Page 70 - Introduction to Electronic Commerce and Social Commerce

48 2 E-Commerce: Mechanisms, Platforms, and Tools

Figure 2.3 The reverse auction Cost
process Price

Bid
$$$$$

$$$$

$$$ Buyer

$$

$
Sellers
Low Bid
Winner

Time

Many Sellers, Many Buyers Several other innovative auctions are available.

When there are many sellers and many buyers, buyers and
their bidding prices are matched with sellers and their asking Benefits of E-Auctions
prices based on the quantities on both sides. Stocks and com-
modities markets are typical examples of this configuration. E-auctions are becoming important selling and buying
Buyers and sellers may be individuals or businesses. Such an channels for many companies and individuals. E-auctions
auction is also called a double auction. enable buyers to access goods and services anywhere auc-
tions are conducted. Moreover, almost perfect market
Penny Auctions information is available about prices, products, current sup-
A bidding fee auction, also called a penny auction, is a new ply and demand, and so on. These characteristics provide
type of online forward auction in which participants must benefits to all.
pay a small nonrefundable fee each time they place a bid The auction culture seems to revolutionize the way cus-
(usually in small increments above the previous bid). When tomers buy, sell, and obtain what they want. A listing of the
the auction-planned time expires, the last participant to have benefits of e-auctions to sellers, buyers, and e-auctioneers is
placed a bid wins the item paying the final bid price, which provided in Table 2.1.
is usually significantly lower than the retail price of the item.
For a tutorial, see the video titled “BidBidSold Penny
Auction Site Tutorial” (2:23 min) at youtube.com/watch?v= Limitations of E-Auctions
ngr2kJcnAr4.
Because most bidders will receive nothing in return for E-auctions have several limitations. The most significant
their paid bids, some observers have stated that the fee spent limitations are minimal security, the possibility of fraud, and
on the bid is actually equivalent to a lottery or wager. The limited participation.
auctioneer receives income both in the form of the fees col-
lected for each participant bidder and in the form of a seller’s Minimal Security
commission for the winning bid. Examples of penny auction
companies are madbid.com and quibids.com/en. At Some of the auctions conducted on the Internet are not secure
100auctionsites.com, you can find a list of several penny because most are done in an unencrypted (or poorly pro-
auction companies. Some companies allow the auction’s tected) environment. This means that credit card numbers
unsuccessful bidders to use all their bidding fees toward a can be stolen during the payment process. Payment methods
purchase of items at regular or slightly discounted prices. such as PayPal (paypal.com) can be used to solve the prob-
Users need to be careful of scams. For additional informa- lem. In addition, some B2B auctions are conducted over
tion, see en.wikipedia.org/wiki/Bidding_fee_auction. highly secure private lines.