E-AUCTION, E-BARTERING

An online auction is an electronic space where sellers and buyers meet and conduct different types of transactions.

This market mechanism uses a competitive process where a seller solicits

consecutive bids from buyers (forward e- auctions) or a buyer solicits bids from sellers (reverse e-auctions).

Dynamic Pricing

• One major characteristic of auctions is that they are based on dynamic pricing. Dynamic pricing refers to prices that are not fixed, but are allowed to fluctuate, and are determined by supply and demand. In contrast, catalog prices are fixed, as are prices in department stores, supermarkets, and most webstores.

Traditional Auctions Versus E-Auctions

Traditional, physical auctions are still very popular. However, the volume traded on e-auctions is significantly larger and continues to increase.

In addition, person-to-person auctions are done mostly online.

Limitations of Traditional Offline Auctions

• Traditional offline auctions usually last only a few minutes, or even seconds, for each

item sold. This rapid process may give potential buyers little time to make a decision, so they may decide not to bid. Therefore, sellers may not get the highest possible price; bidders may not get what they really want, or they may pay too much

for the items.

• Bidders must usually be physically present at auctions thus, many potential bidders are excluded.
• Similarly, it may be diffiult for sellers to move goods to an auction site. Commissions are fairly high because a physical location must be rented, the auction needs to be advertised, and an auctioneer and other employees need to be paid.

Electronic auctioning removes these drawbacks.

Electronic Auctions

• The Internet provides an infrastructure for executing auctions electronically at lower cost, with a wide array of support services, and with many more participating sellers and buyers than physical auctions.
• Individual consumers and corporations both can participate in this rapidly growing and very convenient form of e-commerce.

Types of auction

One Buyer, One Seller

• In this confi guration, one can use negotiation, bargaining, or bartering.
• The resulting price will be determined by each party’s bargaining power, supply and demand in the item’s market, and (possibly) business environment factors.

One Seller, Many Potential Buyers

• In this confi guration, the seller uses a forward auction , which is an auction where a seller entertains bids from multiple buyers. (Because forward auctions are the most common and traditional form, they often are simply called auctions .)

Many Sellers, Many Buyers

• When there are many sellers and many buyers, buyers and their bidding prices are matched with sellers and their asking prices based on the quantities on both sides.
• Stocks and commodities markets are typical examples of this configuration. .

One Buyer, Many Potential Sellers

Two popular types of auctions in which there is one buyer and many potential sellers are

1. Reverse auctions (tendering) and
2. name-your-own-price auctions.

Reverse Auctions

• When there is one buyer and many potential sellers, a reverse auction (bidding or tenderingsystem) is in place.
• In a reverse auction, the buyer places an item he or she wants to buy for a bid (or tender ) on a request for quote (RFQ) system.
• Potential suppliers bid on the item, reducing the price sequentially. Several rounds of

bidding may take place until the bidders do not reduce the price any further. The winning supplier is the one with the lowest bid

The Name-Your-Own-Price Model

• Priceline.com pioneered the name-your-own-price model .
• In this model, a would-be buyer specifies the price (and other terms) that he or she is willing to pay to any willing and able seller.

Online Bartering

• Bartering , the exchange of goods and services, is the oldest method of trade. Today, it is done primarily between organizations. The problem with bartering is that it is difficult to match trading partners.
• E-bartering (electronic bartering) – bartering conducted online – can improve the matching process by attracting more partners to the barter.
• In addition, matching can be done faster, and better matches can be found.
• Items that are frequently bartered online include office space, storage, and factory space; unused facilities; and labor, products, and banner ads.

Online Negotiating

• Dynamic prices also can be determined by negotiation .

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sagar gupta