While technology has disrupted many sectors, there are a few sectors that have transformed for the better. The 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 online 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) auctions.
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. Product-based B2B online auction marketplace is usually on first price seal bid type of auction. Whereas service-based B2B online auctions are operating on the reverse type of auction.
One such product-based online auction marketplace is Saltrex for bulk international product auctions.
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 transactions 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. The 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 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 to the 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 with a simple example: the seller/admin has set an incremental value of $5.
Bidder A, bid for the product in the amount of 70$. 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 for the higher amount.
Till the auction is expired, bidders can outbid each other on the product.
The online auction industry has seen significant growth in recent years. This can be attributed to a number of factors, including the increasing popularity of eCommerce, the convenience of online shopping, and the wide variety of products available through online auctions. Additionally, the use of mobile devices and the widespread availability of high-speed internet access have made it easier for consumers to participate in online auctions from anywhere.
As a result, the online auction industry is expected to continue growing in the coming years. The online auction market share is expected to increase by USD 1.90 billion from 2021 to 2026, and the market's growth momentum will accelerate at a CAGR of 9.7%.
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, a website named Labx is working on a dual system where a customer can purchase equipment or also participate in auctions. Another similar 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 collections. This marketplace segment is gaining popularity due to the uniqueness the products portray. One 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 points 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 auctions for keyword-specified domain auctions.
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 them 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 for 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.
Limited Edition Products - Limited edition products are unique branded items created and sold for a limited period in a specific market. These products get launched in almost all the industries like fashion, apparel, cosmetics, technology, etc. StockX is among the key players in this niche market.
It is a resale marketplace that allows you to buy and sell the most coveted items at their actual market price via an auction model.
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 in the online auction:
Disclaimer: The information provided above is general. Yo!Kart does not make any representation of 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 the 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 needs to be kept encrypted by the marketplace owner to maintain a high level of security. Information regarding bid winners, personal information, and 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, and bid easily.
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 into sales figures, the number of bidders, and 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 auctions. 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 automated 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 is solely responsible for setting the bid settings. Before even starting the online auction marketplace, the entrepreneur first needs to decide on the business model after which the bid setting needs to be 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.
There are several options available for launching an auction marketplace, including both open-source and proprietary solutions, however, the best-suited way will depend on your specific needs and budget. Some popular options include:
This involves creating a custom platform from scratch, either by hiring a development team or using a platform-as-a-service (PaaS) provider. This can provide more flexibility and control over the final product, but it can also be more expensive and time-consuming.
Some marketplace builder software like "Sharetribe", "Arcadier" and "Marketplacekit" allows you to create an auction marketplace with minimal technical knowledge, but it may have limitations in terms of customization and scalability.
This involves using a pre-built platform, such as an open-source solution like Yo!Kart. This can be a cost-effective and quick way to get a marketplace up and running. Yo!Kart is highly customizable auction marketplace software allowing auction businesses to tailor the platform to their specific needs and branding
The platform includes built-in SEO features, making it easier for businesses to improve their search engine rankings. Additionally, the platform is user-friendly and easy to navigate for businesses to manage their online store. As the business grows, Yo!Kart’s scalable architecture allows for accommodating the growing needs of businesses.
Ultimately, it's important to evaluate your specific needs, budget, and resources before deciding on the best way to build your auction marketplace. It is advisable to do thorough research and testing of the solution before making a final decision.
Before jumping onto the bandwagon of the online auction marketplace, an aspiring entrepreneur needs to find the right business model which will be perfect according to the niche of the business. A well-thought-out and researched business will be able to incorporate functionality for an upward trajectory.
The system that you choose launch your online auction business must-have essential features and functionality to support the business model. Yo!Kart is a standalone multi-vendor platform that can be customized to accommodate the auction module. This is a completely customizable auction marketplace software that can be enhanced to suit different business models.
There are multiple software available in the market to build an auction marketplace. However, Yo!Kart is a leading auction marketplace software with a customizable and scalable architecture that can accommodate the requirements of a fully-functional online auction marketplace.What is the cost to create an auction marketplace?
The cost of building an auction marketplace depends on the approach to building the marketplace. Development from scratch would require a huge amount of time and effort, eventually increasing the cost. However, development using an auction marketplace software like Yo!Kart will be cost-effective and in no time. Yo!Kart’s packages start at $999 which goes up to $7499 as per the customizations.