Online Auctions Reviewed

Article excerpt

If the web has been the great equalizer for frustrated writers who had difficulty getting their message published, online auctions have had the same effect on closet entrepreneurs. Online auctions allow just about anyone with internet access to put up nearly anything for sale, and have it available to a worldwide audience for bidding. This virtual yard sale has led to some auction fans changing their careers to become full-time online auction merchants.

The providers of the various online auction services have made it very easy to post items for sale and to bid on them. All that is normally required is to register as a user (a free process), and for sellers to fill out a form for the items they wish to offer.

A small fee is charged by the auction site for each item offered. This fee is frequently refunded, or a second auction is offered at no cost, if the item doesn't sell.

Bidders browse the offerings, which are sorted by category, and enter their bids by filling out another online form. The system notifies users by e-mail when they are the high bidder on an item, when a previous bid has been topped by another user, and when the auction has closed and what the results were. The buyers and sellers then contact one another by e-mail to arrange the final sale.

Some great bargains can be had via online auctions. I needed a wide-- anglecamera lens but the cheapest one that I could find retail was priced at $280. Searching the auctions on the Amazon.com site for "wide-angle Pentax K-mount" keywords, I found a seller in Arizona that had an entire set of Pentax lenses for $150. His camera body had been stolen and he had replaced it with a model that took different lenses. I was the only bidder, and the sale was complete within a few days. I sent him a check, and he sent the lenses, professionally packed. I wound up with three high-quality lenses, plus an assortment of filters and other accessories, for less than the retail store cost of one lens.

There was a chance that I would be sold a box of bricks, or nothing at all, and have no recourse except to travel to Arizona and hunt down the scam artist. Fortunately, frauds perpetrated via online auctions have been extremely rare. eBay, the first and the largest online auction site, reports fewer than 30 complaints of fraud per one million transactions - a fraud rate of less than 0.001 %. The chance that a retail merchant will shortchange you is probably greater than that.

For pessimists and skeptics (which includes most cops), there are safeguards available. Amazon.com's auction service was new at the time I made my purchase, and they offered a free "insurance" policy for all transactions below $250, guaranteeing against fraud. Insurance is still available on most auction sites, although there is typically a maximum insured loss of $2500 on any single transaction, and there is sometimes a small charge. Transactions on eBay are automatically guaranteed against fraud by Lloyds of London, up to a loss of $200, minus a $25 deductible.

There are also escrow services available that act as a go-between for the buyer and seller: once an auction is complete, the participants agree on the use of an escrow service and the buyer sends payment to the escrow service. Because most escrow services accept credit cards, this also allows sellers without merchant credit card accounts to sell via plastic. When payment has been received, the seller is notified by the escrow service to send the merchandise. When the buyer receives it and reports that he is satisfied, the escrow service pays the seller, and the transaction is complete. Escrow services charge a small fee (less than 5%), based on the purchase price of the item.

What Can I Buy (or Sell)?

You can deal in just about anything. The evolution of the online auctions sites have caused some merchandising rules, mainly because of problems created by the offering of certain sensitive merchandise. A few months ago, a human kidney was offered for sale, and bidding reached $2 million before the auction site cancelled the auction.

Most of the auction sites follow the lead of eBay, which forbids offering for sale of the following items:

Historical artifacts taken from public or Native American lands

Firearms, including ammunition, conversion kits and high-capacity magazines

Dead animals, although pelts, skins, hides and rugs of nonendangered species can be sold

Live animals

Fireworks and pyrotechnic devices

Human parts and remains

Stocks and certificates

Switchblade knives and weapons

Also prohibited for sale are police-- related items, especially badges. An exception is made when the seller is in possession of a letter from the law enforcement agency described on the badge, and giving permission for the sale. But these are rare. Many shoulder patches are available, as are other police memorabilia, like miniature pins, car models, and some uniform parts.

Items for sale are frequently accompanied by images, so that buyers have an idea of what they are bidding on. Images are created by either scanning a photograph or capturing the image with a digital camera. The images have to be posted on a remote site and linked to the auction page, but since most internet service providers include space for a web site in their membership packages, this is easy to do.

Bidding Mechanics

When a seller posts an item for auction, he lists the time limit of the auction - typically from 2 to 10 days. Auctions always include the time left to run before the auction closes, and bidding for items in demand can become fierce in the final moments.

There are two ways that a seller can insure they aren't forced to take a loss on the item. The first way is to specify a minimum opening bid, which is presumably the lowest price that the seller is willing to accept for the item. If no one offers a bid at that level, then the seller is not obligated to sell.

The other method is to establish a "reserve" price when the item is put on the block. This insures against a low bid without revealing how low you are willing to go on. When an item is offered on a reserve auction, a notation next to the current bid will indicate whether or not the reserve has been met. Buyers don't know the exact amount of the reserve, although they see when their bid has met the reserve. If bids don't meet the reserve, the seller doesn't have to sell.

There are also "Dutch auctions," where multiples of the same item are offered. This method is used by many conventional merchants to expand their customer base. The seller identifies how many of the items he has for sale, and sets the minimum and reserve bids, if desired. Bidders can bid on one, more than one, or all of the items. Each bid is calculated as the product of the number of items bid on times the bid itself. The actual price paid is the lowest successful bid, regardless of how much any individual bidder offered. If there are more successful bids than items for sale, then the earliest bidders get the merchandise. Small electronic parts, such as cellular telephone batteries, are frequently sold by Dutch auction, and at substantial savings over store or mail order prices.

The Auction Community

Auction participants aren't operating in a complete vacuum. Each registered user (you have to be registered to sell or bid) can contact a buyer or seller by e-mail to ask questions about an item, or to clarify conditions of a sale. Registered users also have a feedback file that serves as their online reputation as auction participants.

When a transaction has been completed (or fails to be completed), each user can post a feedback comment to the other user's file. This is viewable by all other auction participants, and the comment is rated as positive, neutral, or negative.

The auction site summarizes the feedback file by citing how many comments in each category have been posted. Negative comments are scarce, and are usually the Mark of Cain for participants in future transactions. The vast majority of comments are overwhelmingly positive, as the online auction scene appears to be populated by basically honest, well-meaning people. This is a refreshing departure from the quality of character observed at many swap meets and flea markets.

Can an online auction be used to dispose of stolen property? Probably, but not without leaving a significant paper trail. Registered users have to supply a mailing and e-mail address, as well as a telephone, in order to transact business. Messages, checks and packages have to be exchanged, and most crooks don't remain at one place long enough to make this work. The extremely low rate of reported fraud is evidence that this market has been unexploited by the criminal element.

eBay is the largest of the auction sites, but others work in about the same fashion, and have different merchandise (and policies). If you don't find what you want on one site, try another. Look in the category listings first for the item you want (or want to list), or try a search for key words or phrases. If you are looking for a particular model number of a product, this is often the best way to see if one is offered for sale.

If you're looking for a bargain, or have items to sell, online auctions are a good venue to try. The cost of selling is minimal, and the cost to bid is zero (unless, of course, you are successful). If the experience of others is any indication, you can have a profitable and enjoyable online experience.

[Reference]

Online auction sites:

ebay

http://www.ebay.com

[Reference]

Amazon.com Auctions

http://www.amazon.com (click on the "auctions" tab)

Yahoo! Auctions

http://auctions.yahoo.com/

Lycos Auctions

http://auctions.lycos.com/

[Reference]

City Auction

http://www.cityauction.com/

DealDeal.com

http://www.dealdeal.com/

Auctions.com/

http://216.33.88.51/

[Reference]

The FairMarket Network

http://www.fairmarket.com/network.htm

Bid.com

http://www.bid.com/

[Author Affiliation]

Tim Dees is a former police officer who writes and consults on technology in law enforcement. He can be reached at (706) 235-8104, or at dees@compuserve.com