Auctioning has been a way to buy and sell goods or services for thousands of years. In an auction the seller sets a low starting price and a group of buyers bid incrementally higher prices until a winner emerges. In the past, these auctions were limited to large lots of excess merchandise, foreclosed or confiscated goods, or specialty items that would be sold to the public in person at an auction house on a specified date. Today a large part of e-commerce is comprised of online auctions, selling practically anything to a worldwide pool of buyers, 24 hours a day, 7 days a week. There are a number of online auction sites but the largest marketplace by far is eBay, followed distantly by Yahoo!Auctions.

Pierre Omidyar founded eBay in 1995 with the intent of creating a forum to sell collectible Pez candy dispensers online. The site grew as an online marketplace for individuals to sell and buy items from each other. Early in its history eBay was seen as nothing more than an auction site for the sale of hard to find collectibles and antiques. eBay has since shed that image and is now the largest online auction marketplace for just about any product or service one can imagine. On any given day, there are more than 12 million items, in more than 18,000 categories, listed on eBay. In less than 10 years eBay has grown from a living room experiment to a massive selling tool, totaling $14.87 billion in gross merchandise sales for 2002.

Online auctions are mainly person-to-person, business-to-business, or business-to-customer sales relationships. New and used items are posted, usually with a picture, description, warranty, and shipping information, and buyers are allowed to bid their price. When the auction closes, usually after five to seven days, the bidder with the highest price wins and is contacted by the seller to facilitate the transaction. After a transaction is completed both buyer and seller are usually asked to leave a feedback rating about each other’s performance. Future buyers can gauge a seller’s credibility by using these feedback ratings.

With such large amounts of products being sold in a marketplace where both buyer and seller remain virtually anonymous, problems are expected to arise. Making purchases through online auctions does entail a certain amount of risk for buyers and sellers. Problems can include broken items, items different than what the buyer expected, stolen items being sold, and stolen credit cards being used for purchases. Feedback can help to establish credibility through a good track record of transactions; however, it is not foolproof. There are a number of great deals that can be bought through online auctions, but there is no way to be 100% sure about purchases, so buyers beware!

Online auctions, such as eBay, have certainly revolutionized the way that we buy things as well as brought about new problems. Anyone with internet access now has the opportunity to be involved in a market place where they can get almost all kinds of products, while also being actively involved in setting their price. As we move deeper into the 21th century, forecasts estimate that the total number of online auctions as well as types of products offered will continue to grow.