Help - Getting Started - Online Auctions
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What is an online auction?
An online auction functions just like a physical auction. Sellers put items up for auction for an allotted time, and potential buyers bid on the item until the auction ends. The highest bidder wins the auction and pays the seller. The difference is that the listing and bidding are done electronically on the Web.
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How do online auction sites work?
A registered member of an auction site lists an item for sale within one of the auction site's categories. The member writes a description of the item, and, often, attaches an image of the item to the auction. The user then determines the type of auction, its duration, and the opening price of the item. Next, buyers bid on the item electronically by submitting incremental bids or a maximum bid to the site's bidding system and server. At the auction's close, the highest bidder wins the auction. Per the site's terms of service agreement, the highest bidder is obligated to buy the item. If a winning bidder reneges on this obligation, he or she will likely receive negative feedback from the seller. The deadbeat bidder can potentially be penalized by the site, as well.
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What is the difference between an online auction and an online auction site?
An online auction is a single "lot" or sale of an item on an online auction site. An online auction site is the host and maintainer of the auctions.
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Do I have to pay money to use an auction site?
No, not necessarily. Browsing an auction site is free. Registering as a member of an auction site is also free. However, most sites, such as Amazon.com Auctions, eBay, and Auction Universe charge insertion fees and commissions. Typically, the insertion or listing fee is a small percentage of the item's opening bid. In addition, auction sites earn a commission from all auction sales, derived as a percentage of the auction item's final price. This commission is also referred to as a Final Value Fee. As a buyer, you are obligated to deliver payment for any auction in which you are the high bidder at the auction's close.
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Do auction sites operate differently or are they all the same?
In general, the rules that govern online auctions are the same from site to site. All person-to-person auction sites handle listings and bidding electronically, and offer the standard auction formats, such as straight, Dutch, and Reserve. In addition, most tend to have similar policies regarding suspension for not respecting their terms of service agreement; for example, failing to make payment to sellers or not delivering items to buyers, misrepresenting auction items, and shilling (inflating the price of an item with fraudulent bids).

Different auction sites do label their auctions and features differently to distinguish themselves from each other. For instance, eBay has trademarked its automated bidding system as Proxy Bidding. Yahoo Auctions simply calls it automatic bidding. Finally, not all auction sites are person to person. Onsale, for instance, sells merchandise that has been acquired directly from manufacturers.
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What auction sites are the largest?
eBay is by far the largest auction site. Right now, it has more than 2 million items up for sale in a wide variety of categories, from collectibles and jewelry to computers. The other major general sites are Yahoo Auctions and Amazon.com Auctions (items number in the hundreds of thousands). Excite Auctions, Up4Sale, boxLot, CityAuction, and Auction Universe have inventories in the tens of thousands.
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How do you become a member of an auction site?
Each auction site includes a registration system that allows you to register as a member of the site. To register, you must provide personal information, which will allow other users and the service to identify you while using the site. This is essential to the health of the site because it maintains accountability for individual buyers and sellers. All services require you to submit your name, home address, phone number, email, and sometimes a credit card number. You must also submit or accept a username, which will be your screen name while bidding and selling, and a password, which allows you to bid and leave feedback.
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What types of merchandise are available on auction sites?
The large auction sites feature every type of item imaginable, from collectibles and antique curiosities to art and staple items, such as clothes, real estate, and cars. By far, however, the most popular category of merchandise on most sites is the collectible category.
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Do some auction sites specialize in specific types of collectibles?
Yes. Sites that cater to a specific collectible are appearing more frequently. Currently, these sites are likely to specialize in a certain type of memorabilia (baseball cards) collectible (coins, Beanie Babies, stamps), antique (pottery, glassware, paper), or electronics, such as computers.
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Are there any restrictions on what can be auctioned online?
Some auction sites restrict the auction of guns and pornography. For instance, eBay has banned the buying and selling of any firearms, including antique guns. Auction Universe prohibits the listing of adult material. In addition, almost all auction sites restrict the sale of "infringing items," pirated merchandise that the seller does not have the right to sell. Obvious examples would include pirated audio, video, and software, all of which have explicit user agreements and copyrights, warning against their illegal duplication and sale.
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