An online auction is simply the latest version of the oldest trading method in the world. For centuries, whenever two parties wanted to exchange goods for goods, or goods for currency, they entered into a negotiation over the value or cost. When more than two parties wanted the same goods, an auction often ensued – and the person who made the highest bid won the day.
The methods have changed, and the variations are many, but the principle has remained pretty much the same since shells and pretty stones were the currency of choice.
Different types of online auction
In the same way that variations of face to face auctions were developed over time, there are several types online. These are the most popular:
- Timed auction: multiple buyers compete for a lot and the highest bid (at the time when the sale closes) wins
- Reverse auction: several suppliers negotiate (lower) their prices while presenting their offer to a single buyer
- English auction: bidders compete in a real-time until the highest bid is achieved and there are no more offers
- Penny auction: the bidder pays in advance for the number of bids they want – regardless if they win or not
Bidding at an online auction
To bid at an online auction, you would usually need to start off by setting up an account. This confirms your identity and protects other bidders from rogue traders distorting the bidding and obstructing a fair sale. For this reason, we would advise people to beware of entering an auction that does not require you to set up an account first.
Just like when attending a more traditional live saleroom auction in person, the really smart buyers will do their research first. The auction company hosting the sales should give you access to a full catalogue where you can view the items (or ‘Lots’) that will be put up for auction. After viewing the catalogue and identifying the goods that you are interested in buying, you can compare the prices available elsewhere and devise your buying strategy. In the same way that the internet has revolutionised the auction industry, you’ll find that price research is much easier than it used to be.
With a clear price strategy in mind, and your target items firmly in your sights, all you need to do is enter the bid price that you want to start at and watch to see who moves next. If someone else bids beyond your limit, you can turn your focus to Plan B – and if no one goes near your estimate, you’re quids in and smiling.
It’s important to bear in mind that once you commit to bidding, you are also committing to pay for whatever you win. Make sure you’ve got sufficient funds to purchase whatever you bid on, as most auctioneers won’t cancel the transaction without a very good reason.
Allowing for auction fees and delivery costs
Most online auction companies will also have other administrative costs to include: buyers premiums, internet fees and VAT for example. Once again, it is important to understand all of the costs and extras before setting your target bid price and working out what you are willing to pay. That’s why we have a final price calculator on our website to help you work out the price of your won Lots including these elements.
In the old days, when bartering was face to face and trading over the counter, you could usually make the exchange of goods there and then in person. However, until such a time as the clever tech bods work out a way to de- and rematerialise matter online, your goods will need to be collected or delivered. So, make sure that you’ve allowed for delivery costs when working out the price you want to bid.