CHAPTER ONE
INTRODUCTION
- Background to the Study
A few decades down the line, auctions were carried in auction houses and the bids were made with the auctioneer delegating the bids and this method required the physical presence of the bidders, thus it resulted in a number of limitations. This led to the use of online auctioning which allow for the auctions to be carried out over the internet from anywhere in the world. The advent of online auctions presents on its own, different downsides due to the lack of proper evaluation techniques of the products and the sellers. The current systems do not allow for proper description of the kind of sellers and the kind of products that they sell. These systems do not provide enough detailed information to evaluate the type of sellers and their products. This result in the buyers uncertainty thus resulting in the reduced effectiveness of the online auctions making people opt for offline auction markets. Most available current auction systems do not fully provide product descriptions as well as fully evaluate the different type of sellers that participate in the auctioning process. Online systems come from a background where there is no full evaluation of the shilling activities that take place in different auction systems. The evaluation of shilling activities goes a long way in providing for certainty in the different type of seller. This can be achieved through the provision of the shill scores or shill ratings for each seller in an auction system. By providing the sellers shill rating the different bidders can easily make choices for the different sellers they decide to bid for their products.
The global reach of online auction market places allows for the buyers and sellers to overcome geographical constraints and purchase products anytime from anywhere over the internet. The online auction market provides the consumers with great advantages of low prices, greater product selection and greater efficiency compared to the usual traditional offline markets (Ghose, 2006). The use of online auction system makes use of the decision making assistance tool that results in greater buyer’s certainty towards their choice of the seller’s and product that they make. The decision making assistance tool consists of three parts that is the product information signals, seller’s rating scores and seller’s shilling activities.
The product information signals seek to fully describe the product through the use of textual and visuals, the use of third party product certifications, description of the product characteristics, the product usage and book value. This strives to ensure the buyer’s product certainty. The decision making assistance tool also provides for seller’s ratings by making use of the feedback scores. These feedbacks are given by previous winning bidders and they evaluate the online auction product sellers. These bidders give detailed seller ratings of all aspects of the seller and giving scores for example giving scores of how accurate was the items description, how satisfied they were with the seller’s communication and how quickly were the products transported to them by the seller.
The other important aspect of the decision making tool involves the process of coming up with seller’s shill ratings. Shilling is the act of introducing fake bids into an auction on the behalf of the seller to artificially inflate the price of an item (Weinberg, 2003). To come up with shill rating the system monitors the shill activity characteristics which include those bidders who make a lot of repeated failed bids on the same seller. Shills usually have higher number of failed bids per seller ratio. The auction house maintains records of the number of bids a bidder has placed for every seller that the bidder has interacted with. This information is used to come up with a shill score. Detailed evaluation of the product and seller and the use of the decision making assistance tool ensures consumer’s certainty on the choice of the sellers and the products that they make.
- Statement of the Problem
The problem that usually arises in the normal congregational gathering to auction is that there people will have to leave their various homes to auction and this is a big risk to which might lead to Arm robbing and other various attacks after biding (Pavlou, 2008). In the process of auctioning, at times dispute arises in the mist of the people which also leads to another problem in the house. People do not have enough time to sit for auctioning. But despite the increased numerous advantages of online auction there are problems that are still present in some online auction and biding system out there, unlike in offline markets where buyers can physically evaluate the product quality and interact directly with the sellers, in online markets the buyers do not have such opportunity as the buyers only get to evaluate the product quality via the internet interface that cannot perfectly describe the products (Melnik, 2005). The problem of product and the seller’s uncertainty negatively affects the key success of the outcomes of the online auctions. The implementation of an online auction system that provides detailed seller and product descriptions results in the increased certainty of the bidders towards the choice of the products and sellers that they make.
- Aims and Objectives of the Study
- To design and develop an online auction system that ensures the buyer’s on the sellers and the products that are being auctioned
- To computes the seller’s ratings using the feedback scores from the bid winners
- To generate reports for each completed bid in the auction system
- To notify the bidders of new bids made in the bids that they participate in.
- To computes the seller’s shill scores for each seller that sells products on the online auction system.
- Justification of the Study
The use of online auction systems that do not allow for full effective product description and failure to provide decision making assistance tools to online bidders results in increased product and sellers uncertainty. The buyer’s uncertainty towards product and seller makes it difficult for the buyers to differentiate between the good and bad sellers; the lack of differentiation may force higher quality sellers to leave the market since their quality products do not signal and reward with fair prices thus reducing transaction activity (Dimoka, 2008).
What this new system is trying to accomplish is to create a higher level of buyer’s certainty on the type seller and products that they choose to make bids for. Through the use of effective information like the use of visual and textual product description, third party product certification, product book value and product usage. The successful implementation of this project results in an online auction system that allows evaluation of the product that is far much effective and that come close or equal the physical evaluation of the product.
- Definition of Terms
Auction: An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder (McAfee et al, 1987),
Biding: A provision in a trade agreement that no tariff rate higher that one specified in the agreement will be imposed during the life of the agreement (globalnegotiator.com, 2017).
Online: connected to, served by, or available through a system and especially a computer or telecommunications system (such as the Internet) (merriam-webster, 2017).
MySql: is an open-source relational database management system (RDBMS) (Oracle, 2012).
References
Dimoka, A.(2008), Understanding and Mitigating Product Uncertainty in Online Auction Marketplaces [accessed 18 November 2014].
Ghose (2006), “The online auction market provides the consumers with great advantages of low prices”.
globalnegotiator.com (2017). “Definition of Biding”. http://www.globalnegotiator.com/inte rnational-trade/dictionary/biding/
McAfee, Dinesh Satam; McMillan, Dinesh (1987), “Auctions and Bidding” (PDF), Journal of Economic Literature, American Economic Association (published June 1987), 25 (2), pp. 699–738, JSTOR 2726107, retrieved 2008-06-25.
Melnik (2005), “The problem of product and the seller’s uncertainty negatively affects the key success of the outcomes of the online auctions.”.
Merriam-Webster (2017) “Definition of Online”. https://www.merriam-webster.com/ dictionary/online.
Oracle (2012). “The official way to pronounce “MySQL” is “My Ess Que Ell” (not “my sequel”)”. Retrieved 17 September 2012.
Pavlou (2008), “The problem that usually arises in online auction”.
Weinberga D. (2006), “Exploring the WOW in online-auction feedback” [accessed 18 November 2014].
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