Wanna Buy? What Am I Bid?

Forget "How much does it cost?" In the fast-growing world of Internet auctions, the real question is "How much are you willing to pay?" Name the product - computers, airline tickets, rare coins - and chances are, there's a Web site where you can name your price. The Internet Auction List counts more than 1,500 auction-related Web sites in more than 40 product categories.

You can think of Web auctions as the world's biggest yard sale - places where millions of buyers and sellers meet in a kind of virtual swap - or as a new distribution outlet where companies with excess inventory can reach eager customers. But the fact is, most Web auctions aren't a great place to save money. The advantage of such auctions is that they give you access to products that are hard to find (like a concert poster from an old Rolling Stones tour) or that aren't available in stores (like overstocked computer inventory, refurbished laser printers, or last year's fancy consumer-electronics equipment).

"An auction is not a negotiation between buyer and seller," says Jay Walker, founder and vice chairman of Priceline.com, an online service with a patented model called "buyer-driven commerce." "It's a competition among buyers."

Most online auctions follow the "Yankee" format, in which bids start at a baseline price. Each item is typically listed on its own page, along with a photo, a description, and a starting bid. Bidding stays open for a preset length of time - anywhere from 30 minutes to 2 weeks. You make a bid by typing one in. Many sites notify you by email when you've been outbid, at which point you can decide whether to raise your offer. And you have to act fast: On many sites, early bids have priority over later bids made at the same price.

Andrew Nelson, a San Francisco-based creator and designer of Web and software entertainment, bought a used Compaq laptop through an online auction service. Kelley Chew, an executive (and a collectibles fanatic) based in Pleasanton, California, used a popular Web auction site to buy a miniature Peter Pan pinball machine. What are you in the market for? Here's Fast Company's guide to online auctions. Our advice? Just name your price!

Computers and Other Gadgets

Like most innovations on the web, the earliest online auctions focused on the needs of technology enthusiasts. Onsale Inc. (www.onsale.com), a pioneer of auctions for high-tech equipment, turned the humdrum task of buying a computer into a virtual sport. To take a short course, visit Onsale's Express Auctions area, where auctions take place seven times each day, between 9 a.m. and 5 p.m., Pacific time. These one-hour sessions keep bidders glued to their computers - whether the item up for sale is a 56K modem from US Robotics or a personal computer from Hewlett-Packard. To fuel the frenzy, items start at a price of $1. And as with all Onsale auctions, if bids are still coming in when the auction is scheduled to end, the session goes into an overtime period called "Going, Going, Gone!"

These short-term, high-adrenaline auctions are not for the faint of heart - or for newbies. Peter Henry, 36, CEO of Lexica Holdings LLC, a technology-consulting firm based in San Francisco, has bought more than 100 computer items through various online auctions over the past 18 months. "Auctions are about convenience and price - if you know what you're doing," he says. "A lot of the difference between a bargain and a burn is buried in the fine print."

One of the biggest fears about buying products through an online auction comes down to this: Can you trust the company behind the site? There is cause for caution. Last year, the National Consumers League's Internet Fraud Watch (www.fraud.org/ifw.htm) received more fraud reports about Web auctions than about anything else. Problems involved nondelivery of purchased items and the suspicion that companies were driving up bids.

There's another problem. Many sites, including Onsale, act as "infomediaries," letting other people or companies sell their wares through the site, and that can lead to confusion about where to turn for help. One sheepish Onsale customer - a 43-year-old video producer in San Mateo, California, whom we'll call G.L. - got a great deal the first time he made a bid: He scored a refurbished Micron Pentium II 266 PC for $1,080 (including shipping). Then he bid on another computer offered through Onsale - and got taken for a ride. He paid just $804 for a Pentium II 333 PC, plus $25 for a one-year warranty. But he soon learned that the company that he had bought it from, CD Masters, had gone out of business -- after charging the computer to his credit card. Months later, there's still no computer in sight. G.L.'s credit-card company made good on the $25 he charged for the warranty, but it has yet to decide on the $804 charge. "I don't think I'd do another online auction," G.L. says. "You never know whom you're dealing with."