Features Research & Innovation
AUCTIONS IN THE INTERNET AGE

Auction sales are as old as commerce, and they can be fun as well as being a cost-effective way of buying a variety of items. My first experience was at a police lost-property auction

when I was a student and bought a tire in new condition for my car for five shillings (under $1), when a new one would have cost about $15. There were a few hundred items for sale that day and I remember being amazed at the variety.

Today, the largest auction sale in the world is on the Internet at www.ebay.com. It claims to have over a million items on sale at any one time, and its July earnings report states that the total value of items sold was US$1.3 billion in the second quarter of 2000.

The variety of items on eBay is mind-boggling. The most expensive I have seen is an antique warplane (P-51 Mustang) with the top bid at US$500 100, but a large proportion of the items on sale have bids of under $20.

HOW DOES IT WORK

When you first visit the site, you can look at any item you wish, but you have to register to offer an item for sale, or to bid on an item. The auction consists of lists of items for sale with closing dates normally a few days to a few weeks away. You can click on any item to see specifications and histories of bids and in most cases can contact the seller for further information.

Once registered, you can submit a bid simply by typing in the amount you wish to bid. To save coming back to check bids by others, you can enter the maximum amount you are willing to pay. If other bids force you to raise the ante, eBay software will automatically increment your initial bid in small amounts to that point.

If you are the successful bidder, you have a legal obligation to contact the buyer and complete the transaction. The seller also has a legal obligation to complete the sale.

SECURITY

You are generally dealing with people you do not know, which is a major concern for many potential users.

The eBay organization takes a variety of measures to minimize the extent of dishonesty in the system, principally by excluding buyers and sellers who run up numerous complaints. You can make complaints against unsatisfactory service, which are posted on eBay, and are readily accessible to other customers. Most of the sellers seem to be small businesses who sell repeatedly on eBay, so have some incentive to maintain a reputation. However, it is much easier for a fly-by-night to come and go in cyberspace than in a small town.

In practice, most of the operation depends on trust, and the fact that most people are honest. The large and increasing volume of sales is a testimonial to the overall success of this way of selling. However, the fact that most transactions seem to be satisfactory will be poor consolation if you are taken on your first bid.

My son bought some snowboard equipment on eBay, at less than half the price he could buy for in a store. Several of his friends have used eBay and are satisfied with the results.

New computer equipment seems to sell about 20% below the prices in the best discount shops.

THE PAPER INDUSTRY ON EBAY

Nobody was selling office paper, corrugating medium, kraft pulp or linerboard the day I checked. Of course, eBay is oriented to the individual consumer, and paper products like those are not likely to be in the mainstream. eBay is not a competitor for Forest Express or the several companies that are trying to develop a business in trading paper on the Internet.

CANADIAN ISSUES

Most vendors on eBay are Americans, although eBay has sites oriented toward Canada and several other countries. Many vendors state that they will ship within the US only.

The Canadian site (the URL is http://pages.ca.ebay.com/index.html) is really a window on the worldwide site, but can have the items offered screened to show only those in Canada, or those vendors who have stated that the are willing to ship to Canada.

The Canadian window on eBay also quotes prices in both Canadian and US dollars, which is convenient.P&PC