Online auctions have become popular amongst auctioneers as well as buyers. Of course! Why wouldn’t they. After all it saves the auctioneer a lot of work that would be involved around a physical auction. Also, with auctions going online, physical boundaries have faded, resulting in a wider range of potential buyers. Online auctions have made bidding easier for buyers too, as they can now bid in auctions taking place anywhere in the world from the confines of their home.
The one change that online auctions have seen in the bidding process is that the time window of an auction has increased drastically. So, an auction which would earlier be completed in a few minutes now is spread over hours or probably even days. Now, it is practically impossible to continuously check the latest updates on an online auction and bid accordingly. Hence, an ideal solution for such a scenario would be proxy bidding. Proxy bidding means that you do not have to keep bidding by yourself, it will be done for you by an automated system instead.
How Proxy Bidding Works for Online Auctions?
The proxy bidding feature is an online auctioning system that allows users to decide a maximum amount they are willing to spend on an item. Once this has been done the user does not have to engage in any extensive bidding activities. From this point onwards the proxy bidding feature in the auctioning system comes into play.
The auctioning system now takes on the role of a proxy bidder and places the minimum required bids on behalf of the user. Once the bids on the product being auctioned cross the maximum amount specified by the user, the system notifies the user asking the user to place a new bid for the product. At this point the user can revise the maximum amount he is willing to pay for a product. This process will then continue till the time window for auction expires. Alternatively, the user can decide against updating the maximum amount he wishes to spend in an auction.
Let’s take Proxy Bidding from the Top with an Example
Lets us say that a product is being auctioned on an auctioning website with the following details:
- Opening bid (Starting price): $100
- Incremental value: $5
- Reserve price: $150
1. Bidder Sets a Maximum Bid Amount
Bidder A comes to the site and sets a maximum amount that he is willing to pay for this auction item. Let us say, he sets this maximum amount to $500. Now bidder A does not have to remain on the bidding website.
Note: The user’s maximum amount is not available for other bidders. It is only available for the system.
2. System Places a Bid
After the maximum amount has been set by bidder A the proxy bidding system checks if a reserve price has been allocated for the item and whether the bidder A can meet the reserve price with the given maximum amount. If both the conditions are fulfilled then the system places a bid of minimum possible amount with which bidder A will now be the highest bidder. In our example bidder A’s bid amount ($500) is greater than reserve price ($150), so first it automatically places a bid of $150.
3. New User Places a Bid
Now let us assume another bidder B comes and places a bid on the same auction item. Let’s say, he places a $400 bid, which is greater than $150 and hence the bid is placed.
4. Bids are Compared
The system will compare the value of user B’s bid with that of user A’s. Since user B’s bid is greater than user A’s bid the system places a bid of $400+$5(the incremental value) i.e. $405, as this is the minimum valid bid to maintain user A as the highest bidder for the item. Now, the highest bid of the auctioned item is $405.
5. System Sends Notification
Bidder B is notified about being outbid with an alert message. Based on this notification user B now places a bid of $500 for the item auctioned. The bidding amounts of bidders A & B have now become equal. In this situation bidder A is accepted as highest bidder by the system as he was the first one to place the bid.
6. Process Continues
At this point if bidder B places a new bid of $600 then the system places a bid of $500+$5(incremental value)=$505 for bidder B. With a bid of $505 placed in the system bidder A is outbid by bidder B and receives a notifications which informs bidder A about the same. This process continues until the auction expires. Once the auction has expired the bidder with highest bid amount wins the auction.
Proxy Bidding Advantages
The proxy bidding system comes with two main advantages.
1. Allows Automated Bidding
Owing to the proxy bidding system the users do not have to be glued to the auction website continuously. The system will place bids on behalf of the bidders.
2. Saves You Money (sometimes)
The proxy bidding can save your money in certain cases which you may have otherwise lost in the usual online auction. For example say user A places a bid of $1000 for an item and there was already a bid by user B say $500. In this case, the system will place $505 for user A. Following this if no other bidder a places a bid on the said item until the auction expires then user A still wins the bid at an amount which is much lesser than the amount he had entered.
This solution is simple to implement and can be integrated with any auction plugin like Ultimate Auction. Incorporate the proxy bidding solution into your online auction website now and save your users the effort of constantly monitoring the auction process, after all customer is king right! 🙂