Auctions are an interesting way to sell goods, particularly for businesses interested in investment recovery. In an auction, an item is placed up for bid. Either the seller or the person in charge of the auction sets a minimum price for the item, and it is at that price which bidding starts. People then bid on the item and the highest bidder wins. That's the basis for almost all auctions. Today, however, there are two main types of auctions: traditional brick and mortar auctions and online auctions.
Traditional brick and mortar auctions usually take place at a specified location in a community and at specified times. Some places hold an auction on the first of every month, for example. Individuals interested in attending the auction gather at a set time at that location. An auctioneer leads the auction proceedings. Each item up for sale is brought out individually and is briefly described. An opening bid is stated by the auctioneer and is raised incrementally with each new bid. For example, the opening bid may be $500. Once a bid is placed for $500, then the auctioneer may ask for bids of $600. When it appears that no more bids are going to be placed, the auctioneer closes the bidding and the highest bidder walks away the winner.
A number of problems prevent traditional brick and mortar auctions from being as successful as possible for sellers. First, many people do not feel comfortable in the auction atmosphere and may not bid even though they would be willing to pay more for the item up for bid. Plus, since these auctions take place only during a specified time and a specified location, many people who would be interested may not be able to participate in the auction.
Because of these problems, many people are switching to online auctions. Today tens of millions of people from every corner of the world are currently using Internet auctions to make purchases. In 2000, just over 35 million Americans participated in online auctions. That means that almost one third of the country's population was going online to take part in the bidding processes. Plus, those numbers have dramatically increased in the last four years.
The biggest appeal of online auctions is convenience for both buyers and sellers. When the seller makes the decision to auction off an item, he or she can immediately create the listing and post it either to the firm's auction site (if they have access to auction software) or to a third-party auction site. As soon as the listing is up, the bidding can begin, so there are no delays involving planning, making preparations, or waiting for the specified date as there are with brick and mortar auctions. Bidders from anywhere in the world can then place bids on the item or can ask the seller questions about the item by email, which is a feature not available with brick and mortar auctions. Because bidders can comfortably participate in the business process from the seclusion of their home or office, even people who would not normally take part in an auction can do so.
Another benefit of online auctions is that it fosters increased competition among bidders. Since more people can and do participate in these Internet-based auctions, the number of participants a company's product will be exposed to are much greater than they otherwise would be. The bottom line is that the more bidders available, the higher the price is likely to go. A higher price means a larger investment recovery for the company that is selling the goods or products. Plus, with online auctions, sellers can check out the reputation of the bidder. With brick and mortar auctions, there is no way to determine whether the bidder is legitimate or not until it is too late. With online auctions, the seller can view statistics for the bidder to see how many auctions they've successfully won and paid for without problems.
While traditional brick and mortar auctions may have once been the standard investment recovery method for businesses, today more companies are turning to online auctions as a more profitable and convenient solution. As the trend continues to grow, brick and mortar auctioneers will tend to specialize in only certain areas.