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Online Auctions And The Law Of Supply And Demand

Feb 3, 2008
An online auction can be a great way to market your business, but it can also be a place where you can deliver hard to find items at a substantial profit.

Take for instance the Nintendo DS Lite. In the Christmas season of 2006 and 2007 the hand held game systems were in high demand. Store shelves emptied just as quickly as units became available. Customers heard, "Sorry we're all out," more often than any of them wanted to.

For the online business owner it was possible to take a unit or two from their stock and sell it via auction. Generally speaking the interest was incredibly strong with willing buyers paying three to four times the retail price of the units just to ensure they had it by Christmas.

When January came around the market for online auctions that continued to offer units at auction continued to be strong. Those who had Christmas cash were willing to spend it on this gaming device even if the auction price seemed absurd to others.

As business owners these entrepreneurs were providing a service that ultimately brought them a sizable profit. When the law of supply and demand was added to the scenario it was seen by consumers as the only practical method to gain a coveted unit.

In most cases it was the consumers who actually pushed the price to extreme highs. In many cases the bid threshold was not set beyond retail price. The consumers created a bid war on available units in an effort to make sure the gift arrived before Christmas.

For those who could wait the units were eventually found in retail stores when the consumer exercised enough patience.

This is one of the practical benefits of an auction. Many people think of auctions as a means of finding a bargain, but it can also be a place where individuals go to find the rare and desired.

Think of an art auction. Collectors from all points on the globe arrive and bid on one of a kind artwork or memorabilia. They will typically pay a very high price and with that price comes the knowledge that they have something no one else has and perhaps many want.

The growth of online auctions is proof that both types of auctions are accepted among online shoppers.

If you sell a product that is highly desired you may consider the possibility of taking at least one of the highly prized items and making it available exclusively at auction. The reason I suggest this is you can promote the fact that while you may be out of the product you are offering one at auction. This allows regular customers one last opportunity to get something they may have waited too long to purchase. Additionally for those who have almost exhausted avenues of purchasing the item they can use your auction link to find out more about you and what you offer on a regular basis.

You can further promote goodwill in the above scenario by offering all proceeds to a predetermined charity. In either event you can use the online auction to market your business anytime of year.
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