Description
The Independent Value Model provides variables for research calculations of various different types of auctions. The auction website under study is https://www.autorola.eu/. The website offers cars for auctions. There are online sellers and bidders and website makes money through charging the sellers for placing their bids. The website has around two thousand unique visitors per day and its worth is about USD 12,000. Moreover, it has been making handsome income of about USD1000 per month, according to web statistics provided by http://webworthcalculator.com. The yearly income is around USD 14,000.
The website does effective marketing to reach the target audience. The presence of Social Media Icons on the website tells that it has been actively promoting its activities and has been trying to reach potential buyers and sellers. The sellers are not given access to the buyer profiles and they can only see the history and statistics of the previous auctions which were held online, on the website. The marketing activities are the duty of the webmasters, not the sellers. So, they are not involved directly in the marketing and advertising activities. The auctions are generally open auctions on the principle of highest bid winners. The software under use is one of the latest auctioning software available on the web.
The cars are mainly displayed for auction. The seller information is available only when he places a bidding order or starts an auction. There are almost a dozen auctions going on currently. The activity of buyers and sellers is evident from the traffic statistics. Moreover, the reviews and histories of old auctions are also enough for having an idea of the validity of the platform and level of user trust on the website. However, since this is an online auctioning system, there are so many inherited risks with auctions taking place here.
Buyers
Types of Bidders
Bidding is open for all and sundry. The online visitors, who visit the site, have to make an online registration before they can place bids. Since, the website has been ranking on top of the Google Search Engine, it is bound to have all types of visitors. Some might be there to just get information about the auctions and how does this happen online, others might be looking for the best online auction places and the third category will be of the serious auctioneers who have been using doing bidding on the site or intend to do so(Autorola.eu, 2014).
Information
The items on auction are cars. The bidder is given full information about the structure, features and ownership of the car. There are special mentions of any special attributes of the car as, it has been used in some movie or was in use of some celebrity or has been the first of its kind etc. Moreover, bidders are also provided information about the highest bid for the can being placed. Bidders learn about the auction by searching for particular cars on bidding or they just visit the website regularly for upcoming auctions.
Interest
Most of the bidders buy these cars just for the sake of re-sale or auction. Only a few of them tend to keep the items with them for display in their showrooms or for personal collections purposes. A great majority just buys them for their spare parts or coming up with customized cars for various purposes like racing, stunts and similar activities.
Charges
There are no monetary charges for participating in the bid. However, the bidders have to spend a lot of time for waiting for their final destiny in a bid. The website does not has any time limitations for the auctions, the common practice is to announce the winner when there are no more bids or when there are no more higher amount bids. So, the bidders have to keep their money aside for a longer period of time. Moreover, they need to have a reliable internet connection and computer system for remaining up to date with the latest happenings (Autorola.eu, 2014).
There is unlimited number of bidders in the auction. The number is not controlled using any measures. The number of bidders in one auction ranges from a few dozen to many hundreds.
Risk
The bidders are not risk neutral. As said earlier, they have been spending resources and time for participating in the bid and they rely only upon the information provided to them by the website. They do not have any chance to see the product being auctioned in reality and make judgments accordingly. The images and movies are made of high resolution cameras which are capable of changing the real look and feel to a great extent. In these circumstances, the bidders have to hire special agents in that area for checking the items on their behalf, if they have been displayed anywhere for this purpose. They spend resources over there as well. So, the risk seeking and risk Averse behavior fails to deliver. The risk is highest in cases, where there is no any opportunity for the bidder to have real time information about the product (Autorola.eu, 2014).
Auction Rules
The auction takes place online. Some of the parties make arrangements for offline display but, most of them rely on the images and videos. The bids are submitted online, using the Auctioning Software. So, these are actually electronically placed bids. The writing part includes only the bidding information and the amount they enter in the bidding form and phone calls can be placed in case, there are any issues with the software or usage of the software. The system automatically collects all information and biding history of the bidder when he places bid for a particular item. The winner and the price are determined based upon the highest bid ever received and the auctioneer is satisfied and orders to stop the auction and announce the bidder. All of the bids are displayed openly to all of the bidders for the same item, so there is tool little room for disputes.
This is a dynamic auction in which the bidders make ascending price auctions and bids are open to all and open for any changes or editing. Due to lesser amount of ambiguity aversion, the bidder confidence and the number of bids is higher. A typical auction of this type lasts for about a week to a period of month. The seller can see all of the activity and reactions from his own admin panel, given by the website. In addition to that, he can see all of the comments and can respond to the bidders using comments and message services in the dashboard. Yes, bidders are aware of all of the competitors and can see their history of activities on the website. However, in case of new bidders or first time bidders, there is no such history available, but there is profile of all of the bidders giving an idea of the type of competition they can create for others. Bidders cannot communicate directly with each other. There are no chances of bidder interaction on the website for creating a pricing monopoly. However, there are chances that they can cheat the sellers by communicating out of the website (Autorola.eu, 2014).
Similarly, the sellers can cheat the bidders in various ways. There is no way to investigate whether all of the bidders are independent parties or they are representing the sellers, in one way or the other. Sellers can hire people for making false bids of higher rates, increasing the overall bidding amount and if they do not get the ideal amount, a false selling will take place or the auction will be closed due to disputes or allegations. So, there are no idealistic controls of the auction activities.
Theory
The auction which has been analyzed from this particular section is perfect, as it will give extra benefits and effectiveness to the company, as it has a direct linkage with their core financial and strategic position. Ebay would get appreciation in the market.
References
Autorola.eu., (2014). Online car auction - buy and sell cars. Autorola.eu. Retrieved 9 December 2014, from https://www.autorola.eu/
Worthofweb.com,. (2014). autorola.eu is worth $ 12,174 - Worth Of Web Calculator. Worthofweb.com. Retrieved 9 December 2014, from http://www.worthofweb.com/website-value/autorola.eu
