The idea of eBay as an auction website is nothing more than clever e-commerce marketing.
As a professional auctioneer, eBay is a regular part of my lexicon. Many people I talk to commonly associate online auctions with eBay. eBay has done well marketing their service, because while they do have a bidding process, they are not an auction site. eBay does not conduct online auctions; items sold on eBay are not sold at auction. They promote the idea of an auction without actually having one.
The definition of an auction is: “[a] public sale in which property or items of merchandise are sold to the highest bidder.” Source: http://www.thefreedictionary.com/auction
eBay does not sell anything to the highest bidder. Instead, items are sold on eBay to the winning bidder at a pre-set end time. There is an entire cottage industry that builds software to deploy last second bids on eBay. This behavior is known as “snipping.” By entering a bid with only a few seconds left, other users do not have enough time to enter a counter-bid before time expires and the sale is made.
By having a pre-set ending time instead of selling to the highest bidder, eBay effectively circumvents auction laws created to protect buyers and sellers. They also get around licensing requirements in many states. Many items on eBay are sold for less than their actual value because time expires before bidders have a chance to bid again after being outbid. In the past on eBay I have been a buyer willing to pay more for an item but didn’t get my bid placed before the sale closed, and I have also been a seller who received calls from upset bidders pleading me to sell them the item for more than the final price listed on eBay.
eBay doesn’t even claim to be an auction. The eBay user agreement states that they are a venue to conduct “auction-style formats.” Their user statement goes on to state: “you acknowledge that we are not a traditional auctioneer. Instead, our sites are venues to allow anyone to offer, sell, and buy just about anything, at anytime, from anywhere, in a variety of pricing formats and locations, such as stores, fixed price formats and auction-style formats.” Source: http://pages.eBay.com/help/policies/user-agreement.html
At a real auction, online or live, there is a binding contract between buyer and seller. eBay expressly states that bids DO NOT create a formal contract: “For certain categories, particularly Motor vehicles and Real Estate, a bid or offer initiates a non-binding transaction representing a buyer’s serious expression of interest in buying the seller’s item and does not create a formal contract between the buyer and the seller.” Source: http://pages.eBay.com/help/policies/user-agreement.html
Not a binding transaction?! This defeats the purpose of a website that is supposed to sell items. When all is said and done, eBay is just a marketing site charging a fee for an ad. If the buyer can walk away from a bid without repercussions, no transaction has occurred, and no one is any better off.
eBay is a site for consumer to consumer transactions. It is a place to sell tchotchkes, collectables, trinkets and other C-to-C items. It is an online market place just like Amazon.com, or an online version of a flea market. The design of eBay gives regular people the opportunity to sell online. As such, it is not a professional environment. It is not a place to sell complete estates or to conduct business to business transactions. Their terms and conditions allow too much freedom to back out of transactions once they are complete.
eBay should not be a tool used regularly by licensed auctioneers who make a living using the auction method of selling. Professional auctioneers conduct real online auctions on sites like Proxibid or from their own websites. The rules are different on an authentic online auction website and the terms and conditions allow real business to be conducted. Buyers and sellers are protected and both benefit from a controlled environment.
True online auctions have extended bidding. With extended bidding there is no set closing time. Instead each lot remains open until there are no additional bids for a set amount of time. This method nets the seller more money and insures the buyer willing to pay the most has the opportunity to win the item.
Now that you know the difference between an online auction and eBay, consider avoiding the term “eBay style auction” when describing your online auction. To me, “eBay style” means a clever e-commerce marketing idea where items are sold for less than they are worth to the lucky bidder who got the last second bid. That is not an online auction, nor is it something I want to promote.