We are here to give you the Sight & Sound of Information Technology
In order to understand that what is e-auction?? We have to understand that
what is an auction. Auction is a process in which a seller solicits the bids
from many buyers or a buyer solicits the bids from many sellers. In auctions,
the price of the product (which is to be sold) is not pre-fixed. Although the
minimum price is decided. But, selling price is determined by the bids, usually
the highest bidder wins.
Limitations of off-line auctions:
There are some limitations of the traditional off-line auction, some of them are:
- The off-line auctions give buyers, comparatively less time to think and react.
- Bidders don't have enough time to examine the good, thoroughly.
- All the Bidders must be present physically at the auction spot.
- Mostly it is difficult for seller, to bring the product to the auction site.
- Commissions are high.
The auctions which are conducted online are called electronic auctions or e-auctions. In e-auctions, the prices changes rapidly, the prices that change rapidly on the basis of supply and demand, are known as Dynamic Pricing.
Types Of e-Auctions:
Following are some types of e-auctions, based on the number of buyers and sellers involved in auction process:
One Buyer, One Seller:
An auction in which one buyer and one seller, are involved. The price is determined by the negotiations between these two.
One Seller, Many Buyers:
It is the type of auction in which one seller entertains the bids of several buyers. The highest bidder will win. It is most commonly used auction type. It is also known as Forward Auction.
One Buyer, Many Sellers:
It is the type of auction in which one buyer entertains the bids of several sellers. It has following types:
An auction in which one buyer places an item for bid and several sellers bids on it, is called reverse auction. The price in each subsequent bid will reduce continuously and ultimately the lowest bidder will win. It is also known as Tendering.
It is an auction in which a buyer (would be) specifies the price of an item which he or she wants to purchase, and invites the sellers, the seller who will provide the desired item on the buyer's specified price (with maximum facilities or offers), will win. It is a C2B model. Its example is Priceline.com.
Many Sellers, Many Buyers:
The auction in which multiple buyers and multiple sellers are involved, at the same time.
The auction in which multiple buyers bids at same time and their bidding prices are matched with the multiple sellers and their demanded prices, is called Double Auction.
Advantages and Disadvantages of e-auctions:
Following are some advantages of e-auction:
- It can be used as co-ordination mechanism.
- It can be used as a social mechanism to determine the price of a product.
- It can be used as highly visible distribution mechanism.
- It can be used as an important E-commerce component.
Following are some disadvantages of e-auction:
- It provides minimal security.
- There is possibility of fraud.
- The participation may be limited.
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