Online auctions
By Gillian Kerr, RealWorld Systems
The information in this article is current as of December 5, 2002.
The online auction industry is a fascinating demonstration of how the Internet is changing business by enabling small buyers and sellers to become a major economic force. Online auctions are an increasingly cost effective way to buy a full range of goods, and will become a useful purchasing channel for nonprofits in the next couple of years as they become easier to use. They will also become popular fundraising tools for selling donated goods.
There are many online auction companies, including eBay,
uBid, Yahoo
and Amazon. I'm going to focus
on eBay, the most popular and well-known of the online auctions, for several
reasons.
- eBay is the biggest online auction company, which makes it the most attractive
to both buyers and sellers. Auctions are excellent examples of the network
effect, in which the value of a network increases with the number of people
using it. Like phone systems, auctions are only useful if there are lots
of people to interact with. Other auctions may be appealing to smaller niche
markets, but for real action it's hard to beat eBay.
- eBay has a significant Canadian presence, and is sensitive to Canadian users. On eBay.ca you can select to see prices in Canadian dollars and to restrict your searches to items that are available in Canada, or within any of 12 Canadian metropolitan areas. Choosing a local supplier can save a lot in shipping and repair costs.
- eBay has a peer rating system that allows buyers and sellers to score each other on reliability and honesty. It also offers a 'SafeHarbour' service to reduce the risk of fraud and to mediate disputes. Like Amazon, it has developed a highly sophisticated interface that's been honed by thousands of suggestions and complaints by users.
- Third party services have been developed to expand the usability of eBay. They include PayPal, the successful online financial service which was recently bought by eBay, as well as 'sniping services' that make bidding less risky and sellers' agents that can post on several auction sites at once.
eBay has become such a powerful vehicle for moving products that many retail stores and manufacturers, including Henry's Camera stores, Radio Shack and IBM, are using it to sell discontinued or slightly damaged goods.
Charity Auctions
Volunteers OnLine recently announced
that, "eBay Canada, OnTarget, TakingITGlobal, and Making IT Work for Volunteers
have partnered to create the eBay.ca
Charity Auction Volunteer Program...At the eBay.ca charity page, charities
raise funds selling unique items while also helping to raise funds for worthwhile
causes! ...There are 1.5 million registered Canadian eBay users, with over 41,000
new users registering to eBay each day! Over 100 charities have raised $1 million
since the launch of eBay.ca Charity Fundraising in April 2001. eBay.ca charity
auctions can be seen by over 55 million registered users world wide...Charity
auctions can effectively complement traditional auctions by opening up to the
world's largest online trading community."
Charity auctions don't have to be restricted to items that are relevant to 55
million users worldwide, either. eBay has introduced a 'local
trading' option that allows buyers to search for goods that are available
within their region. When I looked at the Toronto offerings there were a whole
lot of tickets for the Raptors and Alanis Morrisette. It's not uncommon that
entertainment companies donate a pile of tickets at the last minute; usually
the tickets are offered to clients, volunteers or staff of the agencies. With
local trading, it may be possible to sell the tickets within a few hours.
There are a number of 'auction
management services' that attempt to help sellers post items more easily,
or post to several auctions simultaneously. I've not researched them, so don't
know how helpful they would be for nonprofits seeking to create an online store.
Making bidding easier
I had never been seriously interested in buying from eBay because of the requirement that you sit by the computer until the very last moment of bidding ð and often lose to someone who gets in a last bid with seconds to spare (that's called 'sniping'). While auction junkies love the excitement and drama of the chase, it's a timewaster for organizations.
New third party services like Bidnapper
and eSnipe (see full list at the end of
this article) make the bidding process more predictable. For example, you can
make simultaneous bids on several auctions, and only pay for the first successful
bid; all of the other bids will be automatically cancelled. And they automate
all the sneaky sniper tools so that you don't have to sit beside the computer
yourself. Bidnapper offers 10 free days of use to give you a chance to play
with the various features; I highly recommend using one of these services.
To use online auctions, do your research on what items you want, decide on the highest price that you'd be willing to pay (and make sure you understand the shipping charges and any conditions of purchase), and then set up your bidding service to bid for you. That way you won't be lured into bidding too high.
Incidentally, even if U.S.-based sellers are willing to ship to Canada, try to avoid cross border shipping. It often costs a fortune, and you're often hit with unexpected GST or other costs when the package arrives. And good luck if there's a problem with the product! Shipping it back and forth over the border is just not worth it.
Peer ratings and online reputation
One of the most exciting community features of the Web is the emergence of peer
ratings for all kinds of interactions. For example, Slashdot,
the famous news site for nerds, gives 'Karma
ratings' to people submitting stories based on the quality and number of
their submissions. eBay assigns every buyer and every seller a rating based
on the feedback that they receive from their customer or vendor. As
eBay explains, "Feedback is the way you let other users know how you feel
about your dealings with a particular user. A user's feedback is a key factor
people use to determine whether or not they want to trade with that user. What
feedback you give or receive is an important part of your trading reputation
at eBay." Users can receive any rating from dark sunglasses, meaning that they
are new to eBay and have no buying/selling history, to 'red shooting star',
meaning extraordinarily positive ratings from many sales. Con artists are likely
to keep changing their email addresses and signing up for new eBay accounts,
so many vendors will refuse to sell to buyers without a decent reputational
rating.
The important message for nonprofits is to buy only from vendors with a good
rating, and to read the comments from previous customers. They are often illuminating.
In
this example, you can see comments on a highly rated Toronto-based computer
vendor from 60 buyers, all of whom have ratings themselves from the people they
have previously bought from or sold to.
On eBay, just as in real life, you can't escape your reputation unless you create another identity.
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Bidding services: All of the following web sites were active as of December 7, 2002:
Auction Sniper www.auctionsniper.com
AuctionStealer www.auctionstealer.com
AuctionBlitz www.auctionblitz.com
AuctionTamer www.auctiontamer.com
Bidnapper www.bidnapper.com
eSnipe www.esnipe.com
HammerSnipe www.hammertap.com/powertool
iSnipeIt www.isnipeit.com
************
Gillian Kerr, Ph.D., C.Psych.
President, RealWorld Systems
gkerr at realworldsystems.net
Read my weblog at http://blog.realworldsystems.net
