The Bidding Game

As a frequenter of traditional auctions I initially found it difficult to imagine online auctions could hold the same appeal. I derive immense pleasure from browsing through musty old warehouses littered with boxes of bric-a-brac and second-hand furniture. Watching an auctioneer positioned behind a podium, shouting out bids, and plucking the bidding codes from the marauding pack of people who follow each lot, waiting for their chance at a bargain, is a sight to behold. And the excitement of bidding, which happens at a frenetic pace, or just observing the action, is quite exhilarating.

According to a recent report released by International Data Corporation (IDC), online auctions solve many of the limitations endemic to traditional auctions, such as confined geographic scope, minimal product variety, hefty transaction costs, and inadequate background information for bidders during the event. Not only are auctions ideally suited for the Internet, but companies are realising that auctions are good for e-commerce as well, often driving brand awareness and user retention.

Until this year, most of the auction sites available online had been based overseas, predominantly in the US. And while this had not deterred avid online bidders, the rise of local sites (locally produced or local versions of overseas varieties) has made online auctions more accessible for the wider population. Not only is the tyranny of distance greatly reduced, meaning that larger goods can be shipped for a lesser cost, it also means that converting the cost of your bid is no longer required. In the heat of the bidding you don't want to find that you have overbid, due to a discrepancy in your conversion rate.

First, check out these tips and guidelinesGetting startedLet the bidding beginPayment and deliveryTips for smart biddingPlaying it safeAuction sitesSold! To the party in the blue browser!

And that's all there is to it. Now you just sit back and wait for your bargain item to arrive. A final word of warning: online auctions can be extremely addictive. Once you get caught up in the bidding process, it's easy to spend more money than you intended. Nevertheless, careful and persistent bargain hunters are rewarded. Keep your wits about you, and you can find some amazing deals.

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First, check out these tips and guidelinesGetting startedLet the bidding beginPayment and deliveryTips for smart biddingPlaying it safeAuction sitesGetting startedThere are a couple of online auction styles. The most common works like a virtual garage sale. The site itself simply serves as a venue for private individuals to hawk their wares through a uniform auction procedure. This type of auction offers a variety of goods, but reliability depends on the integrity of the seller. Most sites that specialise in person-to-person transactions have come up with a clever way to promote honesty among participants, through feedback forms. But more on that later. Some of these sites are also promoting business-to-person transactions, encouraging small businesses to set up shop on the auction sites, whether it is to clear excess inventory or expand their Web presence.

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First, check out these tips and guidelinesGetting startedLet the bidding beginPayment and deliveryTips for smart biddingPlaying it safeAuction sitesLet the bidding begin Once you've found some likely sites (see "Auction sites"), you'll need to know a little about the actual bidding process.

First off, with any site you'll be asked to register to receive a user ID and password. The information you are required to provide varies. For starters, many of the Australian sites stipulate that you need to be over 18 years to trade. Then, depending on the auction site you need to submit some personal details.

On the person-to-person sites, for example Yahoo (http://au.auctions.yahoo.com) or Stuff (www.stuff.com.au), credit card information is not required as payment procedures are worked out independently between the buyer and the seller.

Generally e-mail and residential or business addresses, as well as passwords are the minimum contact information required - eBay (which by the time you read this will have launched its local site at www.ebay.com.au), will not allow its users to register with free or Web-based e-mail accounts.

Sites like Sold (www.sold.com.au) may also require a balance in your online auction account (for example $10) to cover costs such as commissions or fees. Remember, if a site requires complete credit card information ensure it is sent over a secure Internet connection.

Now you're ready to place a bid. Unlike real-life auctions, the online type can last from a day to a week or more. The most common style is the "standard" auction, in which multiple bidders can bid on a single item or several identical items. The highest bidder or bidders are successful when the auction closes.

When an auction starts, there is a minimum bid - usually an absurdly low amount that changes fast, like $1 for a ten-speed bike or $299 for a mid-range PC system. You then bid by clicking a button that increases the minimum bid by a preset amount. Your bid remains as the top bid until another user ups the ante once again, and so on.

A "reserve" auction is another style favoured, and it differs from a standard auction in that a seller is not obligated to sell the posted item until a certain price has been met. According to Stuff's marketing manager Justine Carter, you are more likely to sell your item if you post your reserve price. Otherwise buyers have to guess how much they need to bid in order to win the item.

Several sites use a process called "proxy bidding" in which you determine at the beginning the maximum amount you're willing to pay. From there, as others enter new top bids, your bid is automatically upped by the preset amount until your maximum is reached.

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First, check out these tips and guidelinesGetting startedLet the bidding beginPayment and deliveryTips for smart biddingPlaying it safeAuction sitesPayment and delivery If your bid is the highest (or among the highest for multiple items) when the auction closes, then you've just bought the goods. There's no going back, and refusal to purchase may constitute "false bidding", which is a crime, so make sure you really want what you're bidding for. In person-to-person auctions, you're not technically required to buy the item you've won the bid for, but it's considered extremely bad etiquette to back out after bidding closes.

Now it's time to arrange payment and delivery. Policies vary from site to site, but you may be able to arrange overnight delivery and even purchase shipping insurance.

For the most part, once you've bought an item, you're stuck with it, so be sure to read the site's policies carefully before bidding.

If you've submitted the winning bid on an item in a person-to-person auction, then the payment and delivery process is quite different. In this case, the seller usually (but not always) will detail the payment and delivery policies, along with the item description, before bidding takes place. If you submit the top bid, you'll be asked to send a personal cheque or money order and your item will be mailed when payment is received.

Sound a little scary? It is. There is no way for person-to-person auction sites to enforce fair play - the site simply acts as a venue for personal transactions, no different than a newspaper classified ad.

Many sites have added escrow services to alleviate any trepidation buyers and sellers may have. Basically escrow services operate in a similar fashion to say bond merchants, where the money is deposited with the escrow provider, who then holds the money in an account until the goods are sent and received by the buyer. When the buyer agrees they have received, and are happy with the product bought, then the money is transferred to the seller.

In an effort to keep everybody honest, many sites employ a type of peer review process. eBay, for example, has devised a successful system called the Feedback Forum. This area allows buyers and sellers to indicate whether they've had a positive or negative experience when trading with someone else. These comments are reflected in a "feedback rating" number - the higher the number, the more trustworthy that user is, according to their history at eBay.

Since eBay requires all registered members - buyers or sellers - to provide full contact information (address, phone number), this keeps all transactions squarely in the virtual public eye.

Other sites have also adopted this policy, as well as encouraging e-mail contact between the potential buyer and sellers. If you are serious about bidding online, it pays to do your homework and read up on your potential merchant.

Some sites will pass on the contact number of the seller so you can finish the deal. Other sites will not, for fear of the deal being finished offline, and thereby excluding other bidders and the auction site itself. Yahoo, for example, allows the seller to choose either the highest bidder, or they can choose a bidder with a higher rating - who may be perceived to be more trustworthy, and have proven themselves on the auction site. Keep in mind that there are no warranties or return policies other than what you and the seller informally agree upon.

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First, check out these tips and guidelinesGetting startedLet the bidding beginPayment and deliveryTips for smart biddingPlaying it safeAuction sitesTips for smart bidding Knowing a few basic strategies and rules can make all the difference when bidding at online auctions. A big part of it is simply keeping your wits about you. The bidding process can be a little addictive, and you can easily end up spending more than you planned.

Figure out the approximate retail value of the item you're bidding on. It makes no sense to shop online for something you could get cheaper down at Tandy.

Place a bid early. If there's a tie when the auction closes, the early bid wins.

Use proxy bidding when possible. Proxy bidding lets you establish a maximum amount you're willing to spend. The site will bid on your behalf, but only enough to outbid the previous high bidder. When your maximum is exceeded, you drop out. (You can raise your maximum bid later and rejoin bidding.) Note the auction's closing time. If the item is still within your price range, you may be able to sneak in a last-minute bid just as bidding closes. (Auction sites usually keep bidding open five minutes after the last bid, even if that means going past the close. You'll often see a lot of furious bidding towards close for in-demand items.) Talk to the seller if you have any questions whatsoever about the item you're bidding on. All sellers have e-mail addresses and most provide phone numbers.

Always read the instructions and tutorials for the site you plan to use. They often include site-specific tips and tricks for getting the most out of the service. It's in the site's best interest to facilitate as many transactions as possible, so they want to keep you happy and coming back.

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First, check out these tips and guidelinesGetting startedLet the bidding beginPayment and deliveryTips for smart biddingPlaying it safeAuction sitesPlaying it safe Despite the potential for abuse and scams, online auctions - even the person-to-person variety - are generally pretty safe. That's because dishonest operators attract a lot of attention. Auction sites and regular users spend a lot of time tracking down and keeping out the bad guys. But you can still get scammed if you're not careful.

A few basic tips:

Determine the seller's reputation. Most person-to-person sites have some sort of peer review system - check with former buyers to see if the seller has a history of good or bad dealmaking.

Make sure the auction site you're using keeps accurate files on users. eBay requires members to have a traceable e-mail address. Anonymous Web-based addresses must be supplemented with credit card information. It's a good policy, and tends to keep people honest.

In a person-to-person transaction, call your seller to cement the deal. Most sellers provide a phone number, and that's a good indication they're on the up-and-up. You can get a much better sense of a person on the phone than through e-mail.

Use the peer review system. This type of cooperative open-market policy only works if buyers provide feedback. If you had a good experience, say so. If you didn't, definitely say so!

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First, check out these tips and guidelinesGetting startedLet the bidding beginPayment and deliveryTips for smart biddingPlaying it safeAuction sitesAuction sitesBidFind www.bidfind.comeBay www.ebay.com.auEzebid http://ezebid.com.auInternet Auction List www.internetauctionlist.comOzEtrader www.ozetrader.com.auSold www.sold.com.auStuff www.stuff.com.auTreasured www.treasured.com.auUbid www.ubid.comYahoo http://au.auctions.yahoo.com