Making an Online Auction Business Model
Work for You


There are many different types of online businesses that can be profitable if you know what you’re doing, but one of the most unique models is the online auction business model.  On the surface, it seems very simple.  You throw up a site that provides a place for people to buy and sell goods. 

But there’s a lot that goes into planning and creating a successful online auction business.  In fact, you can even make money from online auctions on eBay or other already-established online auction sites.

Here’s everything you need to know about selling online through auctions.

The Basic Online Auction Business Model


Of course the number one online auction website example almost everyone knows is eBay. The site became known as a place for people to sell their gently used items, but it rapidly grew into an online marketplace that sells new items as well.  In a nutshell, people place things for sale on eBay, and others bid on them in an auction. 

But what if you wanted to create an eBay alternative?  What would you need?

Of course the first thing you’ll need is a website with a catchy name. You’ll need to put your thinking cap on for this one. If the site name isn’t easy to remember, then it will never take off. You need a short word, preferably four five letters.  You can even make one up if you come up with something catching.

Then you’ll need to design the website from the inside out, including an interface that enables users to create auctions and place bids. A programmer and / or website designer can help you with this.

After all the pieces are in place, then it’s time to start marketing your site. You’ll face an uphill battle against eBay, but by offering some incentives like lower fees, you could start growing your market share.  This is a very long process, but after consumers trust your site, it will be able to grow and become profitable.  A significant investment may be needed on your part to advertise and get the name of your site out there and market your business.

How You Make Money on an Auction Website

After you have the name recognition and consumer trust in place, the online auction business model makes it easy to make money. All you have to do is regular maintenance on the site and policing it to make sure people are following the rules.  As a business model, there’s a lot of work on the front end but not as much after everything is up and running.

To get the money rolling in, you basically charge a fee on every auction that occurs on your site. It’s lumped in with the transaction, so users pay it automatically. 

The best way to collect money through an online auction business model is through PayPal. They’ll hold the money for the buyer until the seller ships the item.  Then when the buyer receives it, the funds are released.  Everyone is protected; everyone is happy.

Making Money from Online Auctions

If creating your own online auction business model seems a little much, there are other ways you can cash in on auctions, such as the following simple strategy.  Take a trip through eBay and look at the prices in a category you are familiar with.  Some items seem to slip through the cracks unnoticed.

They’re either listed incorrectly, so potential buyers think they are something that’s not as great as what they actually are, or there’s a Buy Now button on an item for a price that’s much lower than what you could actually get for it if you did a real auction with the item.

There is certainly a degree of risk with this type of online auction business model, and it does require you to have some cash up front.  However, if you know how to spot a great deal that’s undervalued, you can make purchases at low prices and resell them on eBay for what they’re actually worth. 

Many online entrepreneurs make a great living using this one simple strategy.  Some of them focus only on one item, such as smartphones or other electronic devices, and they become very good at buying and reselling these items at very healthy profits.  This one easy-to-implement online selling technique could be applied to almost any product you can think of.  Also, you can use any platform to buy and sell your products, and it doesn’t necessarily have to be eBay.    

Probably the biggest challenge you’ll face in establishing an online auction model is being able to spot great deals.  But if you know your target market well and are able to research it and stay on the top of it, you will be foolish not to take advantage of the opportunities it presents.


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