Online Auction

Why Trust Techopedia

What Does Online Auction Mean?

An online auction is a service in which auction users or participants sell or bid for products or services via the Internet. Virtual auctions facilitate online activities between buyers and sellers in different locations or geographical areas. Various auction sites provide users with platforms powered by different types of auction software.

Advertisements

An online auction is also known as a virtual auction.

Techopedia Explains Online Auction

Online auctions mirror traditional auctions and usually involve multiple bidder participation. In both scenarios, bidders and sellers buy and sell tangible and intangible products and services. Starting bids are low but increase at steady rates to meet market demand and item popularity. The time span of an online auction ranges from one to 10 days for items offered 24/7 worldwide.

Online auctions are a widely accepted business model for the following reasons:

  • No fixed time constraint
  • Flexible time limits
  • No geographical limitations
  • Offers highly intensive social interactions
  • Includes a large numbers of sellers and bidders, which encourages a high-volume online business

Online auctions include business to business (B2B), business to consumer (B2C), and consumer to consumer (C2C) auctions. Ebay is the best example of an auction site that uses all three methodologies.

The online auction business model continues to evolve according to market needs. Examples include eBay, WebStore, OnlineAuction and Overstock. Ebay and other providers encourage legitimate bidding activity through bidder block lists. EBay also offers Dutch auctions for large inventories, where auction bidders pay according to an item’s highest sale price.

Like other online services and activities, online auctions can attract stolen or pirated products.

Advertisements

Related Terms

Margaret Rouse
Senior Editor
Margaret Rouse
Senior Editor

Margaret is an award-winning technical writer and teacher known for her ability to explain complex technical subjects to a non-technical business audience. Over the past twenty years, her IT definitions have been published by Que in an encyclopedia of technology terms and cited in articles by the New York Times, Time Magazine, USA Today, ZDNet, PC Magazine, and Discovery Magazine. She joined Techopedia in 2011. Margaret's idea of a fun day is helping IT and business professionals learn to speak each other’s highly specialized languages.