What are the Advantages and Disadvantages of Online Auction?

Online Auctions or Internet Auctions are growing very popular across the world because of the advantages they offer, especially after the COVID-19 pandemic. In fact, online auctions have revolutionized the way how auctioneers operate and how buyers buy in auctions. However, like with any other thing, online auctions have their own disadvantages as well. In this article, we will take a look at the advantages and disadvantages of the online auction.

Advantages of Online Auctions

The following are the advantages of online auctions (for both buyers and auctioneers):

Global Participation

  • This auction attracts a larger audience from around the globe because of the convenience it offers. Since it is an online auction, people can participate in it from the comfort of their homes.
  • Such an auction attracts buyers who would otherwise not participate in an auction. These buyers include those who are mostly at home, younger buyers, busy executives, and more.


  • Online auctions are very convenient for buyers. They can bid when and where they want, as well as participate in more than one auction at the same time. Moreover, they can even participate in an online auction if they come to know about it just seconds before.
  • Buyers can also easily review the rules of the auctions, as well as the return policies.
  • Some online auctions also provide financial assistance to buyers depending on their financial standing.
  • Online auctions give bidders time to compare the prices of products, as well as allow them to carry out a small research on the quality of the product.
  • It is the best option for those who don’t like crowded and noisy places.

Availability of Options

Online auctions allow buyers and sellers to buy and sell a wide range of products, respectively. This saves a lot of time and energy, as well as money. Buyers can easily find the product they want in an online auction. A quick Google search will inform buyers which online auction is offering the product they want.

Pre-bidding Option

Some online auctions even allow buyers to submit pre-bids. This helps in case a buyer is unable to attend the live auction.

Cost Reduction

  • For the auctioneers, online auctions help to reduce costs as it doesn’t involve many costs that physical auctions include. These costs include the rent of the auction hall, costs of moving products, middlemen costs, marketing costs, and more.  
  • Unlike offline auctions, there is no need for products to be available at one central location in online auctions. It saves costs and time for the auction

Offers More Control

  • Auctioneer gets more control in an online auction. They can easily decide how many items they want to sell and at what time.
  • Sales are quick in online auctions as it eliminates the ‘back and forth effort’ that we usually see in offline auctions.
  • Online auctions are much easier to organize. An auction company just needs to put photos of products on the website and schedule an auction.


Online auctions open every hour a day, while some auctions run for a week. This is unlike offline auctions that run only for a few hours. A flexible time limit is good for both buyers and sellers.

  • To buyers, it gives them more time to bid for the product.
  • And for the sellers it means they get the maximum price for their products.

Availability of Information

All information about the products is available in one central place. Moreover, all supporting documents are also available online. Some auction companies also make available audio and video to provide information on the products.

Also Read: Auction Market

Advantages and Disadvantages of Online Auction

Disadvantages of Online Auctions

The following are the disadvantages of online auctions (for both buyers and auctioneers):

Chances of Fraud

  • Images of products in online auctions may be different from the original product.
  • Online auctions may lead to fraud, or leave buyers vulnerable to online fraudsters and hackers. There have been several cases, where sellers have duped buyers in an online auction. In some cases, sellers have asked for buyers’ banking information and then used it to commit online fraud.

Technical Glitches

There are always chances of technical glitches ruining the auction, both for buyers and sellers. These glitches could occur due to high traffic, payment gateway errors, and more. A single glitch could cost a significant amount of money to the seller. On the other hand, it could prevent buyers from purchasing the product they want. Bidders are unable to view and inspect the products.

Lacking Competitive Atmosphere

  • Online auctions lack the competitive atmosphere that we see in offline auctions. The competitive atmosphere in offline auctions often results in higher bids.
  • Some bidders use a tactic, known as “Sniping.” Bidders using such a strategy place their bids only at the last moment, i.e. when it becomes impossible for other bidders to come up with competitive bids. Such a practice could result in sellers getting below the market value for their offering.

Lesser Control over Number of Participants

  • The auction company has no control over who is participating in the bid. This could lead to anonymity in identifying the bidders.
  • Since online auctions attract a lot more people, it means each bidder needs to outbid a lot more people to win the bid.

Time Gap in Bidding & Delivery

Successful bidders need to wait for the delivery of the product to their address.

Final Words

Despite the drawbacks, online auctions are growing very popular around the globe. Auctioneers are using state-of-art software to ensure auctions don’t encounter any technical glitches and are safe for the bidders as well. Still, it is crucial for both buyers and sellers to investigate all aspects of the online auction before deciding to take it up.

Sanjay Borad

Sanjay Bulaki Borad

MBA-Finance, CMA, CS, Insolvency Professional, B'Com

Sanjay Borad, Founder of eFinanceManagement, is a Management Consultant with 7 years of MNC experience and 11 years in Consultancy. He caters to clients with turnovers from 200 Million to 12,000 Million, including listed entities, and has vast industry experience in over 20 sectors. Additionally, he serves as a visiting faculty for Finance and Costing in MBA Colleges and CA, CMA Coaching Classes.

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