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Dutch Auctions
(last updated on 5/31/2005 2:04:00 PM)

Dutch auctions are a special format in which the seller has multiple identical items to sell. You can bid on anywhere from one item to the available quantify of items. At the auction close, all winning bidders win their items at the lowest winning bid price.

You can identify a Dutch auction by the blue (D) in the item title, and because the quantity listed in the item listing will be greater than one. A Dutch auction cannot have a Reserve Price.

For example, a seller may have five copies of Stephen King's 'The Stand' (on videotape) to sell. Each copy of 'The Stand' is three videotapes together as a set. In the auction listing, the quantity posted will be 5, and the bid price is the amount bid for each item. If you want to bid on two copies at $10 each, you enter 2 in the Quantity field and 10.00 in the Bid Amount field. You do not enter 20.00 in the bid amount field, as this would be a bid for 2 copies at $20 each.

Dutch auctions are used when the seller has many of the same item to sell and wants the bidders to be able to bid on one or multiple items. In the dutch auction format, the bidders specify how many of the items they want to bid on. For example: John has 25 computer monitors he wants to sell. The monitors are all brand new and of the same type. He sets the starting bid at $200 per monitor. Sally wants to buy 10 of the monitors so she places a bid for 10 of them at $200 a piece. Mike is also interested in these monitors and places a bid for 15 of them at $200 a piece. Currently both Mike and Sally are bidding on separate items and a bid has been placed on all of the available monitors. Now Vicky decides she wants 5 monitors. Since all of the monitors now have a bid placed on them, she must outbid the last bidder which was Mike in this case. She places a bid of $250 each for 5 monitors. Now Mike is the high bidder for only 10 of his original 15 he bid on. If the auction ends with no more bids placed, Sally would have a winning bid for 10 of the monitors, Mike would have a winning bid for 10 of the monitors, and Vicky would have a winning bid for the remaining 5 monitors. The selling price of all 25 monitors is determined by the lowest winning bid price. In this scenario, all 25 monitors would sell for $200 each.

Dutch auctions are a special auction format where a seller has more than one identical lots for sale. Each lot must be identical, and consists of one or more items. For example, if a seller wishes to sell two ammo cans he would list two lots, each lot consisting of one ammo can. If the seller wishes to sell 50 boxes of ammo in lots of 10, he would list five lots, each lot consisting of 10 boxes of ammo.

The seller specifies the minimum price (the starting bid) and the number of lots available. Bidders bid at or above that minimum for the quantity they are interested in purchasing. At the close of the auction, the highest bidders purchase the lots at the lowest successful bid.

For example, imagine there are 10 computers being sold at $500. Twenty-five people bid $500 for one computer each. In this case, only the first 10 people will be the successful bidders, since the bid amounts are the same, and earlier bids take precedence.

Now, say that one of those people bid $550 for one computer. Since his bid is higher than all the others are, he will certainly be one of the successful bidders. The earliest bidders who bid $500 will claim the other 9 computers, and the final price for each computer will be $500.

In the case of multiple quantities bid for by a bidder, the lowest bidder may not earn the right to purchase the complete quantity, since there may only be one left by the time the higher bidders have been processed. In other words, if the lowest bidder requested a quantity of 3 computers, he might only be entitled to one computer, since 9 other computers could be allocated to higher bidders. The only way around this problem is to ensure that you are not the lowest bidder. If it is agreeable to the seller, the bidder may not be obligated to partial quantities if the bidder cannot purchase the full quantity bid on. In that case, the seller may skip that bidder and move on to the next one, if any.

In Dutch auctions, the current standings are always displayed with the Item Description Page, and the complete bidding history including unsuccessful bids are also available.

Please note: AutoBid is not enabled during Dutch auctions.


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