|
ebay logo source: www.go.developer.ebay.com |
Internet
auctions started as a hobby for a few computer people in the San Francisco area
to have a “virtual swap meet” and get rid of some things they had, and find
some things they wanted. In just ten years, this fun little idea has become a
multi-billion-dollar enterprise and a global phenomenon, and amazingly,
presents one of the best low-risk opportunities in history to start or grow a
business! The potential is unlimited and still growing. Online auctions
generate very high revenues for sellers and often, good deals for buyers, and
the transaction costs are usually reasonable. The best part about this is that
the marketplace is open to everyone.
Recently,
online auctions have been in the news for less optimistic reasons like scams
and fraud. For the same reasons eBay enables speed, anonymity and a global
marketplace to honest buyers and sellers, it also provides opportunities for
the behaviour of less honest members of the community, in particular, credit
card scams in certain Third World locations. However, there are many millions
of auctions every day, and like the majority of any community, the vast
majority of these auctions are run fairly and more importantly, they are making
the sellers a tremendous amount of money. Where there is opportunity there is
risk. I’ll help you understand both, to maximize one and avoid the other.
How do online auctions work?
An online
auction is just like any traditional auction, fundamentally. Someone (a
“seller”) offers something either at a set price, a minimum price, or on open
bidding. Others (“bidders”) make offers on the item by stating what they will
pay. Upon successful completion there will generally be a “highest bidder,” who
has now become the “buyer.”
There is
one main difference between eBay and a traditional auction like you might have
seen at Christie’s or Sotheby’s: eBay facilitates the auction but never takes
possession of the goods, and makes no specific warranties about the item’s
quality, the seller or buyer’s honesty, nor does it play any direct role in
payments relating to buyer’s and seller’s, but rather,