Internet Auctions

In the last few years, the Internet auction has exploded as a fast and easy way to get rid of unwanted goods. For small business owners, Internet auctions can be a cost-effective way to test market products in an online sales channel and to liquidate dated or overstocked merchandise.

In fact, the online auction business model has helped to change the way micro-enterprises do business -- for the first time, home-based sellers are able to quickly connect with a global market at a price they can afford.

eBay – the Internet auction market leader – currently has over 56 million active users, and thousands of budget-conscious home-based merchants around the world now make their living using eBay to sell their products.

Internet Auctions Explained

How Do They Work? (Procedure)

Internet auctions are often called online marketplaces. They bring buyers and sellers together in one Internet setting for the purpose of trading goods and services.

Most auction sites do not actually sell any products or services that they own themselves. They simply act as ‘hosts’ or ‘facilitators’ as they provide the structure necessary to list, display, bid and pay for goods and services online. The auction site functions as a local farmer’s market would function, as a meeting place to buy and sell goods people have brought with them from elsewhere.



Buying and selling processes differ, depending on the model of the particular online marketplace and the type of goods or services being sold. For example, some auctions are by bid only, some allow the sellers to set fixed prices for their goods, and some offer a combination of both. Some sites ask the buyer to name their price and see if sellers will match it, and some even ask the buyer to request goods or services they wish to buy.



Buyers may find items or services on an auction site by browsing through different categories, by searching using keywords, or in some cases, by visiting an auction member’s affiliated store. Then, they either bid on an item or service, against other users seeking to purchase the same item or service, or they choose to pay a fixed price which the seller has set in advance.



The auction site makes a profit by charging fees to list a product or service, and/or by taking a commission for each completed sale.