The word “Auction” reminds all of us of a huge room with precious products displayed and people gathered around with placards, bidding on the products they admire. Going Going Gone and the gavel strikes.
While Technology has disrupted many sectors, there are a few sectors that have transformed for the better. Auction marketplace is one such business that has grown its popularity immensely since its digital revolution.
In the post, you will gain in-depth knowledge of the auction industry and how to build an auction marketplace.
Just like the name suggests, an auction held over the internet is known as an online auction. Online auctions are sales transactions that happen after different participants competitively bid over a product or service. An online auction marketplace is a platform for sellers and bidders to bid for products. The bidding can be amongst individuals, merchant consumers, or businesses.
The auction sector saw exponential growth since the internet penetrated its operations. Online auctions can be classified into business to business (B2B), business to consumer (B2C), and consumer to consumer (C2C) auction.
Business to Business Auction - B2B auction simplifies the access of the global target audience in real-time, shifts products in bulk, and maximizes their profitability. The B2B auction can be either product-based or service-based. For Product-based B2B online auction marketplace is usually on first price seal bid type of auction. Whereas service-based B2B online auction is operating on the reverse type of auction. One such product-based online auction marketplace is Saltrex for bulk international product auction.
Business to Consumer Auction - B2B auction has been the most famous type as it was focused on analyzing single-item auctions in isolation from the market. The B2C auction marketplace can operate on any business model of an online auction marketplace. The most common type of business model in B2C auction is the incremental type. One such example of a B2C auction is Shopgoodwill which allows vendors to auction their products via an automatic bidding model.
Consumer to consumer Auction - C2C auction became prominent with the internet, making it possible for consumers to become sellers. The rating system allows trust and transaction between bidders in different geographical areas. Depending on the niche of the products in the marketplace, the business model can be decided by the marketplace owner. The most popular example of a C2C auction marketplace is eBay where consumers create a seller profile and auction the item on the portal.
|First- Price Sealed-bid||
In this model, the seller sets a reserve price for the product they are auctioning. Reserve price is the hidden minimum price for the product the seller is willing to accept. Once the bidding starts and the auction amount reaches or exceeds the reserve price, the auction will end. There is no time limit in this form of the auction and the bidder who reaches the reserve price will be the winner.
In this model, the seller/admin decides an incremental value for every product that they add on auction. The incremental value is an amount that will be added to the latest bid to make the amount of the bid higher for the next bidder.
Let’s explain it by a simple example: the seller/admin has set an incremental value of $5. Bidder A, bid for the product at the amount of 70$. The next bidder can only bid for the product at 75$. The winner will be the last bidder before the time of the auction is over.
In this model, a bidder places a bid for the maximum amount they are willing to give for the product. if another bidder places a higher bid then the previous bidder will be outbid.
The outbid bidder will get an update via email so that they can place another bid of the higher amount. Till the auction is expired, bidders can outbid each other on the product.
Launch Your Online Auction Marketplace According to Your Preferred Business ModelContact Experts
As the pandemic hits the world, people are increasingly preferring the online medium to procure products through bidding. Due to strict social distancing rules, many auction places are closed. Here are some latest statistics that are the online auction industry.
One thing an entrepreneur needs to understand is auctions are usually done for rare items that the customer would want to pay a hefty amount to procure. There is a service-based auction where a firm releases a tender and a reverse auction type takes place. Here are listed some common niches of the auction that you can launch for your auction marketplace.
Equipment - To auction medical, laboratory, or heavy-duty equipment that is not available so easily. One such website Labx is working on a dual system where a customer can purchase equipment or also participate in auctions. Another Such marketplace IronPlanet has been auctioning heavy-duty equipment.
Jewelry - Unique products make a different category in the online auction marketplace. Many bidders are finding unique jewelry items to add to their collection. This marketplace segment is gaining popularity due to the uniqueness the products portray. A such website with varied niches in a single marketplace is Propertyroom.
Domain names- A unique business niche attracts a lot of traffic as it caters to the pain point of the market and also due to a monopoly in the market. One such niche is the Domain name for which Sedo has been providing auction for keyword specified domain auction.
Vintage postcards - Collecting unique items is a hobby for many people. One such item is Postcards. Rare postcards by unique people or unique times are highly valuable for deltiologists. Invaluable is one such website that auctions postcards.
Vintage/rare coins & currency - Numismatic is a person who collects currency, including coins, tokens, paper money, and related objects. For these hobbyists, a marketplace that auctions rare/vintage coins make the process of finding easy.
Real estate - Bigger commodities like property with historic value or great location are auctioned at a much higher price. people understand the value of these properties and invest in them heavily. One of the most common forms of offline B2B auction has picked up popularity in the online world too. Auction.com is a website that auctions real estate around the world.
Cars - Many are passionate about collecting vintage cars. A marketplace where cars are auctioned off is picking up a lot of popularity. people have been increasingly bidding on these websites to get a hand on their favorite wheel. Auto Auction Mall is one such website.
Tickets - Tickets of important events or concerts are usually sold out around the dates. Some people want to make a profit by selling tickets at a higher price to those in need. There are rules and laws pertaining to tickets auction and an entrepreneur needs to check before starting an online ticket auction marketplace. One such website is Ticketmaster.
Many more - There are many other websites and niches for auction. An entrepreneur needs to think in the right direction and find a niche that will be widely accepted in the market. Here are some more market players of the online auction:
Disclaimer: The information provided above is general. Yo!Kart does not make any representation with the above mentioned websites.
Real-time Bidding - people want to be updated about a bid when the product is live and participate in the bid in real-time. A marketplace must-have features to allow bidders to bid in real-time. Real-time updates of the bid and dynamic countdown help provide a seamless experience to the bidders.
Encrypted User Information- Information about the bidders need to be kept encrypted by the marketplace owner to maintain a high level of security. Information regarding bid winners, personal information, payment information needs to be kept encrypted on an auction marketplace.
Auction Selection - The Buyer Journey of a bidder needs to be seamless on the online auction marketplace. The user must be able to navigate to the items, select the item the bidder wants to bid on, and bid easily on the selected product.
Auction Watchlist - After a bidder bids on a product, they want to keep a close tab on the product. To know whether the product is sold or still available for bidding. The marketplace should have a “My Bid” section where the bidders can check on the products they have bid on.
Advanced Analytics - An insight on sales figures, the number of bidders, traffic data is very important for the product owner before they can add another product to the marketplace. A marketplace must have advanced analytics to provide in-depth insights into the auctioned products.
Responsive Vendor Portal - The product owner/ Vendor must have a dedicated and responsive portal to effectively manage product auction. A separate portal for vendors facilitates better product listing and bidding management.
Automating Selection Process - The system should automatically select the winners of the auction according to the business model of the marketplace. The winning bidder must be sent an email automatically confirming the win and prompting further action for payment.
Smooth Product listing - The system must allow merchants to upload detailed information about the products. A product attributes functionality that allows merchants to add Product Name, Product Current Bid Price, Time Left (Dynamic Countdown), Number of Bids Placed and Encrypted User ID.
Seller management - The admin or owner of the website needs to keep a track of the whole online auction marketplace. The vendors must go through a strict background check. To avoid any fraudulent activities on the marketplace, the seller onboarding must be well-managed by the system itself.
Manage Auctions - The admin must have complete control of the marketplace, though the seller might be updating the product details, the admin must have control of editing the product listing. To maintain consistency in the marketplace, the admin can edit product descriptions, seller information, email content, bid increment, and everything else on the auction marketplace.
Automatic invoice processing and generation - To reduce the amount of work for the admin, the marketplace must be well equipped with automatic payment and invoice management. The system must have payment gateways that process the winning amount to the vendor after deducting the admin commission. The Invoice of the payment should be automatically generated by the system when an auction is complete.
Manage Bid Setting - The admin has the sole responsibility to set the bid settings. Before even starting the online auction marketplace, the entrepreneur first needs to decide the business model after which the bid setting needs to set accordingly. The incremental price, re-entry into the bid, allowing users to exit the bidding, and many more such settings need to be made by the admin.
One of the most important aspects of an online auction marketplace is to maintain security for the bidders. To gain the trust of the audience, the marketplace needs to have features that dictate surety. We have listed down some of the features that ensure the security and transparency of an online auction marketplace: