Online Auction Platforms

From dodgy dealers here today gone tomorrow, through online auction platforms attracting every Tom, Dick and and Harry in order to increase their profit margins, to the lack of market differentiation for those well-established, trusted auction houses, now is the time for the auction industry to step up to the plate and introduce its own independent, verified trustmark. E RADAR's Will Roebuck explains why...

For the past 5 years I've been working with Watts and Associates, a global auction firm specialising in construction and heavy plant machinery. Director John Roebuck recently spoke at our EU Commission-funded DigiChampz Initiative on the perils of not having fit-for-purpose broadband to enable online bidding in real time.

Working regularly alongside Team Watts one issue really concerns me. How do online bidders distinguish between an auction house that's built up a good reputation over time, and the dodgy dealer who set up his business just yesterday and has no track record in the auction industry?

They can't. And this is a growing challenge for branded auction houses that are having to compete with less well known 'wheeler dealers'. For whilst the Internet, quite rightly, has opened up the auction industry to almost anyone that has something to sell, professional auctioneers now need to find an innovative way to differentiate themselves and their brands across online auction platforms.

Online auction sites such as eBay might operate a star-rating system for customer feedback to help boost online trust and confidence. But, these are often open to misuse, abuse and fraud. It's ever so easy. Just get your mates to add a few nice comments about your service and to click on your 100 percent score. And if you end up really abusing the system and being thrown off eBay all you need to do is to create a new account. Away you go again!

The problem of fake online reviews has become so widespread that the UK's antitrust regulator has launched a formal investigation into whether it needs to clamp down on the illegal practice.

Online auction scams

Scammers run rings around eBay. Yet eBay Customer Support claims that its data indicate that less than .1% of all transactions result in a confirmed case of fraud. Frauds that can be committed by sellers include:

  • selling counterfeit merchandise;
  • shill bidding - undisclosed vendor bidding that is used to artificially inflate the price of a certain item;
  • selling bootleg merchandise;
  • receiving payment and not shipping merchandise;
  • shipping items other than those described;
  • giving a deliberately misleading description;
  • knowingly and deliberately shipping faulty merchandise;
  • denying warranty exchange after pre-agreement;
  • knowingly selling stolen goods;
  • misrepresenting the cost of shipping;
  • using bulk shipping prices to knowingly mask much higher costing, individual return shipping;
  • using pseudo-accounts to make high non-paying bids on similar items that competitors are selling

Call to action

Now is the time for the auction industry to step up to the plate. To establish a set of global standards that can underpin an independent, verified trustmark for use online and which can differentiate between trusted auction house and dodgy dealer. Industry also needs to work with global online auction platform providers, such as i-bidder to ensure that any trustmark has credibility amongst users.

I'll be talking with my colleagues at Manchester University's School of Computer Science on how we can create some Internet standards for the auction industry. And if you are a long standing auction house that's interested in protecting its brand from wheelers and dealers, and want to find out more about an industry-wide trustmark, please contact me for further information.