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Online auction is a market mechanism where sellers have the opportunity to list items for sell and also buyers can request bids from suppliers. The online auction can be exclusive or open to members of the public. Sellers and buyers make sequential bids and item price is often determined by the highest bid. There are two main forms of auction; forward auction and reverse auction. Forward auction is conducted by a seller through a selling channel or intermediary targeting many possible buyers. A common forward auction example is ebay.com which acts as a third-party auction seller. In a reverse auction there is usually a single buyer interested in purchasing a product or delivering service. This is commonly used by large organizations and governments.
Online auctions provide businesses and individual sellers with an instant and a larger number of prospective clients looking for listed items. Online auctions are also a better avenue for companies and individuals in need of getting rid of unwanted products at an acceptable price. It is commonly used by companies to free up their inventories from excess products. As a seller, online auctions provides new sales channel
Because most online auctions use a third-party intermediary companies incur limited electronic commerce technology costs in terms of hardware and software installations. Companies also avoid the need to hire IT staff and consultants and saved costs may be channeled to other company needs. Third-party online auctions enable businesses to avoid dealing with billing and shipping tasks which are often conducted by an intermediary. For instance the use of payment companies like PayPal and shipping companies like FedEx or UPS to deal with logistic issues. This is beneficial to the seller because it reduces the transaction cost for the company involved in the transaction
It is also a great avenue for buyers to easily find unique and inexpensive items thus enhancing customer convenience and greater access to a larger of pool of collectibles and unique items at a cheaper price. Online auctions also provide anonymity to the buyer. Buyers purchasing high value product may keep their identity unknown to the seller thus providing anonymity.
Online auctioneers benefits from higher repeated purchases as clients routinely visit the auction site in search for different products at discounted prices. Online auctions also provides extra source of revenue in form of advertisement because customers often spend more time on the auction site compared to e-catalogue sites.
E-catalog is used by companies to present their products to customers in an online format. It is considered as a product database for promotion and attrating potential buyers. E-catalog are categorized by how a product is presented to buyers and how it is displayed or integrated with the business process.