1. Introduction
The meaning of auctions and how they work
We can say that auction is a market mechanism by which purchaser make tenders and traders (dealers) place offers. The competitive and dynamic nature are the main characteristics of auctions by which the final price is reached, also auctions are an applicable method of commerce and trading for generations; transact with services and products for which traditional marketing channels are inefficient.
The Internet, nowadays, supplies an infrastructure for doing auctions at lower price with many more dealers and purchasers.
2. Dynamic pricing and Types of auctions
Auction has a major characteristics which it’s based on the dynamic pricing. “Dynamic pricing” refers to a purchase operation (transaction) where the price or the cost is not fixed.
On the other side, prices in supermarkets, department stores, and the other storefronts are fixed because they are catalog prices. Different types of auctions are available, each one of them has its own procedures and motives. Based on how many purchasers and traders are involved, it is customary to assort dynamic pricing into four main categories, and each of them can be done off-line or online.
Types of auction:
A) One Buyer, One Seller
Each side can use bartering, bargaining, or negotiation. The final price will be determined by the power of bargaining, demand and supply in the item’s market, and maybe business-environment factors.
B) One Seller, Many Buyers
Forward auctions are used here by the dealer (the price increases with time in these auctions). Another example of this type is Sealed-bid auctions. In a first-price sealed-bid auction, the product is granted to the highest bidder while in “Vickrey auction” (a second-price sealed-b...
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...and arrangements for payment and shipping are included in these activities.
Easy! Auction (saveeasy.com) is a typical post-auction tool.
Summary
We have introduced the meaning of auctions and how they work, and explained the relationship between dynamic pricing concept and types of auctions. In addition to the benefits of online auctions, we talked also about the auction process and software development.
To conclude, one of the main issues in e-commerce in these days is how to integrate the Internet into offline businesses, so a company that can offer and provide its services both offline and online can add value to the customer’s experience.
References
1- Introduction to electronic commerce (3rd Edition) [Efraim Turban, David King, Judy Lang].
2- Korper, Steffano and Juanita Ellis: The E-commerce book: Building the E-Empire. San Diego, CA; Academic Press, 2000.
There are no statutory guarantees available at traditional auction using auctioneer if the goods purchased do not fit for the purpose, do not correspond with the description and do not have an acceptable quality. (ACL s 2)
This is when two or more persons who want the same item and keeps bidding the price up until it reaches a fair market value. By law you most have a least two persons present to conduct an auction. Then the highest bidder buys it for the final bided price.In advertisement for auction houses that catches must people eyes is to get fast cash selling personal property. The advertisement means just that you can get money within fourteen days or less after the auction house sells your personal property. The auction business has been around for a long time with a good track record for selling anything that has a price or doesn't have a price.
Markets have different structures or models, all function under the view of competition. Competition in economic terms is understood to be the situation in market where the monopoly power is absent or very limited and no power is influencing product price or quality. Hence a competitive market is the one in which none of the participants possess market power. A competitive market achieves efficiency in the allocation of scarce resources if there are not other market failures present. The major four known competitive market models are: 1- Dynamic Competition put forward by J. Schumpeter.
1. What is a price taker? Discuss the assumptions that are made in order to obtain the perfectly competitive model.
English auction (EN) – where bidders outbid each other until no-one else is willing to bid against the current bid. The participant who placed the current bid wins the auctions and pays the bid amount.
Online Auction e.g. eBay. In common with new online retail brands, before the emergence of Internet technologies, this concept was not possible. Essentially eBay is a Consumer-to-Consumer (C2C) business. For more information on how online auctions work, see the lesson on eMarketing and price.
As with all markets and their respective economies, having equilibrium is one of the key factors of a successful system. Although most markets do not reach equilibrium, they attempt at getting close. There are numerous methods devised to reach equilibrium, whether they involve human intervention directly or a cumulative decision by all factors involved. These factors may be a seller's willingness to lower overall revenue, or a buyer's willingness to withhold some demand for a certain product. Of course, the basics of supply and demand retrospectively control the equilibrium in the market.
Based on these concerns, retailers in the international marketplace have their work cut out for them. But through proper education of consumers, and the ever-expanding growth of the infrastructure in many countries, the future seems to be leaning heavily towards using the Internet for many needs.
Priceline.com is an e-commerce site which when founded in 1998, brought forth a new angle to conduct business. Traditionally marketers scan the market to determine which prices purchasers are willing and able to pay for products or services. The sellers then offer their product for a price which meets their internal criteria. With priceline, instead of the seller setting the price, the buyer makes an offer of what he or she is willing to pay and sellers compete for the buyers business. This innovation represented a first in that general non commercial consumers have never been able to name the price they will pay and have sellers respond.
At prices lower than the market price, e.g. 2Op, the quantity demanded will exceed the quantity supplied, giving rise to a condition known as a sellers’ market. This is illustrated in Figure I I .3.
The futures markets are described as continuous auction markets and exchanges providing the latest information about supply and demand with respect to individual commodities, financial instruments, and currencies. Futures exchanges are where buyers and sellers of an expanding list of commodities, financial instruments, and currencies, come together to trade.
Currently in international market and domestic market, there are two types of the purchasing methods purchaser uses. One method for the buying the products from the market is “spot market buying” and the second method of buying the products is with “future contract”. The on the spot method is also called “cash market” or “physical market”, where the products, currencies or commodities sold for cash and delivers the products immediately or within short period of time. For example, “oil, grains, silver, beef, sugar, natural gas, milk, and gold are done through the spot market, where the prices are the set by open market and the transfer of cash and goods takes place immediately”, and deliver as requested date in the future or within short period of time. The spot market is an instantaneous exchange for the current list or spot price for a particular commodity. With the integration of internet technology, the spot market has become even more efficient and useful especially in the energy industry. If energy companies have large surpluses of energy, the internet can give them a chance to find buyers in current need almost immediately. Though the spot market is good for company I need “right now”, its drawback is the fluctuating prices that can cause chaos when calculating the logistics over the long term.
The second market structure is a monopolistic competition. The conditions of this market are similar as for perfect competition except the product is not homogenous it is differentiated; thus having control over its price. (Nellis and Parker, 1997). There are many firms and freedom of entry into the industry, firms are price makers and are faced with a downward sloping demand curve as well as profit maximizers. Examples include; restaurant businesses, hotels and pubs, specialist retailing (builders) and consumer services (Sloman, 2013).
...ount of untrustworthy and reliable sellers. EBay could counteract this problem by implementing a strategy where eBay would have the authority to terminate a user’s account if their rating in percentage dropped below 60%. This strategy may help the organisation to reduce the amount of unreliable seller resulting in a much more safer and reliable market platform where people would be able to purchase products at ease without any hassle.
E-commerce is about two decades old, yet due to its fascinating dimensions, it remains a challenging area for researchers and professionals.