Going, going, gone

The chances are you've heard the story down the pub. A bloke discovers that an old record he bought for 50p is rare and he sells it on the internet for hundreds of pounds.

Maybe you heard the one about the woman who managed to pick up a priceless Ming vase online for less than a tenner. While the latter should be taken with a bucket of salt, there's no question about the growing popularity of buying and selling through online auctions.

It's well known that one person's cast-offs are another's collectables and if you have got some old bits and bobs gathering dust in the attic there may very well be someone interested in buying them online.

Similarly, if you're looking for a deleted LP or that Jawa to complete your set of original Star Wars figures, an internet auction is the perfect place to find it.

Auctions explained
As the name suggests, internet auctions let individuals buy and sell items across the web. By far the most popular site is eBay, established in 1995 by Pierre Omidyar.

His wife is an avid collector of Pez sweet dispensers and she happened to mention how great it would be if she could pick up dispensers from the internet. The whole business idea took off from there and Mrs Omidyar now has 400 of the things and a rich husband to boot.

To date there are more than 20 eBay sites around the globe which tie in together to offer the largest personal online trading community. Goodies on offer range from antiques and art to coins, collectable figures and even furniture.

In addition, if a seller in another country is willing to ship something to the UK it will appear for sale on www.ebay.co.uk as well as the seller's local site.

Another hugely popular place is QXL, based in Hammersmith and set up by journalist Tim Jackson in 1997. His idea was to create an auction site that not only allowed the user to buy and sell but was easy to use and run by a local team that would understand the needs of the UK customer.

The final player in the market is Yahoo, although this is US-based and prefers to steer its European users to eBay.

It's important to note that, although they are referred to as 'auctions', these sites aren't quite like their real world equivalents. While they allow you to buy and sell just about anything at any time, auction-style, they act only as a venue.

The companies behind them can't check out or offer a guarantee on any goods on offer and tend to not get involved in the resulting transactions.

Buying and selling
The action on sites such as eBay is very similar to that of a traditional auction. Sellers put up an item for sale, dictating terms such as to how long it is on offer, acceptable payment methods and postage costs.

The bidding can then begin. Sellers can set a reserve price to make sure they get the minimum price they want and, in some cases, may want to offer a 'Buy It Now' option. This lets someone jump in and claim the item for a set price before bidding begins.

Of course, there are rules governing the items you can sell. You must ensure that you are legally able to sell each item included in your listing and that it is lawful to sell it to UK residents. If the buyer is overseas, it must be lawful to sell and export the item to a person resident in their jurisdiction.

While the service is designed for private individuals, there are stories of traders who take advantage of the fact they can sell goods on auction sites without worrying about the usual liabilities incurred by retail or mail-order outlets if goods are faulty or go wrong.

One way to spot possible traders working this back door is to watch for regular offers of multiple goods: not many private individuals are likely to own 30 identical notebook PCs or 50 copies of Windows XP, for example.

When asked about such unscrupulous practices, Jennie Reed, eBay's UK marketing communications manager, pointed out that "all eBay users are treated equally and must adhere to the user agreement. The seller specifies the terms of sale on each listing and, by bidding for an item, a user is accepting these terms."

Bidding is binding, so it's important not to make an offer on something you don't really want or can't pay for. If you're lucky enough to win, you email the seller to arrange payment and shipping to your home.

Fees
While joining and bidding is free, there are fees for sellers. With eBay, an initial listing charge is calculated from the opening price of the goods on sale and a final charge is calculated once your items are sold.

The former ranges from 15p up to £1.25, while the latter is based on percentages of the final figure. Different fees apply if you use the Buy It Now service.

Other small fees are charged for adding more than one picture of the sale item, emphasising text and getting eBay to place a link to your sale on its homepage.

Regular eBay user Jon Carl Ross feels that the charges are quite fair. "They do take a percentage of the final figure but, considering that you have access to a worldwide audience, it's good value," he said.

Long-time seller KS Jacobs agreed with this but advised sellers to be "amount-conscious. It's best not to list items at too high a price and get charged large fees once it is sold," he said.

There is no charge to list an item on QXL, and the first two pictures are free. However, there are optional fees for promotion tools. QXL also has a final sale fee based on a percentage of the closing bid but this is limited to a maximum of £50 per item.

Safety net
With so many users online it's unlikely that you will personally know who you are buying from or selling to.

To help you get some idea of who you are dealing with, the sites have feedback systems that allow users to rate the buyers and sellers they have dealt with.

Obviously, new users won't have any ratings, and the system is open to abuse by dishonest traders and buyers, but in general it works very well.

Potential buyers also have the opportunity to email the sellers to ask specific questions if they need to while the auction is ongoing.

The other thing you might worry about is the possibility of fraud. "Given that eBay has 10 million auctions on the site at any one time, it is nearly impossible to monitor every single auction," said Reed.

"However, less than a hundredth of one per cent of listings result in a confirmed case of fraud. eBay successfully relies on its network of users to feed information back on any unscrupulous sellers in order to keep the site free from fraud."

The site also runs a Fraud Protection Programme. If buyers feel that they have been defrauded then, provided that they meet certain guidelines, eBay will reimburse them up to £120 for claims over £15. QXL has a similar programme. However, the vast majority of transactions go through with no problems.

KS Jacobs believes things are secure. "The best guide is common sense," he explained. "Don't trust bidders with your bank details or personal information and be aware that things on offer that look too good to be true probably are."

Another way to ensure transaction success is to use one of several secure methods of payment. While some sellers will accept personal cheques, most will only take credit cards and use well-established online transaction services such as eBay's own BillPoint or PayPal. The latter is so popular that eBay is set to acquire it at the time of writing.

Ross agreed. "PayPal is easy. You pay them and they pay the seller without disclosing your card details," he said.

If you are really concerned about security or dealing in high sums, you may want to opt for a service called escrow.

With this, the buyer sends money to a third party, which notifies the seller when it has received the funds. However, it only releases them when the buyer contacts it again to say the goods have arrived.

Either the buyer or seller or both can meet the cost of using the escrow system and fees are calculated depending on the value of the transaction.

Although this method of payment is more complicated than others, it is definitely recommended for peace of mind where high-value items are concerned.

Going, going, gone
Online auctions are a growing phenomenon and, as our case studies show (see below), there's a lot of fun to be had, not to mention the potential for making a profit.

Receiving billions of visitors every month, services such as eBay and QXL are now highly organised and have opened up a whole new world of money-making opportunities for PC users across the globe. There are even books on how to market your goods on auction sites.

If you are looking for that rare collectable item, or are planning to clear out the spare room, it's worth seeing what these sites can do for you. As Jacobs says: "Empty your lofts and sheds. There's gold in them there hills."

Just try not to get too addicted.

ODDS AND ENDS

As you might imagine, rummaging around on auction sites can turn up some peculiar items. There are a number of weird and wacky things that have been put up on eBay. For starters, how about bidding on the skeleton of a woolly mammoth? We wonder how they posted it!

In the past, users have also been able to bid on the eternal soul of musician Moby, the house where Kurt Cobain grew up and even Madonna's old gaff. In just five minutes, we managed to dig up some of our own weird and wacky bits. In fact, eBay has a category set up just for this stuff.

How do you fancy a CD of witchcraft, potions and spells, complete with the infamous 'Book of Shadows'? Or perhaps a rare foot-operated dentist drill? Open wide and say 'Arrrgggggh'.

Film fans may want to bid on eBay for a rare 18-page autopsy report on Marilyn Monroe. At writing, the bidding stands at £6. If that's not bizarre enough, how about a mummified skull? Finally, if your dream of becoming a millionaire seems a bit far off, you can splash out 75p for a $1,000,000 note.

CASE STUDIES

Trudie Bamford
Trudie from Wales always loved scouring shops for vintage clothes. One day, having bought a classic 1950s skirt for £10 from a charity shop and realising it did not quite fit, she decided to give eBay a go and was amazed when the final bid for the skirt came through at £20.

Impressed by how easy it was to make an instant profit, she soon discovered her inner entrepreneurial spirit and began buying vintage clothing with the intention of selling it on for a profit.

Within weeks, she used eBay.co.uk's shop-front option to create her own online store, named Viva La Frock, and she now has access to eBay's global customer base of more than 46 million potential buyers, all registered with the site.

KS Jacobs
Based in West London, KS has turned eBay into a profitable hobby. After using it to get rid of some unwanted videos in his film collection, he soon discovered the truth about one man's junk and was able to pick up electrical items, CDs, video games, soft toys and anything else that caught his eye at car boot sales, selling them on at a profit.

"Using eBay as a price guide gives an idea of what to buy," he said. "It's an easy way to earn a few quid and anyone can do it."

Jon Carl Ross
Londoner Jon Carl is the man who sold that record we mentioned at the start. It was Iron Maiden's The Soundhouse Tapes EP.

"I bought the record when it came out about 20 years ago for £1.20. I didn't like it much and shoved it in box," he said.

"Later, I saw it listed in a music buying guide and kept meaning to sell it. However, I didn't want to sell it to a dealer as they only give you half the going rate for anything. Then I discovered eBay.

"I had seen some copies of the same record going for quite a lot, so I decided to give it ago. I put a reserve of £70 on it and the record eventually went for £320."

Like this story? Spread the news by clicking below:

 del.icio.us     Digg this     reddit!