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The following article was published in our article directory on April 6, 2012.
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Article Category: Shopping
Author Name: Kelsie
Before penny auction sites became popular, there were already auctions operating online. This has resulted to confusion among a lot of people as regards the difference between penny auctions and traditional ones. This, in turn, led to their inability to choose which type to patronize and reluctance to try out the many penny auctions found online. If you are one of these people who have yet to make up their minds, read the rest of this article to know the similarities and differences between these two types of auctions.
SIMILARITIES:
The basic mechanics at work in a typical auction (regardless of whether it is online or offline) are present in both traditional online auctions and penny auctions. These include the fundamental element that defines an auction - that is, that it is a way of buying and selling an item that involves putting it up for sale and taking bids from interested buyers. Unlike most offline auctions, though, both traditional online and penny auctions sell the item offered up for bidding to the last - and not the highest - bidder.
Aside from making use of the "last bidder wins" format, another similarity between these two types of auctions is the presence of a time limit for every item that is up for grabs.
DIFFERENCES:
There are a number of differences between a traditional online auction site and a penny auction. Most of these are enumerated below.
Bidding format - In most traditional online auctions, bidding is free provided that you have registered an account with them. In penny auctions, however, the pay-to-bid business model is used. This means that you need to pay a certain fee before you are allowed to bid on the item of your choice.
Risk - As opposed to traditional online auctions, with penny auctions there is a greater risk of losing money. This is because with the former, you do not need to shell out anything to be able to bid; hence if you fail to get the item you do not lose any amount of money. With the latter, though, if you do not win the item you will lose money you paid for the bids you placed.
Cost of Items - Penny auction sites gained popularity because these enable you to purchase items at very low prices. In traditional auctions, you can still get a good deal, but there is a chance that you will end up paying more for an item than if you win it in penny auctions. This is a result of the nature of the bidding system of a traditional auction where the person who wins the item is not only the last but also the highest bidder.
Seller - In most traditional auction sites, the goods being sold are posted by users; in penny auctions, these are put up by the site owners.
There are a number of similarities and differences between a traditional online auction and a penny auction. As such, it is not the case that one is better than the other is. Ultimately, the choice of where to bid is a matter of preference rather than anything else.
Keywords: Penny Auction
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