Types of Online Auctions

Types of Online Auctions
By Mary Solomon

What is Online Auction?

Online Auction is the online business model. Participants participate through bidding for products and services over the internet. Online Auction sites have specific auction software that regulates the overall process of auction and make the buying and selling functional.

Types of Online Auctions

There are two major types of online auctions.

- The English Auction
- The Dutch Auction

Both of these auctions use different ways:

• To make bids i.e. written, visual, or oral bid.
• Different sectors for making bids i.e. public or private sector.
• Differ in the rules of sequence for bidding it may increase or decrease gradually, or increase and decrease simultaneously.

The English Auction

In English Auction, prices start up from low and then increase gradually by successive bidders. In English Auction auctioneer of the good or service starts from the lowest price and price will increase with increments or the bidders are also allowed to increase the price with whatever increments they want to make. Rise in price stops when the bidders don't want to increase the price further. EBay, Yahoo and Amazon are the examples of English auction.

The Dutch Auction

In Dutch auction, auction starts with high price level decided by the bidder and then gradually falls down until the bidder gets the buyer who is willing to purchase the goods at asked for price. In Dutch auction, in the beginning the product's price is very high. Dutch auction is very suitable for perishable goods such as food and flowers. Decision of higher starting price is based on the recent history of sales of similar goods. In Dutch auction multiple identical items are kept in one auction which are sold to all winning bidders on same price. TFA or Tele Flower Auction is the example of online Dutch auction.

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