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How to Build an Online Auction Website

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Yuri Musienko
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The process of web development of your own online auction website does not differ in particular complexity, but requires an understanding of the important nuances of the activity of such sites: auction mechanisms, monetization models, user roles, etc. In the article we will consider these and other nuances, as well as talk about the main stages of development of online auctions.

Step 1: Auction Mechanisms

An online auction is a trading platform where a product and / or service does not have a fixed cost. Instead a betting system is used, when buyers, competing with each other, announce the amounts for which they are ready to buy goods. Anyone who indicates the maximum amount receives the goods and / or service at the end of the auction. The way buyers compete for the product and bid is determined by the auction mechanism (type of auction).

Online auctions typically use the following mechanisms:

Auto auction. The buyer offers the maximum amount of money that he is willing to pay for the goods and / or service. The system determines this amount as the currently winning bet. If another bidder offers a large amount, the previous record is deleted, and a new winning bid appears instead.

Reserve auction price. In this case, the seller puts the goods up for auction, indicating the minimum amount for which he is ready to sell it (this is the reserve price). Usually the reserve price is hidden from the participants, so they can only observe the growth of rates. It is assumed that in this way the seller and auction administrators want to hide the real value of the goods.

For example, if the reserve price is $ 100, and the maximum bid during the bidding reached only $ 80, then the goods remain with the seller. Moreover, if bidders would offer $ 100 or more, the goods would be sold.

Incremental auction. In such a mechanism, the minimum bid for each subsequent participant is calculated by the formula: current maximum bid + fixed increase. A fixed gain is a predetermined amount, which usually depends on the size of the bet. For example, the gradation may be:

How to Build an Online Auction Website Incremental auction

Step 2: Niche and Target Audience

Suppose you are the first bidder in which the starting price is $ 20 and the maximum bid is $ 40. In this case, the minimum rate is calculated as $ 40 + $ 10, which is $ 50. That is, no one can bet less than $ 50. If the second participant makes a maximum bid of $ 110, he automatically raises the minimum bid by $ 15, that is, to $ 125.

Many people believe that online auctions work with the same products as Amazon, Alibaba, Jet, and Walmart. That is, these are the same retail chains, but auctions. However, this is far from the case, since markets of this type trade in goods and services related to restaurants and the food industry, automobiles, finance, logistics, art and real estate.

If you intend to create an online auction, then you first need to focus on one of these niches. This will allow you to develop functionality and design that will have a higher response in the selected target audience. Which, in turn, will give a local advantage over competitors and contribute to the success of your site.

Almost all IT giants went this way: Amazon began with the sale of books, Google - with a search engine, Facebook - with a social network, Apple - with personal computers, Microsoft - with programming languages. For your online auction to succeed, follow their example.

Here are some examples of niche online auctions:

How to Build an Online Auction Website niche

User roles. Auction sites are web platforms where goods and services are bought and sold using auction mechanisms. The platform’s objective is to regulate relations between buyers, sellers and system operators (administrators). Therefore, your site must support three user roles.

The following roles must be created:

  1. The seller should be able to create an account, open an account (or use payment services), create a lot and monitor the progress of the auction, accept payments, view sales statistics and ratings with reviews.
  2. The buyer should be able to create an account, open an account (or use payment services), view listings, search for specific products, make bids (or buy immediately), make payments, leave feedback, and also view his statistics and seller ratings.
  3. The administrator should be able to moderate auctions, bids, user profiles and site content.
Site functionality. To create a network effect around your project, thus increasing its value and popularity, you must provide users with functions that facilitate their interaction with each other and the site.

What functions should you provide for sellers:

  1. Listing function for managing bids: creating a lot, choosing the type of auction and its conditions, editing the conditions of the lot, accepting payments and the like.
  2. An expanded toolbar for communicating with other people, viewing the history of activity, sending files, statistics, income and other activities.
  3. Online product evaluation (before selling the product you need to get an accurate quality assessment and calculate the cost) using a calculator or by attracting an appraiser.
What functions should you provide for buyers:
  1. Functions of listing listing, advanced search, description of goods and auction conditions, notification of the beginning and end of the auction.
  2. Auction control panel for setting and refusing bids, cart.
  3. Advanced search engine with many categories and filters.
  4. Rating system and reviews (with the ability to edit them).
  5. Shopping stories.
What functions should you provide for the administrator:
  1. Manage user actions.
  2. Work with the description of auctions, applications, categories, lots.
  3. Management of a rating system, mail services, marketing tools, payment gateways and the like.
In addition, you also need to implement functions for registration and authentication, integration with social networks and payment systems, a support service. Some niches (real estate, automobiles, financial services, etc.) will also require KYC and AML.

Step 3: Auction Monetization Models

Listing fee. In most cases, online auction sites charge a fee for adding a product or service to the listing. The size of the bet usually depends on the category and usually ranges from 3 to 10%. Sometimes this is a fixed amount, for example, 10 cents or 1 dollar. For example, sellers can place 50 free ads on eBay per month, after which they will have to pay $ 0.35 for each new placement. For Business and Industrial categories, each lot costs $ 20.

Commission on the sale. A fee in the form of a fixed amount or percentage of the sale from each successful transaction. The size of the commission usually depends on the category of the product, and it cannot exceed a certain amount. So, on eBay, the commission for the categories Books, DVDs and Movies is 12% (maximum $ 750), Business and Industrial - 2% (maximum $ 300), Musical instruments - 3.5% (maximum $ 350).

How to Build an Online Auction Website eBay

Commissions for selling goods on eBay

Paid functions. Some sites divide the functionality into basic - free and premium - paid. So, creating an online auction site, you can limit the maximum number of ads per month and charge a fee for increasing this number. You can also take money for the opportunity to use better photos or videos.

Subscription. Monthly / annual fixed fees for access to the auction - from $ 20 to $ 500 per month. Typically, sites that sell luxury goods, jewelry, real estate and bulk goods take a subscription.

Advertising. Payment for promotion of lots (first places in the listing, recommendations and being on the cover page) and / or more interesting design. You can also advertise third-party resources.

Step 4: Design and usability of the platform

The design of an online auction site should focus on the presentation of the product and an intuitive understanding of the key user interactions with the site. So, any potential seller should immediately see how to register an account, create a lot and withdraw money. The buyer must understand how to find the product of interest, place a bid and make a payment. In addition, the seller must also understand when his bid is up and when it worked out.

You can understand how to control the user's attention using video guides on YouTube (there are a lot of them). Their study will take some time, as well as the study of tools with which you can make the layout design and wireframe of the site: Photoshop, Affinity Photo, Sketch, Pixlr and others. If you do not want to waste your time, you can hire a design studio or a website development company.

Step 5: Development Method and Tools

Development from scratch. The implementation of the project from the first page of code to the last point in the text requires a lot of time, effort and money. However, only such an approach will allow you to build a truly unique auction web platform with new functions and interesting design solutions. Usually, developers are hired to outsource this, which greatly simplifies the process, allowing you to maintain copyright control and keep your hand on the development console.

WordPress themes, clones. Template solutions are used when they want to simplify and reduce the cost of a project as much as possible, but this can only work in niches without competitors. In all other cases, users will have no reason to use such a site: “Why do I need a new auction if it looks like two drops of water that I already use.” Template solutions also have security and update issues.

Here are a few WordPress themes for creating online auctions:

  1. Auction Theme.
  2. WordPress Penny Auction theme.
  3. Property Bid Auction Template.
  4. Project Bidding Auctions.
  5. WP Auction Software.
Best PHP frameworks. It's about the frameworks of Laravel, Yii, Symfony and others, with which you can greatly speed up and simplify the development of online auction sites. This is a set of files that includes a number of basic functions and development tools that can be used as the basis for creating your site.

Step 6: MVP, testing and launch

Minimum viable product (MVP). MVP is a site that has minimal but sufficient features to meet the key needs of users. For an online auction, this is the opportunity to put the goods up for sale on the part of the seller and the opportunity to participate in the auction on the part of the buyer, as well as the opportunity to make and receive payment for the purchase of goods.

Platform testing. Once the key features are implemented, start testing MVP. Thus, for minimal money, you can check the concept and identify critical errors. In addition, using MVP you can get feedback, which will improve the concept and design.

Platform launch. The official launch of the online auction site should be accompanied by a high-profile marketing company and generous promotions and bonuses in order to attract the maximum attention of potential users. Sellers on the site must be attracted in advance, promising them all kinds of help, paradise conditions and fabulous profits.

Final word

Online auctions are sales transactions resulting from competitive bidding conducted over the Internet. Depending on the specific jurisdiction, such activities may require an appropriate license. In the United States, such a license is needed in 27 states, and another 13 require licensing requirements for specific types of property in one form or another. In which state exactly you need a license for an online auction, you can find in the constantly updated article «Auction License Laws by State» on the website EstateSales.org.

Merehead does professional development of online auction website development. If you have questions, contact us for a free consultation.

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