Introduction to the Internet and online Auctions

Introduction to the Internet and Online Auctions

The Internet is a network of networks that links together computers using the TCP/IP protocols. A definition of the Internet is (1) a global network connecting millions of computers.

The World Wide Web (WWW) uses the internet services and more to allow users to share documents, images and various other types of media. Webopedia define the World Wide Web as (2) a system of Internet servers that support specially formatted documents. The documents are formatted in a markup language called HTML (HyperText Markup Language) that supports links to other documents, as well as graphics, audio, and video files. This means you can jump from one document to another simply by clicking on hot spots. Not all Internet servers are part of the World Wide Web.

Therefore from the above definitions it would be fair to say that the Internet acts as the transport vehicle for the information stored on the World Wide Web. It is often misconstrued that information is found 'on' the Internet, it would be more accurate to say that the information is found 'via' the Internet.

Online Auctions were introduced in approximately 1995 and have been one of the largest growing businesses on the World Wide Web. Online Auctions are a way of buying and selling pretty much anything via the Internet. Made popular by eBay and now found on dozens of different sites, these online auctions allow buyers and sellers to come together to trade all kinds of items. BitPipe define an online auction as (3) use of the Web to match buyers and sellers around the globe pioneered by eBay.

Some online auction sites allow buyers and sellers to register and trade while others are specifically for the one company to sell items. For example some travel agents operate online auctions to sell late availability offers to the highest bidder.

The Growth of Online Auctions

Since online auctions were introduced approximately 10 years ago there has been an influx of new sites where the trading of every kind can be done via online auctions. There are sites that specialise in certain kinds of goods and sites that trade pretty much anything.

As I have mentioned there are many types of goods or services that can be bought or sold on online auctions. Just a few examples of these are holidays, houses, cars, computers, DVDs and video games. The idea of online auctions is so appealing that there are even online service auctions where businesses can list on going jobs or project based employment opportunities. Freelance professionals can then bid on listings with the lowest salary/payment that they are willing to work for. The winning bidder can then enter into contract negotiations for job or project.

A great example of the success of online auctions is the popularity of eBay. The following statistics show the amount of success that eBay have enjoyed and the amount of growth and potential that this sector of the World Wide Web has for future growth. These sets of statistics have been chosen to give an idea of the yearly growth (2002 vs 2003) and to also show the current rate of growth (2003 vs 2004 (1st 3 Quarters). It has to be taken into consideration that the two sets of data are not like for like, therefore it would be incorrect to compare the two sets of statistics. The reason for the second set of statistics is to show the continued growth of Ebay and not to compare the rate of growth, however I have tried to give more information on the second set for this purpose:

* (4) 2003 growth in comparison to 2002 (last full year comparison available):

o Consolidated net revenues for 2003 were $2.17 billion; this was an increase of 78% from the 2002 revenues of $1.21 billion.

o The number of listings on eBay during 2003 was 971 million; this was an increase of 52% from the 2002 listings of 638 million.

o The total value of merchandise sold on eBay (Gross Merchandise Sales) increased by 60% from $15 billion in 2002 to $24 billion in 2003.

o The total number of registered users increased by 54% from 61.7 million in 2002 to 94.9 million in 2003.

o The number of active users (users who bid, bought or listed over the past 12 months) in 2003 was 41.2 million; this was a 49% increase on 2002's 27.7 million users.

* (5) 2004 (1st 3 quarters) in comparison to 2003 full year (most recent comparison available):

o Consolidated net revenues for 2004 Q1-3 has already matched 2003 and increased by 8% to 2.34 billion.

o The number of listings for 2004 Q1-3 is already over 1 billion listings, with 3 months left until the end of year figures are released.

o The total value of merchandise sold on eBay has already matched the $24 billion achieved in 2003. At this rate we could expect to see another $8 billion in the final quarter, which would make an increase of 33% on 2003.

o The total number of registered users has increased by 32% to 125.0 million since the end of 2003. The average increase of registered users for 2003 was 2.77 million per month 2002 in comparison to 3.34 million per month in 2004.

o The number of active users has increased by 25% to 51.7 million since 2003. The average increase of active users in 2003 was 1.13 million per month; this figure has increased slightly to 1.17 million per month for 2004 year to date.

The above statistics show that even though the percentage rates of growth may be dropping, the actual figures show no sign of slowing down (the figures actually point to a slight increase in the rate of growth) in 2004.

Advantages

In this section of the essay I am going to list some of the advantages of on-line auctions.

Selling unwanted items

Online auctions can be a great place to unload items that are just taking up space at home. As a seller you can assign all sorts of terms to your auction listing. Some of these are:

* Starting price - the price your auction will open bidding at.

* Reserve price - if your auction does not reach the reserve price then the item is not sold, whether or not there have been any bids is irrelevant.

* Postage and handling - you can state what the postage and handling fees will be

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