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Chapter 1. Frequently Asked Questions > What are online auctions?

What are online auctions?

Most online auctions deal with computer-related items, while some have gone into other areas of merchandise. Online auctions are a newer phenomenon than online stores, but there is an increasing number of players. The big difference between stores and auctions, besides the way you procure goods, is the entertainment value involved in auction sites. Online auctions are also able to generate large profit margins by purchasing excess goods at well below retail price, starting the bidding at less than that, and riding a bidding process that drives the final price well past what the auctioneer paid but still well below the retail price. Everyone goes home happy.

Onsale, Inc. (www.onsale.com) was the early leader in the online auction battle. Onsale requires participants to bid upward in $25 increments to help guarantee lucrative profit margins. But although Onsale, which recently merged with software/computer online retailing store Egghead, may have been the early leader, mention Internet auctions today and most people will think, “eBay!” (www.ebay.com). eBay enables people to sell goods online in an auction style and has become the leader in online auctions and personal selling. Amazon.com, Lycos, and others have also jumped into the personal auction fray, but it is eBay that pioneered the concept and remains the leader.


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