Fred Hapgood is a freelance writer based in Boston.
How Do I Bid on Thee? Let Me Count the Ways
There are almost as many types of auctions as there are things to sell on them. Here are a few:
- ENGLISH OR COUNTRY: Sellers present an offering and buyers bid prices up.
- BID-AND-ASK: Buyers "bid" the highest price they are willing to pay and sellers "ask" the lowest price they are willing to accept. An intermediary brings buyers and sellers together.
- DUTCH: The auction has a limited duration; the price is changed by a fixed amount (dropped if run by the seller; raised if run by the buyer) at preset intervals. The first bidder to meet the price as it is set at that time, wins.
- MULTIPLE-ITEM: A number of identical items are placed in the same auction. Goods are distributed to the highest bidders.
- TIME-LIMITED: The highest bidder at a specified time wins.
- FLASH: These auctions are over fairly quickly--sometimes in minutes. They use live auctioneers who entertain bids either through a chat room, Internet telephony, or streaming video.
- DOUBLE: Sellers lower their reserve (minimum selling price) in response to buyer bidding behavior.
- INTEGRATED: On-line bidders participate in an auction at a real auction house. A live auctioneer takes bids from the floor and enters them into a computer, where they are displayed to bidders coming in through the Internet.
Certain auctions may combine several of these features. For instance, in "bid or buy" auctions, sellers specify a floor (a reserve), a duration, and a ceiling (a fixed price). Items go to either the highest bidder or the first person who is willing to pay the fixed price.
Tools of the Trade
The technology for conducting business-to-business on-line auctions is becoming increasingly sophisticated. The following is a list of tools that have just been introduced and some sites that use them.
- LIVE VIDEO (www.bid.com): Real-time video of the products being offered
- AUCTION ALERT (www.acubid.com): Ticker that allows users to simultaneously monitor multiple auctions from multiple Web sites
- ROTATION (www.rbid.com): Technology that presents bidders with three-dimensional, rotating images of items for sale
- AGGREGATION (www.businessbots.com): Software that permits businesses to aggregate several individual auctions into one large specialist auction in order to increase traffic.
Deal Making at the Speed of Light
FastParts is a rapid-fire game of give-and-take that lets buyers and sellers of electronic components converge on a fair priceSuppose you are an original equipment or contract manufacturer working on a $10-million circuit-board project. The project is canceled, leaving you holding several thousand units of inventory representing 50 different part numbers ranging from microprocessors to switches, for which you have already spent $50,000. Your friend Sammy the liquidator will give you $5,000 for everything. You can accept his offer. Or you can log on to FastParts' site.
The first thing you do upon entering the site is to survey requests from buyers looking for parts; all will have posted the quantity they need and the price they are willing to pay. Sometimes--but very rarely--the posted requests will take care of your problem. Normally, you will type in the parts and quantities you have to offer, as well as your asking price (which will be informed by the prices you saw in the buyers' corner). That offer will be both posted and E-mailed out to everyone looking for those particular parts. The fact that all buyers see the offer simultaneously puts pressure on the individual bidder to conclude a deal.
A buyer may respond at once, offering to take the entire lot at your asking price, but more likely you will get a counteroffer for a fraction of the quantity at a lower price. At the same time that counteroffer is presented to you, FastParts is E-mailing it to everyone else selling that particular part. (That puts pressure on the seller to conclude a deal.) If you respond with a counteroffer, that is also E-mailed to all the buyers.
In theory, the communities of buyers and sellers will converge rapidly on a price. If that doesn't happen, the parts will be moved into a conventional auction (also on the FastParts site), which discounts prices faster and moves goods more quickly.
The Sites
