Auction Sites - Auctions Build Traffic, Business-to-consumer Auctions, Auction Fraud

Online auctions have proven very popular with consumers and businesses alike. They offer many benefits to both buyers and sellers. Online auctions offer buyers the promise of lower prices for merchandise and collectibles. Yet, spirited bidding for desirable items may drive up prices beyond what they would have been in a fixed price environment. Online auctions have virtually unlimited geographic reach, bringing together buyers and sellers from almost anywhere in the world. While not yet fully realized, online auctions have the potential to revolutionize pricing by replacing sticker (or fixed) prices, with a dynamic pricing model whereby merchandise is priced according to what the market will bear.

Initially, collectibles were the dominant type of merchandise sold at online auctions. While collectibles remained a popular category, merchandise such as office supplies, computers, and heavy machinery became more prevalent during 2000. High-ticket items for consumers have not been as successful at auction as once hoped. In April 1999 eBay, the leading auction site, acquired Butterfield & Butterfield, a 134-year-old U.S. auction house that specialized in fine art auctions. As a result eBay launched eBay Great Collections in October 1999, offering authenticated art items priced between $250 and $10,000. At its launch, eBay Great Collections had signed up 80 art dealers to provide items for auction. In March 2001 a high-priced auction on eBay of early photographs of Marilyn Monroe failed to result in a sale when bids fell short of the seller's reserve price. However, the same sale saw items in the $15,000 to $20,000 range sell through bids that were placed over eBay's art and collectibles site, eBay Premier.

In mid-1999 Amazon.com formed an alliance with auction house Sotheby's Holdings Inc. to launch a joint auction site specializing in art, antiques, and collectibles. All of the items were offered by Sotheby's and other affiliated art dealers at Amazon.com 's auction site, and the authenticity and condition of each item was guaranteed. The site launched in November 1999, but it closed after less than a year in October 2000. Sothebys.com continued to offer fine art auctions, as did other major art auction houses.

Online auction sites also can offer unusual items that would be difficult, if not impossible, to find elsewhere. Their wide geographic reach is especially useful to collectors, who would have difficulty hooking up with sellers in different parts of the world without the Internet. Sometimes, controversial items are offered for sale. In September 1999 a human kidney was offered for auction on eBay. Bidding reached more than $5.7 million before eBay blocked the sale as illegal.