Different Types of Auctions and Their Implementation
Auctions are used not only for physical items, but also in finance, e-commerce, and e-games since all these services and goods are points of sale. In the financial sector, whole companies are put up for auction, as well as shares and securities issued by companies or the government. In the field of e-commerce, auctions are used for various purposes and categories of goods, from clothing and technology to companies’ services. E-game companies also use auctions for marketing unique technologies, images, brands, and distribution rights for games by large traders.
The need for an auction can vary depending on the product and the goals of the company. For example, in the financial sector, an auction is necessary due to the high demand for a limited item, such as a stock or a bankrupt company, and in this case, the auction can bring the seller more profit than with a conventional contract. In e-commerce, auctions often help determine the price of a product or service as bids from participants show the average and highest price that a buyer can pay. Consequently, after such an auction, the company can set a fixed price based on the offered bids. The same feature applies to e-games as it helps determine the value of a product and sell it or the right to use it for a better price.
Consequently, depending on the purpose of the auction, the company can choose different types and options for its implementation. For example, an English auction can be used to sell companies or shares, where the seller sets the minimum price, and the participant with the highest bid becomes the winner. In e-commerce, the useful method is to ask buyers to indicate the maximum cost for a product or service, and then sellers try to offer the lowest but most favorable price for them to get a client. Another option is the Dutch auction, in which the seller puts a high price, and if the product is not sold, it gradually decreases bids. Therefore, the type of auction used to uncover the value of the product or service helps to determine the price more accurately and see the disadvantages of products or services based on the average value.