Businesses of all sizes are finding avenues to use the Internet to market their products. One of the more recent trends, especially for smaller businesses, is the use of Internet auction sites for both sale and purchase of products.
Types of Internet Auctions
There are two main types of Internet auctions. In an ascending price auction (often referred to as a “forward” or “English” auction); a seller puts up product for sale on the seller’s own site or an Internet “marketplace” site, and bidders place bids in ascending amounts. After a pre-determined time, the top bidder pays the seller, completes the transaction and the product is shipped. Ebay.com could be considered an ascending price auction site.
In a descending price auction (often referred to as a “reverse” or “Dutch” auction), a buyer announces its product needs on its own or an Internet “marketplace” site and sellers submit their lowest price. After a pre-determined time, the seller selects the lowest bid, completes the transaction and the product is shipped.
Auction Seller and Buyer Rules
Most auction sites have a method whereby buyers can rate sellers and sellers can rate buyers. Sellers are prohibited from placing false testimonials in their auctions. Sellers must also refrain from placing bids on their own products to increase the price. As reported on the Federal Trade Commission’s web site, “(t)hese practices are not only unethical, they’re also fraudulent.” Sellers also may not offer illegal items through Internet Auctions. The Federal Trade Commission provides additional details to protect sellers and buyers on their website.