Online Auctions - Things to Watch

As with any new venture, there are things of which one must be aware as one embarks upon the journey. We will briefly discuss some of the things of which you need to be mindful in regard to online auctions.

When choosing an auction site, one of the factors that one should consider is the focus of the auction. By that I mean what type of products or services it offers. Is it general merchandise or does it focus on a particular category. For example, does it offer a variety of items for sale or does it focus on electronic items or computer software or jewelry. Choose according to the type of merchandise you desire.

Types of online auctions

There are basically three types of internet auctions: person-to-person auctions, commercial auctions and real-time auctions. We will talk briefly about each.

• Person-to-person auctions - these usually take place between individuals instead of companies. Beware, however, of companies who "dump" their whole inventory into this type of auction and offer reserve pricing (which we will discuss later) that are not reduced from the normal retail pricing. This type of auction probably will offer the greatest variety in the products and services offered for sale.
• Commercial auctions will spotlight companies who offer their products for sale in the auction business model. This avenue can be used by companies to eliminate surplus inventory, reconditioned or discontinued products. Still other companies will use this platform as an additional means to sell their retail items.
• Real-time webcasts - these are, as the name suggests, live auctions that are broadcast via the internet. The beauty of this type of auction is that bidders can participate in person or via the web from anywhere in the world. Be prepared to pre-register if you desire to join this one, however.

Minimum bids versus reserve prices

This is another area of new information for me. There can really be a big difference between minimum bids and reserve pricing. Minimum bid is defined as the opening bid for an auction, whether a physical auction or an online auction and it may be as low as a few cents. There are many auctions that also have a reserve price. While this price is generally kept secret, it is considerably higher than the minimum bid. If you are dealing with a commercial site, be sure to check the fine print regarding these reserve prices.

Online auctions can be an entertaining, rewarding and financially beneficial experience if one follows some simple guidelines. These guidelines really don't differ much from those you would employ if you were dealing with a local business entity. What item will you buy today?

James Wittering writes for LuckyBidder, an online bidding and entertainment shopping website.