Online Auction or eAuction
Online auction or eAuction helps in price discovery and help the seller realise the best price for his goods or services.
Offline auctions are a costly process, and it consumes a lot of time and cost. It is also inconvenient for bidders to be physically present for auction at the designated time and place specially when they know that there can be only one winner and rest everybody would have to return empty handed.
Online auction is very cost effective and it saves cost and time for both bidders and for the seller. The whole eAuction process is transparent and competitive which ensures not only correct price discovery but also maximum participation as bidders can join the bidding from anywhere in the world.
Benefits of eAuction
- Reach out to many more potential bidders: Offline auction has a limitation that the bidder has to be physically present at the time of auction at the defined location. In online auction, the bidders can participate from any part of the world. Due to this flexibility, online eAuction is able to attract many more bidders than the offline auction.
- Saves cost: Online auction is much cheaper than offline auction as it does not require the hiring of space, the appointment of auctioneer, security, and transportation of goods under auction, etc.
- Saves time: The whole auction process can be wrapped up in a couple of hours depending on bidding intensity. Several eAuction can run in parallel and there is no limitation of space.
- Transparency: Online eAuction is generally more transparent because everybody is able to track the eAuction process online and the whole process can be recorded with the IP address and other details of the bidders. In offline eAuction, there are higher chances of favoritism and other malpractices when one or more bidders is in direct contact with the auctioneer and can influence the process.
- Perfect price discovery: As the eAuction process enables bidders across the world to participate in the eAuction process it leads to better price discovery and helps the seller to maximize his realization.
- Convenient for bidders: eAuction is very convenient for bidders as they can bid sitting in their own offices. They can on the spot consult with their higher-ups and run financial models which generally is not possible in the physical auction as there is a restriction on the number of members from each team who can be present in the hall due to limitation of space. Bidders are saved from unnecessary travel and hence saves both time and money.
Types of eAuction
Right2Vote offer an eAuction platform for all kind of eAuction. Right2Vote's online Auction platform is the best auction site in India can be used for the following types of eAuction:
eAuction under IBC: Under the Insolvency and Bankruptcy Code (IBC), the Insolvency Resolution Professional (IRP) is supposed to find a resolution that can help creditors of the company to maximize their realization and minimize their losses. Generally, the IRP tries to restructure the company by change of management and other methods to get the company back on its feet. The IRP can also auction the assets of the company as part of the resolution process. The auction can be of the following types:
- eAuction of selective assets of the company to realize cash and use in the running of the business
- eAuction of the company as a whole to the best possible bidder
- eAuction of all assets of the company as slump sale
- eAuction of each asset of the company individually to realize maximum value
If within the designated time, the insolvency professional is unable to find a resolution plan which can help the company continue as a going concern, generally a liquidator is appointed to sell the assets of the company at the best possible price and use the proceeds to pay the outstanding creditors.
- eAuction of property (flats, land, and building, etc): Generally, when one is looking to sell his property, they have to depend on brokers. But due to a limited number of options, the seller is not able to realize the best price. eAuction of property helps the seller realize the best price. These days, many banks have started eAuctioning properties which come into their possession due to loan defaults and foreclosures.
- eAuction of second-hand cars: Similar to properties, selling cars in the second-hand market is a tedious task and rarely earns the best value. eAuction helps in realizing the best value. Many banks have also started auctioning cars that come in their possession due to loan default and foreclosure.
- eAuction of painting: Beauty lies in the eyes of the beholder and when it comes to painting, it can't be truer. Hence to attract bidders from across the world, more and more painting auctions are shifting online.
- eAuction of NFT (Non-Fungible Tokens): NFTs are new creations of the technology world. There is a lot of excitement about NFTs. Celebrities are looking to launch and auction their NFTs and fans and other bidders are looking to collect them. The seller and buyer of NFTs are tech-savvy people and they prefer online auctions for convenience and best price discovery.
- eAuction of scrap: Scrap is one of the most underrated auction items. Generally, the realization from scraps is very low due to a limited number of bidders in an offline market. Online scrap auctions have started helping organizations realize much better prices and in many cases, the realization is more than 2-3 times what they used to realize during an offline sale.
- eAuction of natural resources: The government is supposed to sell rights to natural resources like coal, oil and gas blocks, mines for metals, and other resources to the highest bidder to ensure maximum realization for the exchequer. However, in the past, we have seen scams like coal scams, 3G scams, etc when the auction was not done in a transparent manner leading to loss of revenue for the exchequer. eAuction helps in having a transparent auction with maximum realization.
- eAuction of spectrum: Spectrum is also a rare national resource that needs to be sold at the highest possible price to the highest bidder. We have seen spectrum scams in the past which makes it pertinent to make the auction in a fair and transparent manner.
- eAuction of sportspersons: These days, sports like the Indian Premier League (IPL) have the process of auctioning players. The team that bids the highest for the player gets to play the player in his team.
- Others: There is no limit to the kind of auction. eAuction can be helpful in selling the assets of the company, brand, or company, services of a person, software codes, shares of a company, rights over intellectual property, collectors' items, etc.
Features of online platform
Right2Vote's auction platform is the best eAuction website and offers many features. These include:
- Reserve Price or Base Price: Right2Vote platform allows the seller to dictate the minimum reserve price or base price below which the seller does not want to sell his goods. With reserve price, the bidders are forced to bid higher than the reserve price and all bids below the reserve price are rejected.
- Minimum Incremental Value: With this feature, the seller is provided an option to configure minimum incremental value or minimum value by which the second bidder has to increase his bid over the previous bid to be acceptable. This ensures that bidders do not bid with very low increments (say Rs. 1) and waste the time of everybody.
- Automatic time extension: In an eAuction process with a fixed end time, the bidder would try to act smart and bid at the last minute. To ensure that no bidder is able to game the system in that fashion and bidding continues till the time there are interested bidders who are willing to bid higher, the automatic time extension feature has been built into the system. With this feature, if any bidder bids in the last 5 minutes of the eAuction, the eAuction time period is automatically extended by another 5 minutes to ensure the previous bidder and other bidders get sufficient opportunity to better the bid.
- Reverse auction: Certain auctions require reverse bidding. Here the bidder needs to bid lower rather than higher. An example of reverse auction is - what is the minimum viability gap funding the bidder requires to build the road project. In infrastructure projects like roads, which are a public good, the government at times offer incentives in the form of viability gap funding to incentivize companies to build such projects.
- Currency of choice: This feature allows sellers to define the currency of bidding. It can be Rupee, Dollar, Euro, etc.
- Unit of choice: With this feature, the seller can define the unit - Million, Billion, Lakh, Crore, Thousand, etc.
- Flexibility of decimals: This feature provides the seller the option of having the decimals or not having the decimals. If the decimals option is kept off a bidder will have to bid in absolute amount say Rs. 1 and not Rs. 1.01.
Right2Vote's online auction provides many other features which are similar to features on the voting platform. These include:
- OTP based authentication
- Bidder receipt
- Audit trail
- Instant result
- Personalized invites to bidders
- Individual reminders
- Bidder selfie
- IP restriction
- Double authentication
- Result multikey
Process of eAuction
Online auction is generally a two-step process.
The first step is to list the details of the goods under auction and advertise/inform about it to maximum possible people to generate interest. In this first part, the details of the eAuction are first listed on Right2Vote's website under the eAuction section (eAuction). Here following details are mentioned:
- Name of the good under Auction
- Date of Auction
- Contact person's name, email ID, and mobile number
- Description and other details about the goods in form of attachment
The purpose of the listing is to inform possible interested bidders about the auction, generate interest, give them the opportunity to research and do due diligence. As a final step of this process, the interested bidders submit their interest with the seller and generally also submit an EMD (Earnest Money Deposit) as an assurance that they will not back out after making the bid.
The second and final step is the eAuction of the goods on the platform where the bidders bid for the goods on the platform. Before the start of the bidding, the seller sets up the eAuction platform with the help of the Right2Vote team. Information required for setting up includes:
- Name and details of the good under eAuction
- Reserve price
- Minimum incremental value
- Start date and time, and end date and time
- List of interested bidders with their name and unique email ID / mobile number
The whole bidding process is real-time and automatic. There is no intervention required from the seller or the platform managers. The seller is able to real-time track the progress of the bidding. The bidders are able to track in real-time the highest bid received till that time and accordingly they can decide on improving their bid. Bidders also get emails from the system when their bid is accepted and when their bid is superseded. Bidder has no visibility of who the other bidders are and who is bidding for what amount. They can just see the highest bid.
The seller gets the full report on a real-time basis about the bidder, his bid amount, IP address, and time of the bid. After the close of the bidding process, the bidding record is available both in PDF format and excel format for internal audit and record purposes.