“How do Dutch Auctions Work on eBay?” by Jason James
A multiple-item (‘Dutch’) auction is an auction where more than one of the same item is being sold at once. There are two kinds of Dutch auctions.
Without Bidding.
The most common Dutch auctions are actually a combination of two auction types: they’re multiple-item fixed price auctions (Dutch Buy it Now auctions to you and me). This just means that you can offer more than one of an item at a time for a fixed price.
This is very powerful if you’re selling something small in large quantities. You can just say how many of the item you have, and the Buy it Now auction will stay there until its duration is up or all the items have been sold.
Buyers aren’t limited to only buying one item at a time, either: they can enter how many they want and then just click Buy it Now to get them. If you’re selling small things loose, then this can be really great – instead of selling them in packs of 50, you can sell 24 to one person and 95 to the next. It lets buyers save money by buying exactly what they need, and it lets you offer them the flexibility to have as many or few of an item as they want.
With Bidding.
Dutch auctions can also be done by bidding, but the process is rather complicated. Buyers bid a price and say how many items they want, and then everyone pays the lowest price that was bid by one of the winning bidders. Let’s say there are 10 of an item for sale. Anne bids $5 each for 4, while Bob bids $4 for 6. Anne will get her 4 and Bob will get his 6, but they will both only pay $4.
Here’s another example. If there are 5 items for sale and Anne, Bob, Carol and Dean want to buy 2 each, then obviously someone is going to lose out. Whoever bid the lowest will only get one of the item. If Anne bid $5 each, Bob bid $4 each, Carol bid $3 each, and Dean bid $2 each, then Anne will get 2, Bob will get 2, Carol will get 1 and poor Dean gets nothing. So then: how much they pay for the items?
Starting to sound like a particularly evil math problem, isn’t it? The answer is that everyone will pay $3, as Carol’s bid was the lowest one that won anything. If you have trouble getting your head around that, then don’t worry – everyone else does too! That’s why Dutch auctions with bidding are so rare.
Yours in success,
Jason James
Consultant and eBay Power Seller
Founder, Auction Resource Network
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Jason James is originally from Boston, MA. and has spent time in the U.S. Marine Corps learning some of the discipline that is required for a successful home-based Internet marketing business.
Jason has built a long track record of success mastering eBay and building profitable membership websites.
His first Internet success was selling products on Internet auction site eBay, becoming a power seller then eventually putting together the website www.auctionresourcenetwork.com which detailed the exact steps a person can take to make money on eBay.
Jason’s most recent venture is putting together a series of Online videos made by some of today’s top Internet marketers to help budding entrepreneurs get trusted information to help their online businesses grow to phenomenal levels.
Jason has kindly allowed us to post one of his articles about how to be successful on E-bay each day for the next couple of months. Thanks Jason.