What is the history of online auctions?


Quick Answer

Online auctioning began in 1995 with the company Onsale becoming the first company to make significant online sales. In September of the same year, the company known as AuctionWeb made its first sale: a broken laser pointer, originally meant as a test sale, that sold for $14.83. This company, founded by Pierre Omidyar, went through large stages of growth before becoming eBay.com. EBay helped to make online auctions a reality, integrating the possibility of automated bids and in-site search engines.

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Full Answer

There are six different types of online auctions: English and Dutch auctions, first-price sealed-bid, Vickrey auctions, reverse auctions and bidding fee auctions. English auctions start with a low price which gradually increases as the auction progresses. Dutch auctions work in the reverse, with the original price set high and the seller lowering the price until a buyer turns up. First-price sealed-bid auctions allow all participants to make a single bid, with the individual bidding the highest winning the item to be sold.

Vickrey auctions operate much like first-price sealed-bid auctions, but the winner of the bid only has to pay the amount bid by the second-highest bidder. This auction style is supposed to prevent strategic bidding. Reverse auctions reverse the roles of the buyer and seller, allowing multiple sellers to compete for the buyers' business. Bidding fee auctions require customers to pay for each bid that they submit.

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