One of the first steps in setting up an online auction is to select the primary bidding format and associated options that best fit the needs of your online auction project. Here are several questions you'll need to answer before getting started.
- Do you wish to allow bidders to use Proxy Bidding?
- Do you want to offer a fixed price, "buy" option on your auction listings?
- Do you want to sell multiple quantities of the same item at one time?
- Do you need to implement a reserve price?
Fortunately, AuctionAnything provides a number of options when it comes to selecting the right bidding format.
- Standard Bidding - single quantity format
- Traditional Bidding - single quantity format
- Combination Bidding - single quantity format, called Top X if multiple quantities
- Dutch Bidding - multiple quantity format
The standard bidding format may be the most familiar option due to its popularity on eBay. This listing type allows the bidder to place a Proxy Bid (aka Limit Bid or Maximum Bid). The Proxy Bid represents the maximum amount the bidder is willing to pay for a particular listing and is not known to any other bidder. By placing a Proxy Bid, the bidder authorizes the auction system to counter-bid on his/her behalf up to the Proxy Bid amount. It's important to note that the system will only bid the minimum amount required to keep the bidder in the lead.
Benefit: A bidder can place a one time bid for the maximum amount he or she is willing to spend. This approach can help save time and eliminate the need to counter-bid on a listing.
The Traditional bidding format does not use the proxy bidding concept but instead implements an Absolute Bid. An Absolute Bid (aka Tradition Bid) represents the fixed amount the bidder is committing to pay for the associated listing. Therefore, if successful, the high bid is raised directly to the full amount of the bid placed.
Benefit: Bidding may be more engaging due to counter-bidding (i.e. back and forth bidding) between multiple parties.
The Combination Bidding type was developed by AuctionAnything around 2005 specifically for fundraising clients. This format allows the bidder to choose which logic to use when placing a bid. The bid may be placed as a Proxy Bid or Absolute Bid. This option is not recommended for commercial applications.
Benefit: A bidder may place an Absolute Bid if he or she wishes to raise the Starting Bid immediately. With only Proxy Bidding, the initial bid cannot be raised without competition. The thought here is that a bidder may wish to pay more than necessary for an item simply to support the organization, while other bidders may wish to leverage proxy bidding.
The Dutch Bidding format is specifically designed for multiple quantity listings and will be discussed in another blog post dedicated to the topic.
All of the single quantity bidding formats mentioned above allow for the following listing options:
- Instant Purchase Price (aka Buy Now or Buy Price)
- Reserve Price
What about including a "Buy" price?
The "Buy It Now" option is referred to as Instant Purchase within the auction system. It's an option (not a listing type or format) to immediately purchase a single quantity, auction listing at a fixed price. Typically, the purchase price is set at a premium amount by the seller. There are two ways to implement Instant Purchase, so choose wisely.
- The Instant Purchase option disappears once the first bid is placed. This may be an incentive for someone to buy an item immediately instead of risking it at auction. However, the ability to buy the item may be short-lived.
- The Instant Purchase option remains throughout the bidding process. This version may upset the high bidder if executed, but he or she has decided to forgo the purchase themselves and knowingly risked losing it.
What's a Reserve Price?
A Reserve Price is the minimum amount that the seller will accept for the listing being sold. This price is not normally shown to the bidders. If the Reserve Price is not met, then the seller is not obligated to complete the transaction with the high bidder. However, the seller may opt to mention in the listing description that they will entertain selling the item to the highest bidder when the reserve is not met.
NOTE: A Reserve Price should NOT be entered if it's the same amount as the Starting Bid. In this case, the Starting Bid (aka Minimum Bid) acts as the "reserve" by default and the listing does NOT have a true Reserve Price.
A Few Don'ts
- Don't use more than one of the above single-quantity, bidding format options together. It may confuse your bidders and create problems. For instance, you'd never want a bidder to mistakenly place what they thought was a Proxy Bid on a Traditional listing. The bid would go immediately to the full proxy amount even if there were no bids on the listing!
- Don't change bidding formats from auction-to-auction. Again, this can create confusion amongst your bidders. Stick with your first selection unless it's absolutely necessary to switch to another option. If switching, please contact AuctionAnything for assistance.
- Don't use a Reserve Price on a listing unless absolutely necessary. In most cases, it's better to start the bidding at the reserve price instead. Bidders typically don't like to spend time bidding on something they may never win.
How about some examples?
For additional information and detailed examples, please see the Glossary on our demo site. As always, AuctionAnything is happy to assist with any questions regarding the setup of your auction website.