they can pay and once paid the Seller is immediately notified. These features plus tons more will not only make your new Auction Site cool but it’ll make it profitable too.

Don’t Let Auction Sniping Kill Your Online Auctions

Bidding for online auctions is undeniably a game. A fun game, a game that can have many strategies. From the very basic incremental bidding to a troublesome sounding sniping to clear cheating in the form of shill bids. Most importantly, it is an interactive game, where your action depends on the other players’ actions.

Each of the strategies, has its up sides and down. Let us talk about auction sniping – why one would do it, why one maybe shouldn’t do it and why do sellers not like it so much.

What is Auction Sniping?

A snipe bid is one in which the bidder makes his “maximum possible” bid at the “last possible moment”.

The two elements of this strategy are the value of bid and its timing.

Maximum possible bid would mean the most that the bidder is willing to pay for the item on auction. This is basically how the bidder values the said item.

– This bid is timed in such a way that it makes any other bidder impossible to overbid it. So, if the bid is the highest bid, it is more than likely to win.

Of course, this is true only for auctions that have fixed end times.

Auction Sniping: Buyer’s point of view

Auction Sniping: Buyer's viewPitfalls: Now, there are many things to consider before calling this a winning strategy from the buyer’s point of view. The strategy assumes that the bidder knows for sure what the true value for the item is. This is untrue in most real-life cases. We can never say how much exactly we are willing to pay for an item without having a baseline to compare with. Secondly it assumes, that the bid will definitely be higher than other bids. Or in case of proxy bids, nobody’s proxy bid will go beyond the auction sniper’s bid.

Why is the buyer sniping? Considering the practical issues, why would a buyer snipe at all then?

For one, it is a relatively low maintenance considering there is a hoard of inexpensive software out there which can do it for you.

Secondly, it makes all the right noises as far as winning at best price goes. Anyone who is selling sniping software makes very good arguments and claim near 100% winners.

Last and most importantly, there is a good chance the bidder will get to buy at a much lower price than if they were bidding incrementally. Consider how the two strategies work. The idea is that instead of bidding many times from when the auction opens, you bid just once at the fag end of the auction. The bidding psychology in the first strategy, is such that the bidder is gauging what others are bidding. When pitted against the second strategy, auction sniping the incremental bidder doesn’t get that reference point. To top it off, the price doesn’t increase and the auction sniper can just make a bid in the end that will have to be higher than the current highest bid – that’s it. The main selling point is that the ultimate price paid is much lesser than what the price would have been (maybe after a bidding war) had the sniper been an incremental bidder instead. Basically, the auction sniper wants to pay the least possible by delaying their show of interest.

Hardly illegal, from bidder point of view they are playing smart, not dirty.

Auction Sniping: Seller’s point of view

Auction Sniping: SellerThe last reason that works for the buyer is the seller’s sore point – the price is the lowest. By not revealing what the auction sniper is actually willing to pay – through their bids – the auction doesn’t reach its true potential. It can be argued that the loss might not be too high, but the seller’s concerns are valid. There are few ways to avoid auction sniping.

How to avoid snipers on auctions?

Automatically extend the bid deadline by a few minutes if a bid is placed in the last moments of the auction, to give other buyers time to react.

Captchas: If the seller is required to enter a captcha right before committing to buy, the seller achieves two things. They delay the time required to bid by a few seconds. The captcha can have an expiry time to avoid auction snipers from entering the captcha in advance. Also, automated sniping tools are pretty much thrown out of the auctions.

“Buy It Now” button: A non-sniper can just buy the item long before the sniper contemplates sniping the auction. Sure, there is a chance that there could be “Buy It Now” sniping, but that requires manual bidding and precision.

Minimum number of bids: A less desirable strategy could be to have a required number of bids for an auction for the buyer to be an eligible bidder. The other prong of this mechanism is that this might dissuade bidders completely. Also, in a way it is against the spirit of auctions.

Incentivize early bidding: Seller could offer a discount to the earliest, highest bidder. Of course, deciding the discount amount/percentage will be a balancing act. But, it might be well worth it to dissuade auction sniping.

Having said that, auction sniping would do well for a seller to study their auctions well. This is to figure out how much they are really losing out to sniping. For all you know, the impact is not too bad. Alternately, the study might lead to some insights into the bidder’s practices that could be used to the seller’s advantage.

Should I set up a ‘Buy Now’ price for my online auctions?

How an online auction site sets up rules for “Buy It Now” and “Reserve” prices varies from site to site. From when the “Buy It Now” option is unavailable even if it is setup to when the reserve price is made known to bidders, the terms and conditions are different for every site. Also the fee levied on such options varies with each site. It will do you well, to go through the specific rules of the site you are using to sell your product thoroughly. As usual, when buying you should be cognizant of additional shipping charges, etc.

The common understanding of these terms though are worthy of discussion.  'Buy Now' Online Auctions

“Buy Now” Online Auctions

An online auctions website can allow you to have a “Buy It Now” price for an item you have put up for sale. In such a case, the bidder can opt to buy the item right away at the said price instead of participating in an auction. This automatically ends the sale. Since we are talking about online auctions, we are only looking at cases in which the “Buy Now” feature is used along with an auction. It should be noted though that some sites will allow you to have only “Buy Now” sales. This would then function like any other online sale.

The various related rules that an auction site could have are as follows:

Category: The “Buy Now” option might be available only for a certain type of items in online auctions.

Price: The “Buy Now” price has to be a certain % above the start price.

Feature disabled: The “Buy Now” feature could be disabled as soon as the first bid is placed. Or it could be disabled when it reaches a certain % of the reserve price.

Price determination:

The tricky part then is to determine what the “Buy Now” price should be. One strategy could be to keep an eye on similar products and see how they have fared in online auctions to determine the “Buy Now” price. Another alternative could be to arrive at a price that you are willing to accept for the product. Basically, you don’t want to regret it if a bidder opts for the “Buy Now” option you have for them.

Benefits:

Control: Having a “Buy It Now” options lets you have some control over the price. It also gives direction to the auction. When a bidder sees the said price, they are less likely to start bidding a lot below that price.

Speed: As the auction space has grown, ironically enough, people who make on “Buy Now” purchases have increased. These are most likely people who want the product right away. And it serves you well too because you can move on to other things in life. Not to mention, it also saves time spent on monitoring auctions.

Psychological advantage: A “Buy It Now” price feels good to both buyer and seller. The buyer is happy that they haven’t paid too much which they can never be too sure of in an open online auctions. The seller gets the price they had in mind. A win-win situation if there was one.

Concerns:'Buy Now' Online Auctions

Auction site fees: Sellers have to be wary of the fees charged by the online auction site. Though this fee is usually not too high, it does eat up into your profit and has to play a role when you set your “Buy It Now” price.

Need for speed: The need for haste could be a disadvantage too because it might put buyers off because of the pressure.

Setting price: Most “Buy It Now” prices will have a lower limit set by a certain % of starting auction price or the first bid (if the option is disabled at first bid) and a higher limit has to be decided based on the % of the “Buy It Now” price itself (if that is the rule for disabling the option). This makes setting the price a tricky affair – it becomes a balancing act of sorts.

Auction Reserve Price

In such cases, having a reserve price comes in handy. An online auctions reserve price is a price set by the seller which is the bare minimum they want to sell the product for. If the auction bids do not reach the said reserve price, the seller is not obligated to go through with the sale.

Also, the reserve price is not publicized. That way bidders are not influenced by seller’s expectations. At most, some sites might just mention that the reserve price has been met.

It must be borne in mind that adding a reserve price could entail a fee by the auction site.

The bottom line is that a thorough reading of the auction website’s terms and conditions is inevitable. After which, lots of research has to be put into the price that you expect from your products in an online auctions. Unless of course, you are only a once-in-a-while auctioneer or the value of your products isn’t very high.

Live Online Auctions Without Auction Software – Impossible

As your live online auctions and auction business becomes more popular and grows, the one beautiful problem it will bring along is increase in traffic and transactions. Many a online auction businesses start out with manually managing the auction one at a time. For example, you might have used the comments section to monitor the auction. Or alternately, you might have had bidders call or e-mail you and updated the website accordingly.

Manual Auctions not Live Online AuctionsThe many problems with such a manual auction management system are self-evident as compared to Live Online Auctions:

A time-consuming process: It requires more than 100% of your time. If live online auctions is on, you have to be up and about to monitor any glitches or trouble-shooting it might require.

Lots of room for manual errors: After all that effort, a manual auction system is no where close to being perfect. Of course, no system is going to be 100% error-free but a manual system, that requires frequent and similar type of updates is bound to have a larger share of errors when compared to an automated system.

Looks and is amateurish: A manual system is bound to be look and be unprofessional. In this era of automation for even courier delivery, a manual system is primitive. You can’t blame a bidder for not taking you too seriously and gravitating towards the more automated systems of auction.

Less control to bidders: The move towards automated systems by users will also be a function of how much control users can have when they are logged into an automated system that allows them to keep track of their own actions and monitor auctions they are interested in.

Breaks down with higher volumes: A manual system is invariably going to crack under the pressure of higher volumes in both number of transactions and the bidding itself. The cost of losing business has to be pitted against the cost of auction software for live online auctions.

Little scope of adding features: These are times of more and more functions and features being offered to a site user. It is impossible to compete with feature rich auction software using manual systems of auction. These features become even more important when your auction is live. Using auction software for live online auctions is practically inevitable to move to an automated system for your own good.

This is not that bad because there are loads and loads of auction software options out there which are feature rich and have a whole load to offer.

The only reason for you to stay with the manual method is that either your volume is low or the frequency of your auctions is less. As soon as auctions become an ongoing activity versus being a once in a while event, you have to move to an automated system for your own good.

This is not that bad because there are loads and loads of auction software options out there which are feature rich and have a whole load to offer.

Why Is Auction Software A “Must Have” For Live Online Auctions?

Live Online Auctions

Once you have decided to take the plunge and buy an online auction software, you want to make a list of all the features that your auction site needs. This requires a deep study of all the features that such auction software packages offer.

Feature-Rich Options:

The live online auctions arena have never been as competitive. To stand out, you need to offer your bidders as many features as possible. And you have to do so without making their life complicated. From ease of use technically for you behind the scenes and for your bidders at the front end the latest online auction management software systems have it all. If the set-up you have is that which allows users to sell their goods too, you want that to be rich in features and easy to use too.

Some of the functions you are looking from the bidders’ point of view are proxy/absentee bidding, bid and bidder management, billing and invoicing, notification options to notify the bidder at each step,

For your own sanity, some of the options you want the auction software to include are inventory and shipping management. You also want options for offering variation in auction style like say, live auction or reverse auctions or sealed bid and silent auctions. You also want a reliable and many options for payment gateways.

In addition, if you have sellers, you want to make image editing available to them.

Technical support:

Given the competition, auction software package companies are trying to win customers by excellent technical support both in terms of product offering and after the sale for live online auctions. They cater to both customizations you might need for your particular kind of business/auctions and after sale hand-holding. Most of the good companies have technical staff that is both approachable and available.

Minimized learning curve:

Since these companies have been involved in creating this software for lots of clients, they know the ins and outs of what is needed. They have already made their mistakes and you are taking advantage of what they’ve learnt. Your job is restricted to just know how to use their program which they have to make as simple as possible for their own obvious benefit.

Advantages over Amazon/E-bay based Live Online Auctions:

Sure, having your software based on Amazon/E-bay or selling through them has its advantages in terms of exposure, but it has some serious disadvantages too.

Changes in their platforms: The algorithms that these companies use change over time as they are trying to improve their systems and adapt to competition. They are not obligated to inform API users about the changes. Even if they did, you would have to keep track and make changes in your software to keep it from becoming obsolete.

With your own live auction online software you are in better control.

Categorizing and listing glitches: These sites have known issues with categorizing and listing items. If your product isn’t categorized right, you aren’t going to be visible in searches. This leaves you high and dry with no fault of yours.

A customized auction software will keep you in charge. Also you can play around to see what gets you better results.

Profits get squeezed: Again due to increased competition and to thrive themselves these companies have no option but to squeeze more profit out of you or ask you to lower your prices. If you don’t do the latter, you might suffer in terms of your items showing up later in their search results.

Your trades might be lower but you can make up for volume by having that slight bump in your profit margin.

Once you have your software in place, it is absolutely imperative that you do your market research and analysis and deploy marketing methods to get the results that work best for your live online auctions. For you might have the best online auction software out there but you will not get anywhere if you don’t know how to get people on board.

Rest assured though, that setting up your own auction software is the first step in the right direction to run live online auctions. A true example of well begun, half done.

Stripe Payment Gateway Addon Released

Stripe addon is now available for WPAuctionSoftware Plugin. Besides being PayPal & Authorize.net ready, WPAuctionSoftware can now support Stripe payments too. You can choose to enable either of these 3 payment gateways on your auction site.

With this addon, you can add a payment option in WPAuctionSoftware for customers to pay with their cards via stripe. Stripe addon accept payments on your auction site. Instead of pushing people off your site to pay, Stripe payment gateway allows your users to pay with a simple, well-designed payment pop-up. It provides the option for a more richly featured payment management system. Stripe’s service has been fully integrated within our auction platform, to provide a truly comprehensive range of payment options, control and protection for today’s online auctioneer.

Features of Stripe Payment Gateway:

  • Processes credit cards without sending clients to another site
  • Allows you to accept payments from customers anywhere in the world
  • Secure interaction with Stripe servers keeps your customers’ data safe
  • Seamless checkout experience within your own site; means increased conversions & sales

Advanced features and functionality of Stripe Payment Gateway:

  • Completely integrated online credit & debit card payments.
    All payments are captured directly on your auction website, so the user stays within your domain – ensuring all interaction remains under your branding control.
  • Safe & secure credit & debit card information storage for later use.
    Payment cards and corresponding information can be securely stored, and then reused on another occasion by the bidder, without their needing to re-enter details. There is also the option to hold and use these card details to take automatic or semi-automatic payments from the user post-auction.
  • Full pre-authorisation of payment cards, prior to taking any actual payment.
    This provides the means to pre-authorise users, via their credit & debit card, when they first apply to bid on an auction. Users can therefore be forced to provide these details before they’re allowed to bid.
  • Easy-to-use Stripe control panel.
    A simple administration area that allows you to easily manage payments and all securely stored client information & profiles.
  • Highly competitive charging structure.
    Stripe provides a low market-leading fee of only 2.4% + 20p per transaction. Foreign exchange payments are charged at an extra 2% over standard market exchange-rates.
  • Payments are sent direct to your current account on a 7 day rolling basis.
    Simple and efficient direct bank-transfers mean that no other third-party merchant account is required.
  • Proven fraud protection, security & compliance.
    Stripe actively works to protect your business from fraudulent charges and monitors suspicious transactions, while providing full security and financial compliance.
Auction Software Stripe Addon
Auction Software Stripe Addon
If you like to add Stripe payment gateway to Auction Software, you can use this Addon. Free support and free upgrades for one year.
Price: $39.00
Price: $19.00

Proxy Bidding Addon Released

Proxy bidding addon is now available for WPAuctionSoftware Plugin.

With this release, you can now bid on two or more items being sold around the same time. Proxy bidding makes bidding an online auction easier and less time consuming for buyers.

Features of Proxy Bidding – How its Beneficial for an Online Auction?

– Allows automated bidding: Proxy bidding addon allows users to make an absentee while the bidding process is going on. The user does not have to keep bidding by himself as it will be done by an automated system.

– Saves Your Time: It saves lot of time by playing a vital role of proxy bidder. Proxies do the bidding on your behalf once the amount is fixed.

– Saves Your Money: The proxy bidding can save your money which you may have otherwise lost in the usual online auction.

Proxy bidding addon allows the user to enable proxy bidding feature by setting ‘yes’ or ‘no’. The best part is you can enable proxy bidding feature any time you want; before the bidding starts, after or in-between the bidding process.

Enable Proxy Bidding Feature

Next, the bidder places a maximum bid amount that he is willing to spend on a product. The user can do so by enetering the amount and clicking on maximum bid button.

Set Maximum Amount

So, here is the process of proxy bidding:

Step 1: Bidder Sets a Maximum Bid Amount
Step 2: System Places a Bid
Step 3: New User Places a Bid
Step 4: Bids are Compared
Step 5: System Places a New Bid
Step 6: Process Continues

Proxy Bidding – How it works for an online auction?

Proxy bidding is an online auctioning system in which the winning bidder pays the price of the second highest bid which makes auctioning on bidding easier and less-time consuming for buyers. Suppose, if you want to bid on an item but you can’t make to the auction yourself, you may still be able to participate through proxy bidding. Proxies bid on those products on your behalf.

The proxy bidding feature allows users to decide a maximum amount that they are willing to spend on an item. Once the amount is fixed then the user does not have to get engaged in any extensive bidding activities. From this point onwards the proxy bidding feature in the auctioning system comes into play.

The auctioning system now plays the role of a proxy bidder and places the minimum required bid on behalf of the user. When the bid on which the product has been auctioned reaches maximum bid amount specified by the user, the system notifies the user to place a new bid for the product. Here the user gets a chance to revise the maximum amount that he is willing to pay. And this process continues till the time window for the auction expires. This way the user can independently decide whether or not to update the maximum amount that he wishes to spend on an auction.

Say for Example:

A domain is in auction with a starting bid price of $12.99. If bidder A places a maximum bid amount of $20.00 for the domain, our system will start his bid at $12.99 and bid up to $20.00 automatically on his behalf. When bidder B visits the auction, he sees the current bid price as $12.99. If bidder B decides to place a bid for $14.00, he will be outbid immediately by bidder A, and the new minimum bid will be $15.00. In order to outbid the first bidder A, bidder B would need to bid at least $20.01. But if bidder B is not willing to spend more than $20 and stops bidding at $19, bidder A automatically wins the bid and gets the item at $19. If bidder B places a bid for $21.00, which exceeds bidder A’s maximum bid amount, then bidder A will lose the bid, and the new minimum bid would be $21.00.

Alternatively, the user can decide against updating the maximum amount he wishes to spend in an auction. Incorporate the proxy bidding solution into your online auction website now and save your users the effort of constantly monitoring the auction process, after all customer is king right!

WPAuction Proxy Bidding Addon
WPAuction Proxy Bidding Addon
Enables proxy bidding feature for your users. Free support and free upgrades for one year.
Price: $19.00
Terminologies of online auction and bidding

Terminologies of Online Auction Bidding

Terminologies of online auction and bidding

What does it mean to sell in Standard Auction ?

When we talk about online auction bidding, Standard Auction (SA) plays a vital role. Standard auction is the traditional model that has evolved to the virtual model. Its the market place for sellers to list their products get the maximum bids and and buyers to bid their highest price to win the auction. The seller and buyer are legally bound for the transaction once the final bid is locked. There are many advantages selling online like huge number of bidders from different location can participate, less fees than traditional auction, don’t have to hire an agent.

What does it mean to sell in Penny Auction” ?

The buyers place their online auction bidding from starting price but they are charged for each bid they place by the auction website. Each time a bid is placed it affects in the increment of cost of goods by a penny or 1%. The most beneficial feature it is very time-bound i.e. 00:10 or 00:20 seconds so the bidder have to watch their clocks ticking. The last bidder is the winner of the auction. The auctioneer makes money in two ways fees (penny) for each bid and the final price at which the goods are sold. The bidders have to buy enough credits in advance before starting the bid. Example: A Macbook was sold on Quibids for $426.65 (Woohh!) but the total number of bids counted were 42665 with 1% increment in cost.

Dos & Don’ts of Penny Auction in Online Auction Bidding:
1. Get maximum number of bidders by continuously promoting on social media – Twitter, Facebook, etc
2. Start your online auction and bidding during evening and night hours (9:00pm to 9:00am) as its a free time for maximum bidders, using weekends & holidays is beneficial.
3. Aim for getting new bidders to participate as this will create competition against aggressive/power bidders. Some websites restrict wins per person.
4. When you advertise and promote always use words & numbers that will attract bidders but don’t mislead or over exaggerate.
5. Always record you winning stories of astonishing prices at which goods are sold that can be promoted later as one in above example.

What does it mean to sell by “Listing” ?

A “Listing” is detailed description of the goods that gives complete information about the product that is being sold. In other words its “Brochure”  of your product. It is easier for bidders to view information in a brochure than a very long boring sales letter. Its an agreement in good faith that you are offering to sell the goods as per terms of the brochure described explicitly. Once listed seller is obligated to sell the goods to bidder who wins the auction.

Do’s & Don’ts of Listing in Online Auction Bidding:
1. Include your brief About Seller, Photographs of your store (if any), etc.
2. Give Testimonial & Accreditation links that your business has achieved.
3. Go through the policies of Prohibited and restricted goods before listing e.g. Tobacco & alcohol.
4. Check rules for different categories of your product e.g. Adult Only section – For age & above 18+.
5. Avoid using text, images and videos that are subject to copyrights (i.e original works of authorship). E.g. Taking image from web magazine “Celebrity wearing aviator shades” using it for your purpose to sell shades is violation of copyrights.
6. Avoid inaccurate and misleading claims while creating your brochure. E.g. Mentioning as authorized distributor if you are not.

What does it mean to sell at “Fair Market Value” (FMV) ?

FMV is price at which goods/property would sell for in open market its is an estimated guesswork. The buyer and seller both involved in the transaction have reasonable knowledge about the facts and figures in relation to the goods/property. There is no undue pressure from market to carry out transaction. The FMV can determine selling price or cost of similar items, condition of the goods/property, & replacement costs.

What does it mean to sell with “Starting Price” ?

When a bidder considering the baseline price gives the first call its known as the Starting Price of the auction. Following the first call other bidders immediately start to bid their counteroffers. The bidding increases the starting price until it reaches to a highest price considered by the seller sufficient to sell goods/property.

Dos & Don’ts of Starting Price in Online Auction Bidding:
1. According to research its always beneficial to start with lowest starting price. This encourages and attract bidders who really want to or might not want buy the goods/property but still place their bids.
2. High starting price might make you loose bidders in terms of numbers, as only few of them will start bidding on high price. The #No of bids has psychological effect that will shows how many people are interested in winning the product. The more no of bids (Traffic) the more is popularity of auction.
3. As a thumb rule the baseline of starting price can be set as 40%-50% lower than FMV.

What does it means to sell with “Reserve Price” ?

Reserve Price (RP) is minimum price level set by the seller for which he will be happy to sell his goods/property. Selling w/o RP is similar to jumping off the cliff without a parachute. Seller is bound to sell when RP is met or is surpassed by the bidders. RP maybe secret or known to bidders depending upon the auctioned goods or property. Seller can lower or remove RP but cannot raise it during ongoing auction.

Do’s & Don’ts of Reserve Price in Online Auction Bidding:

1.Study the market carefully to set First – RP & Second – RP (alternative) or else it will be intended that you are here to burn bidders pocket, piss-off bidders or don’t want to sell the goods/property at all.
2. Always keep the Starting Price lower than RP to attract bidders.
3. Calculating Second – RP in advance is better to use in situation where the bidding stalls and is lower than First – RP. This gives the highest bidder a Second Chance Offer to place his maximum bid.
4. When your RP is met in bidding you can remove to it in order to avoid any indication to buyers about its status e.g. “Reserved Met”.
5. If you find huge difference between RP and Highest Bid you should always walk away from the auction.

What does it mean to sell by “Make an Offer” ?

One of the best feature in online auction. A seller may decide only to give Buy-it-Now & Make Offer for his goods. You have choice to accept or reject the offers from bidders. Price Negotiation is what this feature provides with the bidders. The seller can give a counteroffer based on his reserve price if the buyer is seeking lower prices of goods. Once the seller accepts the offer, buyer is obliged to pay the seller.

Dos & Don’ts of Make an Offer in Online Auction Bidding:
1. This feature gives sellers to interact with bidders hence keep a check if the prices are not lowered than reserve price in negotiation process.
2. Sellers should not use time delay as factor for negotiation as it can be perceived as fraud or fake goods offered. Accept or Reject offers frequently.
3. Some online auction site offer Automatic Rejection, sellers can choose this option for saving their efforts.

What does it mean to sell with “Minimum Bid Increments” (MBI) ?

As the name suggests its minimum increase in percentage is mandatory for the next bidder to raise or go beyond Reserve Price. MBI depends upon the value of goods.

Dos & Don’ts of Minimum Bid Increments in Online Auction Bidding:
1. For premium goods MBI should be around 10% of FMV. (e.g FMV – $70 the MBI is $7)
2. For lower value goods it should be around 4-5% FMV in order to get more number of bids on the item.

What does it mean to sell with “Auction Sniping” ?

In an time-bound auction (penny auction), the bid is placed at very last seconds of end auction to exceed the current highest bid which dramatically increases bidders chance to win. This is often considered as controversial practice because it involves Automated Software which place bids on behalf of the bidder. These services are legal and are available online – GIXEN & goSnipe. Many auction sites have forbidden the use of automatic bidders, so even if bidders win they cannot checkout & claim their winnings. While its upto sellers to list their goods on sniping auction website we don’t recommended it because it looses the whole fun & excitement of people bidding in the game!
Shill avoidance – It is a part of Snipping. A seller uses another account for auction sniping to raise bid to the maximum, this practice is highly unethical. The biggest loop hole is the seller might anticipate higher bid from the original bidders to increase the price but the original bidder may choose not to do so; in this case the seller has to sell the goods to himself plus the auction website charges for doing so.

What does it mean to sell with “Fixed Price Auction” (FPA) ?

In FPA no bidding is allowed and the goods are already set with final price, there is no scope for negotiation or bargain as well as there is no time limit for seller to keep their listing of goods. There will be difference in fees seller will encounter, hence seller has to check with the support team of the auction website.

What does it mean to sell with “Pay-it-Now or Buy-it-Now” (BIN) ?

The seller sets BIN price equal to or more than reserve price. The seller keeps this option to give away to a person who wants to pay directly for the goods without going into bidding program. There might be multiple offers from bidders for BIN and seller has the right to accept or reject these offers. BIN disappears if the normal auction has hit the Reserve Price.

1. It is advisable to keep BIN price 20%-30% higher than Starting Price. The bidders will see less difference between BIN and Starting Price which will result in saving their bidding time and getting goods instantly.
2. BIN is powerful way to kill competition by starting auction simultaneously for similar goods and keeping BIN for lesser price than your competition. (E.g. Apple iPhone 5s – 16GB)
3. Other strategy to use BIN option is during final hours of closing of auction this increases the possibility of selling if your auction has got many bidders already. (Example: Setting BIN – $300 above Reserve price is $200 and then dropping the BIN every 4 hours – $290-$280-$275-$269-$249-$230..)

What does it mean to sell under “Caveat Emptor” ?

Caveat Emptor is a Latin word which means “Let the buyer beware.” It is generally used in real estate auctions, and in a practical sense it means the buyer is aware of all the risks or defects associated with the product and there is no misleading, fraud or deception on the part of the seller. That seller should not with hold any information and should disclose details about the product to the buyer. Example: “A” is car seller and “B” is buyer, “A” gives all the information except that car had 2 owners. This is considered as unlawful.

Dos & Don’ts –
1. Sellers must publish all the necessary information about history of owners of the goods auctioned.
2. Always mention if any third party has ownership/ title of the goods that are being sold.
3. Minor defects, no warranties, specific conditions are critical and should be disclosed.
4. Avoid holding back information due to ignorance/fear this always end-up in lawsuit.

What does it mean to sell with “Shipping & Handling” ?

Shipping Charges: Is cost of transportation of goods from Seller to Buyer’s Doorsteps. This may or may not include local taxes. Seller has to determine if to include or separately add the cost to the goods.
Shipping Options: Buyer is given minimum 2 option to choose from cargo movers (e.g.Fedex, UPS, DHL) and also 2 minimum options for Faster Delivery in terms of Transit Days.

Dos & Don’ts –
1. Its beneficial to include Shipping & Handling costs in the price of goods to provide the golden worlds “FREE”
2. Use good packaging material or another alternative is packaging services provided by the cargo movers at resonable cost.
3. Avoid using FREE International Shipping as there varied shipping charges & customs fees + taxes involved which you are not aware about.
4. Always ensure you provide the Shipment Tracking #No to the buyer immediately for tracking.

What does it mean to be a “Top Rated Seller/ Super Sellers” ?

A seller is always recommended suspended by the bidders and they are judged on grounds of clear communication of photos, specifications & descriptions, condition and ensuring exact same goods are delivered, good quality and price, local as well as global shipping services, easy money back option and warranties. Only continuous success to achieve all above factors will ensure sellers to become “Top Rated Seller/ Super Sellers.”

These were a few a basic terms which every online auctioneer should be well-versed with. Anything that I have missed? Drop a comment and let me know.

Pitfalls that Auction Sites should avoid

Pitfalls That Auction Sites Should Avoid

Pitfalls that Auction Sites should avoid

How is your auction site doing? Are your auctions failing to attract bidders and buyers? Well, that means one thing – you are doing things the wrong way because many other auction sites are getting traffic of bidders and buyers and making a lot of money. But don’t worry, take a look at the following pitfalls that make auction sites fail and see if you can make any improvement to become a better auction site.

Negative Feedback and DSR Rating

If you got negative feedback during your last transaction, chances are you’ll get a low turn up during the next one. Negative feedback basically tarnishes your image and you should definitely expect things to slow for some time. Rather than quitting, try to sell cheap items as you work on recovering your account standing. As a policy at eBay, you earn DSR (Detailed Seller Ratings) the moment you attain 12 feedback ratings.

Failing to Market your Auction Sites

You could be making the most terrible mistake if you are not advertising your services. So, how will potential bidders and buyers know you exist? Keep in mind there are hundreds of other online auctioneers in the same business as you. Develop an auction site marketing system to let people know about your site. Get to know your competitors. If you are new in the business, you might want to find a small niche product with lesser competitors. Competing with giants who sell very expensive products might kill you.

Auction Site – Bad Titles and Product Description

Some sellers are in such a hurry to sell that they use the wrong spelling and grammar for their product title. Bidders might just think you are not serious and bypass you for millions of other items. Also no one will know what you are talking about if the description is incoherent. Ensure that the spellings are 100% perfect by proof reading the text or running it through a spelling and grammar checker. Write your text in a way that attracts attention.

Poor Images or Lack of the same in Auction Sites

Buyers will be reluctant to bid for items they are not seeing and will also be turned off by poor images. This is particularly important for high-value products. And put yourself in the bidders’ shoes – would you buy something that you have no idea about how it looks like? So, if you want to have successful auctions you must have photographs of the items you are selling and they must be revealing and accurate.

Avoid these blunders and build a successful auction site. Do you have any more tips to share? Share your feedback in the comments section below.

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