Online Auctions Are Becoming a Critical Component of E-Commerce Sites

The Internet may make the cry of the auctioneer a thing of the past. According to a new bulletin from International Data Corporation (IDC), Online Auctions: The New E-Commerce Enabler, online auctions are increasing in popularity. "The traditional inefficiencies of auctions in the offline world have ultimately been resolved by the Internet," said Jill Frankle, program manager for IDC_s Internet and eCommerce Strategies research. According to IDC, those inefficiencies include limited geographic coverage, a dearth of variety and breadth of products, high transaction costs, and information inefficiency. "These limitations are actually industry traits that make the market ripe for redefinition by the Internet," Frankle said. The Internet provides the infrastructure to overcome the limitations of traditional auctions. It can handle large quantities of data and support an infinite number of products and services. Additionally, the Internet provides a central platform for buyers and sellers to trade on a global basis. "Online auctions have been so successful on the Internet because they are able to create the three critical Cs for success on the Web: community, content, and commerce," Frankle said. Not only is the Internet good for online auctions, but online auctions are good for e-commerce. They are a tool that can drive user retention and build brands. "Auctions fit the definition of a sticky application - something that engages users and keeps them coming back," Frankle said. The online auction is quickly becoming a critical component for any e-commerce site that wants to market a portion of its merchandise online. IDC believes portals will have to be able to deliver auction functionality to their customers, especially to small businesses.