| The act of Shill Bidding is condemned by most | | | | By now you may feel a little overwhelmed by |
| who partake in the pleasure of online | | | | the terminology that has been thrown around |
| bidding. This unforgivable attempt of | | | | in this article. In the interest of ensuring |
| artificially raising prices on auction items | | | | that there is absolutely no confusion, let's |
| is not only cheeky, but deviously | | | | take two steps back and clarify exactly what |
| self-serving. | | | | an 'auction' is. An auction is when an item |
| | | | is listed for sale (more specifically, for |
| To fully understand the concept of shill | | | | bid) with a set starting price and in some |
| bidding, you need to take a step back and | | | | cases have a reserve price where the buyer is |
| ensure that you comprehend the business of | | | | required to place bids according to the bid |
| auctions - and for the purpose of this | | | | increment set in the auction. Before we get |
| article, online auctions specifically. | | | | ahead of ourselves, let me clarify that a bid |
| | | | increment is the value by which each bid |
| An auction website is a platform which is | | | | placed increases during the auction, and a |
| best explained as being a virtual shopping | | | | reserve price is the minimum price that a |
| channel that enables sellers to sell their | | | | seller is willing to accept for an item. A |
| products to autonomous buyers. Many are of | | | | successful sale is concluded when the minimum |
| the perception that the auction websites | | | | required price has been met (otherwise known |
| themselves are responsible for the sales | | | | as a 'reserve' price which is set at the |
| process, including stock control, shipping of | | | | seller's own discretion). |
| items and receipt of payment. This is a | | | | |
| misconception. While an auction website is a | | | | Now that we have clarified the relevant |
| place of trade, the process is very different | | | | auction 'lingo' you can appreciate why most |
| to an e-tailer (i.e. online retailer) in that | | | | condemn the act of Shill Bidding. It is |
| the stock that is sold via online auctions | | | | regarded by most online auction website |
| are sourced, sold and shipped solely by the | | | | owners as a deceitful and underhanded tactic |
| seller who is making use of the online | | | | used mostly by conniving scam artists. Each |
| auction tool to facilitate the sale. It is | | | | auction website will have their own set of |
| easier to explain what 'Shill Bidding' is now | | | | terms and conditions, however most reputable |
| that you know want an online auction website | | | | online auction websites have a strict policy |
| is. | | | | against this sort of behaviour and would |
| | | | usually blacklist any seller from using the |
| Quite simply put, Shill Bidding is when | | | | site in future. In some countries, shill |
| sellers place bids (whether blatantly or | | | | bidders have been criminally prosecuted for |
| under a disguise) on their own listings with | | | | Shill Bidding where such prosecutions have |
| the intent to raise the bid price in the hope | | | | resulted in both misdemeanor and felony |
| that other bidders would feel forced to bid | | | | convictions and large penalties including |
| for that item at a higher price, thereby | | | | fines and restitution of damages. |
| artificially inflating the perceive market | | | | |
| value or desirably of the product that is on | | | | Online marketplaces rely heavily on the |
| auction. | | | | integrity and reputation that is reflected in |
| | | | its community in order to become and remain |
| In some instances a relative or family member | | | | successful. Shill Bidding can destroy the |
| living with the seller may really want to buy | | | | credibility of such marketplaces very |
| the item that is being sold. The reality | | | | quickly. Not only does it damage the |
| however, is that these bidders are in a | | | | trustworthiness of the website itself, it |
| situation where they are usually able to | | | | completely distorts the bidding process and |
| communicate directly with the seller, thereby | | | | hurts the buyer. |
| creating a unique scenario that is unfair to | | | | |
| other bidders that do not have direct contact | | | | Online auctions are certainly not doom and |
| with the seller. It would therefore not be | | | | gloom. In fact, one of the beauties of |
| fair if these potential buyers were to bid on | | | | selling products in an auction is that you |
| the seller's price in an auction. Should a | | | | allow the market to determine the true value |
| family member or friend genuinely be | | | | of a product, based on the demand and |
| interested in purchasing the product, the | | | | desirability of that particular item, rather |
| seller should resort to listing the item as a | | | | than dictating to the marketplace what the |
| straight-forward sale with a fixed price | | | | price should be. Very often this price |
| (usually called something like a 'Buy Now' on | | | | exceeds the seller's expectations - as what |
| the online marketplace). This removes the | | | | the seller may have regarded as trash may |
| risk of misleading other potential buyers | | | | very well be considered a treasure to the |
| about the market value of the product, as the | | | | buyer, who will quite happily pay an above |
| price is specified and can therefore not be | | | | market price for the simple purpose of |
| inflated at any point in time. | | | | becoming the new owner of that rare find. |
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