|Internet Auctions: The Price (and the Cost) Is Right|
|Key Words||Auction, Consumers, Businesses, Sales, Competition, Price, Income|
Internet auction sites are on the rise, selling everything from antiques and books to consumer electronics goods. E-Bay and Bid.com are two examples of auction sites. Sales of auctioned goods and services amounted to $1.4 billion in 1998, and are expected to grow to $19 billion by 2003. Today, over half of transactions are between consumers, but businesses are realizing that they can benefit; by 2003 they will probably account for two-thirds of sales.
Small businesses have been suffering from competition from larger retailers who can afford to buy in large quantities. Web auction sites provide a means to fight back. A large number of consumers can be reached immediately. The prices paid can be double the starting price. Many sellers have found their income increased significantly. There is no lease on a shop. There is no need to run expensive advertisements. There is no theft or breakage. The workload is less. E-Bay charges a mere dollar or two to post an item, and takes 5 percent on the first $25 of the high bid, 2.5 percent on the next $975, and 1.25 percent of the balance.
(Updated July 1, 1999)
2. Why might the demand for the antiques be greater on the Internet?
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