5 Steps for Creating a Successful Online Auction

The idea is not new. The first mention of an auction without a fixed value of goods dates back to 500 B.C. Such a type of sale is very popular these days due to the incredible excitement it brings and the opportunity to buy unique items at an affordable price.

The shift in the online niche has simplified the process. Internet auctions have become especially popular during the quarantine restrictions caused by the spread of Covid-19. Statistics demonstrated by Christie's show that, during the lockdown, the auction business attracted more than 30% of new customers.

Now is the best time to open a gambling project. The Rosloto team will help you perform this task. We have created a detailed guide on how to launch an online auction, quickly monetise it, and get consistently high traffic.

Investigate the Types of Merchant Activity

The creation of a site is not so difficult. The main thing is to understand the key nuances of the work of such platforms and choose the best model that meets your needs.

The most popular versions of the solution are:

English Auction

This is the most common form of marketplace, which is relevant for both virtual and land-based business environments. This is a public auction with ascending prices, where users with the biggest bet win.

The most recognisable example of English-style bidding is the eBay international digital platform.

It currently has over 187 million registered members. For the first quarter of 2021, the turnover of the trading house exceeded $27.46 billion.

Reverse Auction

In this case, there is a descending betting system, and not the buyer but the seller fights for the lot.

How the reverse bidding works:

• the purchaser posts a request for a desired product or service;
• sellers lower the cost of the requested product to compete with similar offers;
• the vendor who has set the minimum rate wins, and the buyer has the right to renounce the proposed price category.

Features of the solution:

1. Auction of non-unique lots. This type of bidding gives good results in the sale of goods in niches with a high level of competition.
2. Assessment of the real value. The final cost of the lot makes it possible to determine a fairly accurate market price for the goods.
3. Bulk purchases. The auction with descending rates is useful as a tender for finding wholesale suppliers with a limited budget.

“All-Pay” Bidding

From the name of the auction, it is clear that each participant is obliged to pay a rate, regardless of whether he wins or not.

The mechanism is as close as possible to the format of the lottery business: people who buy a ticket do not pay for a piece of paper but for a chance to receive the prize.

Advantages and features of trading in the “All-Pay” format:

• each next rate encourages users to continue participation;
• if the bet is missed, the player loses not only money but also the potential to win;
• bids are obligatory paid.

Penny Auction

This is one of the most popular trading modifications in the “All-Pay” format. During the bidding, the participant does not handle the amount of the goods immediately but makes a series of mandatory payments. The size of each next step is fixed at a few pennies.

Each new bet increases the duration of the auction. The winner is the participant who made the last bid before the counter reset.

This type of auction is very popular in the B2B segment. Sellers can profit not only from the sale of lots but also from fees paid by the participants. Regardless of whether the user won or not, each move has to be compensated in full and is non-refundable.

Select an Auction Mechanism

To create a profitable business of this type, it is necessary to choose a bidding scheme that meets the needs of the audience.

An auction mechanism is a way of competing for goods and changing bids during the bargain.

Most often, owners of online trading platforms use:

1. Automatic system. The buyer announces the maximum amount that they are willing to spend on the purchase of the selected product. The platform automatically enters the value in the registry as a winning one and removes it as soon as another participant places a higher bid.
2. Reserve price. This is the minimum sum for which the seller is willing to trade his goods. Usually, this parameter is hidden from buyers, and they only watch the rate’s growth process. Thus, the organisers keep the intrigue of the auction, and the seller gets an opportunity to receive more money than he originally intended.
3. Incremental auction. Bidding at a fixed minimum rate, with each subsequent offer calculated using a special formula: the highest bid + a fixed increase (a predetermined amount based on the size of the initial bet).

Determine the Niche and Target Audience

Many people assume that online auctions work with the same wide range of products as the largest retail brands like Amazon, Alibaba, or Walmart. However, this is a misconception.

The organiser gains a local advantage over competitors by working in a specific narrow niche, such as the restaurant business, lotteries, casino tourism, or slot machines. For example, the Amazon network has grown into a global giant, having started with a simple online platform for fiction sales.

Select the Software

An auction site is a digital platform where goods and services are bought and sold using special trading mechanisms.

The website's job is to manage the relationships between the seller, the buyer, and the system operators. Therefore, auction software must provide a specific set of features for 3 categories of bidders:

For Sellers

The required functionality includes:

1. The feature to customise listings, which consists of the creation of a new lot, selection of an auction type, revision of terms and conditions, etc.
2. A bid management system with the ability to set a reserve price and adjust the minimum/maximum rate and other parameters.
3. Toolbar for communication with other visitors of the resource with the ability to view the history of activity, ratings of participants, financial statistics, etc.
4. Expert evaluation of the goods before they are sold, which simplifies the calculation of the minimum cost of the lot; this may be a built-in calculator or a request form for the invitation of a special consultant-appraiser.

For Buyers

Those who purchase lots should have access to the following functionality:

• view the listing with the ability to apply search filters and request an additional description of the product;
• notification about the beginning/end of trading;
• offer control panel with an option to cancel a bet, as well as automatic bidding and a shopping cart;
• a program of internal ratings of sellers and buyers with the ability to view activity charts and feedback from the bidders;
• purchase history;
• feedback form for leaving a review or contacting the auction support services.

For Administrators

The platform should include an appropriate set of software components to control and optimise all work processes.

Among the functional elements for administrators and operators of online trading, we can name:

• user activity control program;
• content management tools, including text and graphics editors, rate calculators, services for creating new categories, etc.;
• programs for working with internal ratings;
• marketing instruments, including internal referral networks and external affiliate programs;
• e-mail newsletter management tools;
• components for processing monetary transactions, and much more.

The online bidding software should also include the following:

• templates for the design of the user interface;
• registration forms and authentication programs;
• widgets for identity verification through social media pages;
• information section and a special form for contacting the support service;
• additional tools that make it easier to work with the platform (for example, analytical services, automatic distribution, blocks with comments, chat functions, etc.).

Operators can implement a business project from scratch, using template solutions and PHP frameworks. The Rosloto team offers a convenient and profitable alternative — ready-made game projects on a turnkey basis.

The product includes:

• administrative service with a full set of management tools, including registration forms, user activity control programs, etc.;
• flexible payment gateways with the ability to connect financial instruments to specific geolocations;
• several options for the design of a gaming site;
• content from certified providers;
• legal advice and support in the acquisition of a licence;
• round-the-clock technical support, and much more.

The turnkey auction software from Rosloto is the best choice for a quick start and maximum coverage of the market.

Launching the Advertising Program

It is very important to plan your marketing budget and choose communication channels that are relevant specifically to your niche.

To promote auction sites, the following tools and methods can be used:

• e-mail newsletter;
• short commercials or banners published on third-party niche resources;
• personalised offers made through social media pages;
• links to the online auction left in comments and reviews on various gaming sites;
• internal referral programs to stimulate registered clients;
• video reviews and other types of promotion with the help of influencers;
• participation in niche affiliate programs;
• organisation of thematic actions;
• cashback programs, etc.

When establishing a business, it is worth preparing for the fact that investments will not pay off immediately. Owners of iGaming online projects typically see their first net profit in 6 – 12 months.

The Main Things about the Launch of an Online Auction

Bidding cannot be considered a new phenomenon but during the period of worldwide quarantine restrictions due to Covid-19, this type of business has reached a new level.

Now is the best time to implement a project of this type.

• There are many different versions and bidding mechanisms. The English auction with rising rates is one of the most popular. The world's largest trading platform, eBay, is organised in this format.
• The specialised software must ensure stable interaction among the 3 participants in the transaction: the platform’s operator, the buyer, and the seller. Experts on the Rosloto team recommend that entrepreneurs order a turnkey business. Such a solution will allow them to avoid various nuances related to the independent development and certification of the brand in international and local markets.
• To advertise an online auction, any promotional tool can be used — from internal referral programs and SEO to the purchase of reviews from influencers and personalised e-mail newsletters through social media pages.

You can learn more about the nuances of organising an auction and discover the most promising market trends from Rosloto studio.

We offer a wide range of useful iGaming solutions:

• mobile content;
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• Bitcoin casinos;
• lotteries;
• slots with 3D and VR effects;
• Telegram apps;
• ready-made sports betting platforms, and much more.

There is a large selection of ready-made products and a configurator for creating your gaming site from scratch for free.

For more information, please contact our managers.