On-line Auctions - Going, going, gone wrong?

by Matthew M. Lug - Newspeak Staff

One of the fastest growing areas of internet commerce these days is the world of on-line auctions. These auctions allow individuals or small businesses to sell just about anything to people anywhere in the country, and in some cases the world. The benefit to sellers is the number and variety of potential customers that visit specific auction sites. Since the auction sites are already established and have regular visitors, sellers can make items immediately available without having to worry about setting up a web site or advertising. Buyers can find almost any kind of item and deal with individual sellers directly instead of buying through retailers or resellers. Both sides can save money while buying and selling whatever they want, and the US Postal Service makes lots of money in the process from shipping and money order fees.

How they work
In order to make the most of them, you should know how on-line auction sites work. Most of them follow a basic method. Auctions are set up to last for a fixed amount of time, with a minimum bid determined by the seller. During this time period people can place bids on the items. Bids are usually for the maximum amount that the person is willing to pay. If nobody else has placed a bid, then the current bid is set to the seller's minimum asking bid. If there was already a bid on the item, the current bid will be automatically increased until one person's maximum is reached, at which point the other bidder will become the high bidder on the item. If the maximum bid of both people is the same, then the one who placed a bid first will have the high bid, and the current bid amount would become equal to that maximum bid. If that isn't confusing enough, sometimes a seller will set a reserve price in addition to the minimum bid. This reserve price is the minimum that a person needs to bid in order to win the auction. If nobody bids this amount, then the auction ends without a winner. In all other cases where bids have been placed on an item, the person with the highest bid at the close of the auction wins. This is how on-line auctions differ from regular auctions - in most cases timing is more important than money. For more details, consult the specific auction site.

If you are new to on-line auction sites, then you will probably start off buying rather than selling. When you decide that you want to buy something at an auction site, you should start by selecting sites that are best for the type of item you are looking for. Many auction sites exist for electronics, but only a few have a wide variety of categories. Some sites get more traffic than others, so the number of items being sold will vary by auction site. Larger sites have more sellers, but also more buyers, and therefore more competition. Since smaller sites have fewer buyers, sellers usually set their minimum bids higher. In the end, the best deal could be at any site, but rarer items might only be found at larger sites.

Researching the item
Once you decide on what you are interested in and where you are looking for it, you should see what is available and how much it is likely to cost you. When searching at an auction site, be as general as you can without getting a large list of possible matches. You can start by browsing through the list of categories until you get to the most specific category that will still contain all listings of the item you are looking for. From there you will need to select a word or words that most people would use to describe the item. You may need to do multiple searches to account for differing descriptions, misspellings, and errors by sellers. Once you find what is available, you can see what sellers are asking and what people are bidding for these items. Some auction sites also allow you to search through completed auctions. With this feature you can see what an item is likely to sell for, and combined with the current listings you can see how often a particular item is likely to be put up for auction. This information will be useful when you decide how much to bid and whether to bid on an item or wait for another. Finally, read the sellers' descriptions carefully, paying attention to the condition of the item, the estimated shipping cost, and the methods of payment the sellers accept. If you pay by money order, you'll need to pay an 80 cent fee to get the money order, in addition to the 33 cents to mail it. If you pay by personal check, you'll still need to pay postage to send it, but the seller may also delay shipment until the check clears. Credit card purchases are the most convenient, but few sellers accept this method. All of this should be considered when you decide how much to bid on the item.

Other options
At this point you should have a good idea of what is available on auction sites and how much those items will probably cost you. Since auction items are likely to be in used condition without warranties (unless the seller states otherwise), in some cases you may be better off buying the item new from a local or on-line retailer. If you are looking for a rare item or something that is no longer produced, then auctions may be your only option. Items like DVDs for example are quite popular on auction sites, and often do not sell cheap. If you take advantage of discounts and special offers available at most retailers of these products, you can usually get new and unopened items for less than you would pay at auction sites. The best source for information regarding these types of discounts and offers is also the only specific web site I am going to mention - dealnews.com.

Once you are sure that you are interested in a particular auction listing, you need to decide how much you are willing to spend on the item. Keep the item's description in mind when making this decision, since the specifications and condition of the item are likely to influence how much it is worth to you. Ask the seller any questions you have about the item, since you don't want to find out later that you bought something you don't really want. If the item you are interested in is put up for auction regularly, you can be sure of having another chance if the bidding goes too high for you. Otherwise, you'll want to seriously consider the absolute maximum amount you would pay. At this point you might be tempted to place your bid and see how it goes. There is one thing that I cannot possibly stress enough - BIDDING EARLY ONLY HELPS THE SELLER. Timing is extremely important in on-line auctions, so wait as long as you possibly can before bidding, until the last minute if possible. People can't outbid you if you don't give them time to react. If nobody else is interested in the item, then placing the first bid may work, but usually it will just increase the high bid without helping you win the auction.

Completing the transaction
If you do win an auction, you will be expected to send payment promptly. The seller should contact you with the total cost including shipping and handling, as well as where payment should be sent. You should respond with your shipping address and any other necessary information, such as your preferred shipping method if the seller gives you a choice. All of this will help speed up the final stages of your transaction. When you receive the item, you should immediately inspect it. If it is not the item you thought you were purchasing, contact the seller to resolve the situation right away. The same applies if the item is not as described, or if you feel that the shipping charges were significantly greater than what it actually cost to ship the item. Finally, most auction sites have a way to post comments about your transaction. You should post feedback immediately if the transaction was satisfactory, but you should try to work out any problems with the seller before posting negative feedback.

Tracking auctions
Many people claim to have amazing software that helps you manage your auctions. The truth is that if you have a web browser and a spreadsheet program, you have everything you need. When you first see an auction you're interested in, bookmark it in your web browser. Keep these bookmarks in the order that the auctions end and check the current high bid periodically. If it is higher than you are willing to pay, just delete the bookmark and either forget about it or look for another auction with the same item. When you win an auction, move the bookmark to a folder or list of bookmarks for auctions that require payment. After paying, move the bookmark to a list for auctions you're waiting to receive. When you receive an item, you can then use the bookmark for that item to post feedback before moving it to a section for received auctions. If you win several auctions, you will probably want to keep track of what you've won and how much it cost you, including the cost of shipping, postage, and any other fees. You can use a spreadsheet program to organize this information and determine whether or not you're being responsible with your money. If you've spent hundreds of dollars and all you have to show for it is a small box of junk, then you might want to re-think what you're doing.

If you've accumulated a lot of junk over the years, you may be tempted to fill up a dumpster and be rid of it. However, it's amazing what people will pay for junk, and thanks to on-line auction sites you can probably find them. Selling isn't something that I have experimented with yet, so you should first look to your auction site of choice for information. Much of the previous section on buying may also be of interest when selling items.

Describing your item
When you're all set to sell something, you'll need to put some thought into how to describe it. There are two general guidelines here: more information is good, more annoying HTML code is bad. Some people seem to think that flashy graphics, animations, and sounds will make people want what they're selling. Instead, it makes the auction listing slow to load and difficult to understand. Stick with plain text information describing everything that a buyer might want to know and a picture of the item (if possible), and you'll be in good shape.

Setting a price
Next, you'll need to determine a starting bid. This should be the absolute minimum you want to get for the item. You can set a reserve price if you want a starting bid that is lower than what you are willing to sell the item for, but this is rather pointless and quite annoying in most cases. There's always a chance that your minimum bid (or reserve price) will be how much your item sells for, so don't pick something that will disappoint you.

Picking a closing time
This is something that most people overlook. Since auctions usually last for a fixed number of days, the time you start the auction will usually be the time the auction closes. The close is when you want the most people bidding (since that's when most bidders who aren't brain dead usually place their bids), so you don't want it to be at 3AM. Potential bidders may be anywhere in the country, so you'll want to keep times in four time zones in mind. Think of when you and people you know are likely to be looking at auctions (usually evenings and weekends, since people never use the web for personal reasons at work, right?). If your auction won't last for exactly seven days, then you will also want to keep track of the day of the week that the auction will end.

That's it
If you need any other information, it can probably be found somewhere on the auction site you're working with. You should familiarize yourself with the policies of the auction site so you are aware of any legal rights and obligations that you will have as a result of participating in auctions. Most of all, you should take this seriously, since you are dealing with real people and real money.

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