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Sunday, March 05, 2000

Going, Going, Gonzo
Online auctions are fancy tag sales
in the wild, wild West of E-commerce

Daily News Staff Writer

nless you've been in a coma or living under a rock, you probably know that online auctions are da bomb. eBay, Amazon and Yahoo! as well as a host of other smaller sites are the centers of the craze, with everything from celebrity memorabilia to entire vacation resorts being offered to the highest cyberbidder.

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Sreenath Sreenivasan shows off some auction goodies to his wife, Roopa Unnikrishnan.

According to MediaMetrix, a ratings firm that measures Web audience, eBay is the granddaddy of online auctions, cinching the No.4 slot of most popular E-shopping sites. It lists more than 4.2 million items for sale, ranging from the extravagant a 1946 Daimler limousine owned by the Netherlands' Queen Wilhelmina for $24,000 to the mundane, including about 20 gag-lottery tickets from various sellers at various prices, and a shrunken head from South America for $24.99.

All this makes online auctions a booming business.

According to Martin De Bono, senior analyst at http://www.gomez.com/, a site that ranks and reviews online auction sites, about $4 billion in merchandise will be sold in online auctions this year almost $11 million every day in swapped lava lamps, baseball cards and old books with eBay being the clear winner.

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Tom Polley with some neat stuff he got online.

That's about the size of the old-fashioned auction market $4 billion controlled by the two great international auction houses, Sotheby's and Christie's, who landed in hot water with the U.S. Justice Department in February for alleged collusion in setting selling and buying fees, which are determined by complex sliding scales.

The Net has even attracted Sotheby's, which invested $40 million to create two online auction sites in 1999 one with Amazon.com, and another brand-name site run by the house. Christie's said it would not follow suit. But don't let the pox on these two houses scare you off online auctions. The two auction worlds hardly intersect. In contrast to the high-profile art and celebrity memorabilia sales by the estates of Jacqueline Kennedy Onassis or Marilyn Monroe, few people will buy truly valuable works of art online. High-ticket auction items need to be examined by the buyer to gauge their quality and condition. Online auctions are more like country livestock sale-fests.

Changing Language

Well, okay. Is this why E-auctions are so popular?

"It's very entertaining," says De Bono. "Whatever your hobby, you'll be able to find an auction that caters to your interest."

There's also a community feeling, with hundreds, or thousands, of fellow pack rats engaged in bidding. And don't forget the idea of shopping as sport. Auction enthusiasts will tell you there's little to compare with the excitement of placing the winning, or high bid on a particularly rare tchotchke.

Online auctions are even changing language. Like "Xeroxing," the proper name "eBay" is quickly being morphed into a generic verb.

"When my wife finds a priority-mail box at home, she says, 'Oh no. You've been eBaying,'" says Sreenath Sreenivasan, a professor of journalism at Columbia University's Graduate School of Journalism, who buys antique magazine covers about his native India and sells books and other items to raise funds for a scholarship program run by the South Asian Journalists Association.

Sreenivasan uses all three major auctions and each has its advantages, he says. eBay has the biggest user base; Amazon.com has what's called the Amazon-Payment program, which helps sellers by automatically charging the buyer's credit card on record with Amazon. After the company takes its cut 25 cents per transaction plus 2.5% of the transaction amount Amazon.com sends the seller a check. And Yahoo! offers another huge customer base, although not as large as eBay's.

"I'm very happy," he says. "It's a great example of technology working for the everyday guy."

Real vs. Virtual Auctions

If you're thinking of buying or selling something online, there are things you need to know before you begin.

Basically, an auction is just "the method of selling by which property passes from the seller to the buyer at the highest price offered in a public forum," according to The Complete Guide to Buying and Selling at Auctions. It's an old economic model, with records stretching back thousands of years. But until recently, they have been local affairs where buyers were able to examine, touch and otherwise paw the merchandise before the bidding started.

At the high-end auction houses, experts evaluate the worth of items in advance and furnish the provenance or history of valuable objects in a pre-published sales catalogue. The expert judgment on the item's historical importance, rarity and authenticity is accompanied by high and low estimates of the price the house expects the item to fetch.

Online auctions are different. First off, this is the Net it's "buyer beware."

Second, you're not likely to find many rarefied art offerings. And lastly, these auctions go on all the time. You're not limited by location or time, and once you register at the sites, you can have the site track your auctions automatically.

Five for the Money

Before you get started, you need to understand the features of online auctions.

  • In reserve-price auctions, the seller sets minimum prices that are not revealed to buyers. If there is no bid equal to a reserve price, the item does not sell. Of course, the buyer can always contact the seller after the auction is over and negotiate a new price if he or she really wants that pack of baseball cards.
  • In an open-reserve auction, the starting price of the bidding is revealed.
  • In a Yankee auction, items are usually sold in lots rather than individually, although lots can be split up (at the seller's discretion). Usually, the highest bid for the lot wins.
  • Dutch auctions are really weird. The best way to explain how these work is by using the following example: say you have 12 Beanie Babies for sale, each with a $25 reserve in place. There are 100 bidders. The 12 highest bidders pay the lowest price bid over the $25 reserve.
  • Private auctions come in plain brown wrappers. Often used to sell adult items, bidders' e-mails aren't revealed nor is bidding displayed. When the auction is complete, only the seller and high bidder are notified. eBay offers a large selection of adult material that is often sold in this way.

Auction Action

Although there are dozens of auctions online in addition to the Big Three eBay, Yahoo! and Amazon they all work more or less the same way.

First you register by selecting a user name and a password, and providing your e-mail address. Be sure to read the privacy policy of the site carefully! If you're registering with a site that sells directly to you, instead of connecting citizen buyers and sellers, you may be asked to provide a credit card number.

You view items up for auction by either browsing through the category listings or doing a specific search by entering keywords in the search box. Once you've found something you must have, place your bid using a form at the bottom of the Web page for the individual item. If you're the high bidder, you'll be put at the top of the list as the person to beat.

Now you can track your bid. Some sites, like eBay, send you automatic e-mail when you've been outbid. On others, you have to check back occasionally. There are even software programs, such as AuctionTicker, that will track your bids automatically.

If you end up placing the winning bid, you pay for your item and make shipping arrangements directly with the seller, who will tell you how much the shipping and insurance, if any is, and where to send the payment.

Selling is a little different. After you register, you "post" your item, which means describing it in an online form on the site, maybe adding a picture. You can specify how long the auction will last, with eBay letting you choose a three, five, seven or 10-day auction. There are no hard rules on how long you leave an item up for sale make your best guess.

Next, you set what the minimum acceptable price, or reserve, will be, if any.

Then you wait for bids to come in. Once the auction ends, and your minimum bid is met, the buyer pays you usually in the form of a cashier's check or money order and YOU pack and ship your item to the buyer. It's a good idea to insure it and ship it in a way that allows you to track it.

Fraud and Junk

This all sounds easy, but how do you avoid fraud? And if you have a bad experience, what can you do about it?

There are various ways of protecting yourself against fraud, including escrow services and rating systems that let you see what others think of sellers and buyers. But, as with most things on the Net, or in life, there are no guarantees.

"My purchase through eBay was one that I probably would never make again," says Arul Sundaram, in charge of business development at Community Connect Inc. He bought some skis from a seller upstate, and while they were fine skis, it took three weeks for them to arrive.

"And it cost me more to have the skis shipped to me than the skis themselves cost," he says. "Overall, I think I'll go to a ski swap or a store next time."

eBay's feedback system is the way to lodge a complaint if someone doesn't do business in a respectable manner. Feedback takes the form of stars or numbers next to a person's name. Click on the ratings and you get a complete list of recommendations for, or against, any person who has previously participated in an auction. If you see a lot of negative comments, you might not want to do business with them.

Professor Sreenivasan, for instance, is very proud of his 18 positive recommendations from other eBayers with whom he has done business. He has no black marks on his record.

This feedback is important because it's there for every auction bidder. If the seller has a record of not delivering the goods or sending an item that isn't the one auctioned well, hell hath no fury like eBayers cheated.

"RIP OFF!!!" wrote one irate buyer. "200.75 DOLLARS WORTH OF CRAP!!! WON'T ANSWER E-MAIL PACKING CRAP!!!"

Amazon.com also offers a feedback and rating system very similar to eBay's, but also has an "A-to-zGuarantee." This allows buyers to petition Amazon.com for a full refund after jumping through multiple hoops, which entail:

A) Waiting 30 days after the sale.

B) Being a resident of the United States, Britain or Germany.

C) The seller's feedback rating is above 3 out of 5.

Buyers are also limited to three lifetime claims, but if you're particularly gullible, perhaps you shouldn't be buying things on the Net anyway.

Yahoo! offers a rather anemic rating system and then cheerfully steps back and washes its hands of disputes. It does post the telephone number for the national Better Business Bureau in Washington, D.C., if "talk it over" doesn't work.

"I've had some discouraging problems with sellers," says Tom Polley of Manhattan. "Either they don't ship the stuff fast enough, or it's broken, or you have to hound them to actually send the crap to you. You'd think they'd be delighted to get rid of those [Charlie the Tuna] lamps, but apparently not."

One solution: a third-party escrow payment service, which should be familiar to anyone in New York with a bad landlord. Of course, the escrow company takes a fee of about 6% for purchases up to $500 and 4% over $2,500 the upper limit.Lest all this sound confusing if not downright perilous, it seems that online auctions are here to stay, with the market for other people's attics estimated at $6.5 billion next year, according to Gomez.com.

"Basically, eBay and other auction sites are fun in the same way that a tag sale is fun you get to see the junk other people accumulate, and you might even pick some of it up if it's cheap enough," says Polley. Does he have any regrets after he went through a bit of eBay mania of his own?

"My greatest auction regret is that I was outbid on that Russian submarine that was up on eBay a few months ago," he says. "Man, did I have plans for that!"

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