The Functioning of an Online Auction Platform

Traditional auctions have today moved from the usual on-premises environment to the online ecosystem for a couple of reasons. One is the benefit of increased profitability that an online auction platform brings to the table. The next is by compulsion as Governments have imposed lockdowns and strict social distancing regulations due to the Covid-19 pandemic.

To understand the functioning of an online auction platform, it is necessary to make a comparison between the two on certain parameters.

Let’s start with the convenience factor. In the past, participants of an auction had to commute to the event and be present physically to take part. This often meant shelving other work for the whole day. On the other hand, an online auction platform uses specialized software to conduct the process. Anybody from any corner of the globe can register for an auction and bid from an Internet-enabled device such as a smartphone, tablet, desktop, or laptop.

And that is not all. You do not have to continually track the auctions also. Just place your bid on the platform for a specific item and go about your daily chores. When that is over-bid by somebody else, a notification will be sent to your bidding device, giving you the option to bid higher or drop out.

Moreover, you can make a one-time bid that is much above the base price. You do not have to monitor the progress for long periods while others carry out hectic bidding for that item. Only when your bid is reached will you be notified about it. The downside is that if the bids stop way below your mark, you still have to pay the higher value for the product.

After convenience comes the cost factor of an online auction platform which is much lower than on-premises auctions. The first saving area is in hiring a venue and an auctioneer which can be substantial and eat into your profits. Online platforms on the other hand operate virtually using specialized software for the purpose. They offer fully managed services starting from registration of the participants, conducting the bidding, declaring the winners, and providing multiple gateways for payment. All these services are available against a nominal administrative fee only.

Another area where considerable savings is assured for the organizers on an online auction platform is the display of goods. In on-premises auctions, the goods have to be physically transported to the venue for displaying and handing over to the highest bidders. In online auctions, the goods stay with the sponsoring merchants and only the photos are uploaded on the platform.

Finally, the reach of the physical auctions is limited largely to the local population whereas, for online auctions, the bidders can be located in any corner of the world and bid from there. Prices are consequently higher as a result of increased competition, leading to more profits for the organizers.