Auction trading is a common occurrence in our time. And this is not so surprising, because it helps some sellers to profitably sell certain goods, and to others to buy what they need at a price they can afford. It is difficult to overestimate the importance of this type of trade. Evidence of this are international auctions through which huge volumes of goods are sold. So, about 70% of tea, 90-95% of unwashed wool, significant volumes of furs are sold in this way. In the Netherlands there are constantly working flower auctions.
Some believe that selling goods at auction is beneficial only to sellers, because the price is constantly increasing with every step and it seems that it is simply wound up. However, this is partly true only for the traditional type of auction, which we are all used to. But the auction can be carried out in another way, when the price does not grow with each step, but decreases. This type of auction trading is called Dutch.
The Dutch auction is a kind in which the obviously inflated starting price is immediately set, and then they begin to gradually reduce it until someone buys the goods displayed. If there are several sellers, then the buyer selects from them the one who requests a lower price.
This type of auction sales in international practice is sometimes called wading. Its essence is as follows: the seller determines the maximum price for his goods, which can be seen on the special dial installed in the hall, and begins to lower it until one of the participants presses the button assigned to him and thereby expresses his intention to complete the transaction .
A Dutch auction is usually used to sell a large number of identical items. It is very convenient for both wholesale buyers and wholesalers. By the way, tulip sellers invented it, because they were very interested in the wholesale of their perishable goods. The undoubted advantage for the seller is the ability to quickly and easily sell their goods. And it is beneficial for buyers that the price will be higher than the starting price only if demand exceeds supply. The Dutch auction is also called the opposite, in contrast to the traditional method of this kind of trade. Anyone can participate in it, since there are a lot of websites on the Internet that allow you to sell or buy goods through an auction. As an example, consider a Dutch auction on eBay.
There can be several winners in it. Another feature is that the participant, in addition to the price, must also indicate the quantity of goods that he wants to purchase. The "proxy bidding" system does not work here, this means that the maximum bid of each participant is known to all potential buyers. The buyer has the right not to purchase the lot, if it suddenly turned out that he accounted for fewer goods than he ordered. In this case, the rest of the product will be offered to the next bidder.
A curious detail: according to eBay rules, when an auction approaches the finish line, each winner pays at the price indicated in the minimum successful bid! Since eBay does not send notifications that you have "left" the list of winners of the ongoing Dutch auction, you need to check the bidding process from time to time in order to make a new bid if necessary. It looks a bit confusing, right? Therefore, we consider some examples.
Let's say a certain seller decided to put 10 digital cameras at a Dutch auction, the starting price of each of which is 200 USD. If there are 10 or fewer people whom she is quite happy with and they have made bets of 200 USD, then all of them will be in the list of winners. And if there are more people wishing, for example, 15 people, then only the first 10 will be the winner. Suppose, among these 15 participants, 7 people bet 150 USD, and 5 participants - 130 USD. In this case, the cameras will receive the first 7 people with rates of 150 USD and 3 people who set 130 USD before the others. And all of them will pay a price of 130 USD, since this is the size of the minimum winning bet.