Online auctions have improved the traditional auction model in several ways. For example, an online auction may run for a week, ten days, or even longer, giving potential buyers plenty of time to find the item, search for similar items, examine the results of previous auctions, and decide if they want to bid. Furthermore, potential bidders can ask the seller for more information about the item.

Another plus is that online auction sites are typically built around relational database software. This enables the site to store seller and buyer identifications and track items, bids, selling prices and other details.

On sites that offer automatic bidding agents, a buyer can place a bid and store the maximum price she is willing to pay. The seller and other bidders do not see this information. The bidder does not have to keep logging on to the Web site to see how she is doing. If there are other bids, the bidding agent will keep raising her bid automatically, up to the limit she has posted.

Types of Online Auctions

Three types of online auctions are in general use. They are:

• Straight (or absolute) auction

• Reserve auction

• Dutch auction

Straight auctions, sometimes known as absolute auctions, are the most common. A seller has only one item up for bid, and no reserve price is set. The seller establishes the opening price and then waits for bids. At the end of the auction, the seller has to accept the highest bid, even if it is not a penny higher than the opening price.

In a reserve auction, the seller sets a “reserve” price. This is the lowest amount she is willing to accept in return for giving up the item. When a buyer attempts to place a bid that is lower than the reserve price, he will likely receive a response such as “reserve not met” from the auction site, and his bid will not appear. When a bid higher than the reserve price is received, a message such as “reserve met” will be displayed in the listing, and the high-bid price will also show up. At this point, from the buyers' perspective, the auction is under way.

In a Dutch auction, a seller can list multiple quantities of the same item. Multiple bidders can win, or a few bidders may try to buy more than one quantity. In any case, all bidders pay the lowest successful bid amount, even if they bid higher. (There is also a so-called Yankee auction. It is very similar to a Dutch auction, except that each winning bidder pays his high-bid price.)

Outbid? Maybe Not!

Here is a cautionary tale to keep in mind once you start using online auctions. If you bid on an item, and another bidder pushes the price higher than you wish to pay, you might assume that you have been knocked out of the auction. You might even search for a similar item in another auction or on another auction site and place a bid on it. Be careful.

“You can end up in a tight pickle,” cautions Mark O'Neill, a Germany-based freelance writer, English language consultant, and eBay mentor for members of the Disabled Online Users Association. “Recently, I bid for an expensive DVD set and subsequently got outbid. Then I found a cheaper deal elsewhere and posted a bid. But when I checked my ‘My eBay’ page again, I discovered that the person who had outbid me in the first auction had had his bid canceled, and I was now the highest bidder again. I was looking at a total bill of over $100 for two identical DVD sets, because the first seller had canceled the highest bid without informing me. After some hasty e-mail tennis, my bid was subsequently canceled by the seller, but it made me realize for the first time about the pitfalls of bid cancellations. As eBay told me later, ‘When you are outbid on an item, you haven't necessarily lost the auction, because the higher bidders can be canceled or suspended for any reason at any time.’ So don't go looking for an item elsewhere until the auction you were outbid on has ended.”

Of course, if two or three others outbid you, you probably can assume you really are out of the running, and it will be safe to place bids in other auctions.

Experienced buyers and sellers often keep two computers running during the final minutes of an online auction. One computer is used to place or monitor bids. The other computer has an appropriate e-mail account open. A seller will be watching for last-minute questions sent via e-mail by potential bidders. A buyer will be ready to post questions, watch for any outbid messages, and contact the seller if he wins the auction.

Ready to Buy and Sell?

The best-known online auction sites, including eBay, Amazon, Yahoo! and others, make it very easy to open buyer and seller accounts. After all, to stay in business, they need a constant inflow of auction items and new bidders. Once you get involved in online auctions, you may get hooked not only on buying and selling but also on watching the quiet but fascinating process of electronic bidding itself. You may never cease being surprised at what you can buy and sell in online auctions and what new interests you can discover or rediscover. The toys and books you considered magical as a child are still floating around in cyberspace, sometimes still in their original packaging. The tools you need to do a special job; the gearshift knob you thought you might never find for the 1954 Chevrolet you are restoring; the old lunchbox you need as a prop for a community theater play — these are all tucked away in surprising corners of the world. And they may soon be listed for bids at an online auction site.

However, resist the urge to rush off in search of them. First, you should learn more about online auctions and what is required to use the leading sites as a buyer and seller. You will have accounts to set up, payment methods and shipping addresses to select, and some rules and procedures to review. This book will help guide you and shorten the inevitable learning curve.

Don't skip the chapters that follow. The time you invest now in studying and preparing for the auction process will be rewarded many times over in the months and years ahead. You will enjoy better bargains and higher selling prices, the best reasons for joining in the pleasures and profits of online auctions.