Online auction method and system facilitating the sale of multiple product units at prices varying with volume
An online auction system for auctioning off products includes a server system, plural buyer systems, and plural seller systems. The server system comprises a seller interface, a buyer interface, a price adjustment mechanism, and a bid manager. The seller interface performs an online bid setup process including obtaining, from a given seller system, price varying information and quantity information corresponding to the price varying information. The buyer interface communicates, to select buyer systems, bid information and product information, and accepts from a given buyer system a given quantity needed and a given bid. The price adjustment mechanism determines a given parity price for the given buyer, which varies according to the given quantity needed. The bid manager defines a given winning bid for the given buyer as a function of the given parity price and a rank of the given buyer in relation to other buyers.
1. Reservation of Copyright.
The disclosure of this patent document contains material which is subject to copyright protection. The copyright owner has no objection to the facsimile reproduction by anyone of the patent document or the patent disclosure, as it appears in the U.S. Patent and Trademark Office patent files or records, but otherwise reserves all copyright rights whatsoever.
2. Field of the Invention
The present invention relates to certain types of online auction systems and methods for providing sellers and buyers a mechanism for selling and buying, respectively, products (goods or services) in unit quantities.
3. Description of Background Information
Auctions are used to sell many types of products (goods and services), including land, commodities, art, food, money, work contracts, computers and automobile parts, to name just a small number. The goal of the seller using an auction process is to obtain the highest value possible in exchange for the good or service. Thus, goods and services are frequently given to the highest bidders so as to provide the seller with the most profit.
Auctions provide sellers access to large quantities of buyers, without the seller having to set a fixed (sometimes arbitrary) price for its goods or services. The auction process can also save sellers time by avoiding negotiating prices individually with buyers.
There are many different types of auction formats. Open auctions give buyers open access to the current bid price, and allow the buyers to proffer a counter-bid when they learn about the most recent highest bid. There are also silent and sealed-bid auctions. Auctions may also be categorized in terms of whether they conform to an ascending price scheme, or whether the price slowly drops until a buyer will come forward and purchase the good or service.
Offline auctions may require buyers and sellers to meet at one or more regionalized or fragmented auction sites. This limits the ease with which buyers and sellers will be able to meet.
Some offline auctions are not so region-limited and allow buyers access to participate in a bidding process through various communication channels. For example, a publication may be widely distributed in the form of electronic or printed media, and bidders may be able to send their bids to a central location, for example, by facsimile, mail, e-mail or telephone. Such systems, while centralized, still present certain inefficiencies in making information available to buyers, and in allowing buyers to send in their bids to the central auction facility.
These and other limitations associated with offline auctions can limit the selection of products auctioned, discourage participation, and drive transaction costs up.
In many cases, multiple layers of intermediaries exist between the original seller and the end-buyer.
Online auctions address many of these problems associated with offline auctions. One type of online auction of increasing popularity is the Internet web-based e-auction. Many types of e-auction sites exist, such eBay, Amazon and OnSale. Sites such as these provide centralized trading communities for bringing together buyers and sellers. These systems allow real-time listing, browsing, and bidding through one commonly-accessed system. Such activities may take place from any personal computer having Internet access anywhere throughout the world. Many sites specialize in particular types of seller-buyer trading, e.g., person-to-person (eBay), business-to-consumer (OnSale), or business-to-business (VerticalNet).
Existing e-auction systems have databases which provide both buyers and sellers access to important information needed to analyze trading data and set prices. Access to these databases decreases inefficiencies associated with distributing and obtaining information and thus encourages trading activity.
Online auctions employ many well-known auction methods, including such commonly used business-to-consumer or business-to-business auction formats as the multi-unit ascending auction described by Vickrey (1962) and Ortega-Reichert (1968). The YankeeAuction™ of OnSale.com uses a variation on the format disclosed by these Vickrey and Ortega-Reichert references. The YankeeAuction model involves a seller auctioning a quantity of identical units. Bidders select the number of units they need and the unit price they are willing to pay. Progressive bidding occurs for a specified period. At the close of the auction, the highest bid prices win at the respective bid quantities. Bids are ranked by unit price, then quantity, and then bid date. Accordingly, with the Yankee Auction, the highest bid wins. In case of ties, larger quantities win. For when the quantity is identical, earlier bids will take precedence.
There are many types of products that sellers would prefer to sell in larger quantities. Thus, the sellers may give a substantial discount to the buyer purchasing a larger volume. This is particularly the case with the used computer market. Every year, global computer dealers sell billions of dollars worth of used computer systems and hardware.
Manufactures typically sell their used PCs in enormous fixed-size lots of 1,000-10,000 units, that only a handful of resellers can afford to purchase. The resellers then resell the items in smaller quantities, charging higher prices per unit.
There is a need for a centralized auction system or method which will minimize the transaction costs incurred by the seller and the buyer. The seller will preferably be able to quickly sell large quantities of products directly to buyers of all types while maximizing the total revenues generated from the sales.
4. Definition of Terms
The following term definitions are provided to help the reader in understanding the terms used herein.
Bid Increment: the incremental amount of money by which a buyer must increase a bid over a competing bid in order to win the bid.
Maximum Parity Unit Price: This is a parity unit price which corresponds to the smallest allowable sublot quantity set by the seller.
Minimum Sublot Quantity: this is the smallest sublot size which a buyer can purchase.
Parity Unit Price: a price falling on the parity unity price curve, which represents the unit price needed to win a given bid as a function of quantity in accordance with a pricing model set by the seller.
Reserve Unit Price (Current Reserve Price): unit price if a buyer purchases the total lot quantity.
Sublot: a portion of a lot.
Total Lot Quantity: the total quantity of units comprising a given lot to be auctioned off by a seller.
Unit: a measure of goods or services being sold through the online auction. An example of a unit is one computer, an hour of professional services, or a dozen golf balls.
Unit Bid Price: the amount of money a buyer bids per unit.
SUMMARY OF THE INVENTIONThe present invention is provided to improve upon systems for online auctioning of goods or services. In order to achieve this end, one or more aspects of the present invention may be followed in order to bring about one or more specific objects and advantages, such as those noted below.
An object of the present invention is to allow sellers to sell goods or services in given lot quantities, by breaking up the lot into sublots, while charging a higher unit price for smaller sublots. An object of the present invention is to provide a mechanism by which the sellers can control the manner in which buyers are encouraged to purchase the units in higher volumes, by, e.g., controlling the extent to which higher volumes are discounted.
A further object of the present invention is to provide a mechanism for allowing sellers to set up the parameters of a bid in a simple, time-efficient manner. A further object is to provide a bid/auction mechanism which minimizes the transaction cost incurred by the seller while maximizing the income received by the seller as well as the sales volume (allowing the seller to control costs related to warehousing and stocking products yet to be sold).
The present invention, therefore, may be directed to a method or system, or one or more parts thereof, for facilitating the online interaction between product sellers and buyers. Such a method or system may involve the auctioning of goods or services, such as personal computers, through an online mechanism, such as an Internet website.
In accordance with one aspect of the present invention, an online auction system is provided which comprises a server system, plural buyer systems, and plural seller systems. The server system comprises a seller interface, a buyer interface, a price adjustment mechanism, and a bid manager. The seller interface performs an online bid setup process including obtaining, from a given seller system, price varying information and quantity information corresponding to the price varying information. A buyer interface communicates, to select buyer systems, bid information and product information, and accepts from a given buyer system a given quantity needed, which a given buyer using the given buyer system desires to purchase. It also accepts a given bid from the given buyer system. The product information may comprise the quantity (in units) of goods or services. By way of example, the goods may comprise computer hardware/software systems, such as personal computers with pre-loaded software.
The bid information may comprise bidding period information, such as auction start date/time and auction end date/time. The given bid is the amount the buyer is willing to pay for the given quantity needed.
The price adjustment mechanism determines a given parity price for the given buyer which varies according to the given quantity needed. The parity price may comprise a unit parity price. A bid manager defines a given winning bid amount for the given buyer as a function of the given parity price and a rank of the given buyer in relation to other buyers.
The bid manager may comprise a mechanism for quoting as the winning bid amount the given parity price when the given quantity needed is greater than a current high bid quantity. The current high bid quantity may comprise the current highest quantity bid at a parity price for that quantity. The bid manager may further comprise a mechanism for quoting as the winning bid amount a value equal to the given parity price plus a bid increment when a sum of the given quantity needed and the current high bid quantity is greater than the total remaining quantity for sale.
BRIEF DESCRIPTION OF THE DRAWINGSThe above and other objects, features, and advantages of the present invention are further described in the detailed description which follows, with reference to the drawings by way of non-limiting exemplary embodiments of the invention, wherein like reference numerals represent similar parts of the present invention throughout the several views and wherein:
Referring now to the drawings in greater detail,
Bid manager 22 manages the overall bidding process, and coordinates the operation of seller interface 14, buyer interface 16, and unit price adjustment mechanism 20. Seller interface 14 comprises a process which handles the interaction between server system platform 12 and seller systems 26. Buyer interface 16 handles the interaction between server system platform 12 and buyer systems 28. Unit price adjustment mechanism 20 performs calculations to determine a unit price used to determine a price required to win a bid for a given bid quantity.
Server system platform 12 may comprise one or a plurality of computers, and each of the components forming part of server system platform 12, i.e., bid manager 22, unit price adjustment mechanism 20, seller interface 14, memory 18, and buyer interface 16 (and others not specifically shown—e.g., operating system components, applications, or other software that may also be running on the platform), may comprise processes operating within an operating system on the platform. The operating system may be a single operating system or distributed operating system.
Each of buyer systems 28 and seller systems 26 may comprise, for example, individual personal computers coupled to internetwork 24 via a dial up connection, through an internet service provider, or through a LAN or WAN connection to the Internet. In the illustrated embodiment, buyer systems 28 and seller systems 26 comprise web browsers, which communicate with server system platform 12.
Seller interface 14 performs an online bid setup process which includes obtaining, from a given seller system 26, price varying information and quantity information corresponding to the price varying information. Buyer interface 16 communicates to select buyer systems 28 bid information and product information. The product information may comprise information describing goods or services. In the embodiment specifically illustrated herein, the product is goods, which comprise second-hand/previously owned personal computer systems. The bid information comprises bidding period information, specifically including an auction start date/time and an auction end date/time in the embodiment provided herein. The buyer interface also accepts from the given buyer system 28 a given quantity needed, which a given buyer using the given buyer system desires to purchase, and a given bid. The given bid is the amount the buyer is willing to pay for the given quantity needed. If this bid is sufficiently high to be a winning bid, the transaction will take place, either obligating the buyer to purchase the product (and the seller to sell the product) for the specified terms, or, depending upon the implementation, actually effecting an electronic payment for the product and setting in place a product delivery process.
Unit price adjustment mechanism 20 determines a given unit parity price for the given buyer, which unit parity price varies according to the given quantity needed by the given buyer. Bid manager 22 defines a given winning bid amount for the given buyer as a function of the given unit parity price and a rank of the given buyer in relation to other buyers.
Specifically, a set of unit description records 44a is provided which describes a unit of a given product. In this embodiment, certain characteristics of a type of personal computer being sold are described in various records 44a. The products being sold may be identical. That is, each unit may comprise a product which has certain identical characteristics to all other units within the lot. Alternatively, a given unit may be considered a unit because it meets certain requirements. Minor variations may not preclude a product from being considered a unit from the same lot, so long as they meet the describing characteristics set forth in the unit description section of the seller screen.
Bid parameters 46a are also set forth in first seller screen 40a. They comprise a total lot quantity 40a, a reserve price 50, a reserve unit price 52, a bid increment 54, a minimum sublot quantity 56, a splitting factor 58, a pricing model value k 60, an auction start date/time 62, and an auction close date/time 64.
The embodiment shown in
The seller interface may be provided with a mechanism (not specifically shown) for allowing the seller to register prior to being cleared to trade using the e-auction site. Registration may involve inputting a standard set of personal and business information through an online form (not shown). Such data may be maintained in a system database 11 as shown in
A minimum sublot quantity 56 is input by the seller, and specifies the minimum sublot quantity that can be purchased by a given buyer. A splitting factor, which is 50 in the example, is specified by the seller which determines the unit price increase that is applied to split lots to offset added transaction costs. More information will be provided below regarding the significance of the splitting factor and how it may be used in the bidding process. A pricing model parameter (k) 60 is also specified. In addition, the seller will indicate parameters defining the bidding period in the illustrated embodiment. Those parameters comprise an auction start date/time 62 and an auction close date/time 64.
The splitting factor is a seller-defined parameter used with a pricing algorithm to quantify the unit cost increase to be applied to split lots. For example,
In the embodiment shown in
The bid manager 22 will compare different bids for different sublot quantities in order to rank the bids and to determine the winner. Utilizing the database 11, bid manager 22 will compare high bids for each sublot quantity versus the reserve unit price specified for that quantity. For instance, if buyer no. 1 offers to purchase the entire lot of 100 units for the initial reserve unit price of $100.00, while buyer no. 2 offers to by 25 units at $150.00 per unit (120% of the initial reserve unit price), then the buyer no. 2 will win the bid. In order for buyer no. 1 to counter the bid of buyer no. 2, he or she must bid an equivalent 120% of the reserve unit price for that particular quantity (100 units), i.e., $120.00 per unit. If buyer no. 1 achieves price parity (120%) with buyer no. 2, buyer no. 1 would win the bid since bids-are ranked by price, then quantity, and then date.
The unit parity price curve may be defined in any manner so as to allow the varying of the price as a function of the quantity purchased by the buyer.
The unit price adjustment mechanism 20 may be implemented to determine whether a given sublot quantity dictates a particular parity unit price in accordance with the curve shown in
The value f represents the splitting factor.
This calculation is required for the seller interface depicted in
Given the two endpoints of the linear pricing model (dP,Q) (P,sQ), an infinite number of polynomial curves can also be created that pass through these points. The family of polynomial curves passing through the two points, in the embodiments illustrated herein, may be determined using the following equation, solved for the bid unit price (p) given a sublot quantity (q):
In this equation, k is a factor associated with the specified pricing model which may be selected by the seller, as shown in
In another embodiment, the pricing curve between the two points (sQ, P) and (Q, dP can be determined by a combined exponential equation of the form:
where k is a factor associated with the specific pricing model selected by the seller. Note that this equation yields the same result as the polynomial equation, but uses exponential nomenclature instead.
In yet another embodiment, the pricing curve can be calculated according to a generalized Leontiev equation of the form:
where K and d are pricing factors associated with the specific pricing model selected by the seller. And the unit price (p) associated with a sublot quantity (q) can be determined by using the quadratic equation of the form:
Note that the generalized Leontiev equation yields the same result as the polynomial equation and combined exponential equation, but uses a complex quadratic nomenclature instead.
Once an auction has been launched by a seller, it will be visible to potential buyers browsing the auction cite. Through the buyer interface, a summary, or detailed listing, of the auction parameters may be presented, for example, in tabular form.
In a next act A6, a confirmation display is provided to the seller via seller system 26. Accordingly, if, for example, the first seller screen 40a shown in
While the invention has been described by way of example embodiments, it is understood that the words which have been used herein are words of description, rather than words of limitation. Changes may be made, within the purview of the appended claims, without departing from the scope and spirit of the invention in its broader aspects. Although the invention has been described herein with reference to particular structures, materials, and embodiments, it understood that the invention is not limited to the particulars disclosed. The invention extends to all equivalent structures, mechanisms, acts, and uses, such as are within the scope of the appended claims.
Claims
1. In an online auction system for auctioning off products in measurable units, the online auction system comprising a server system, plural buyer systems, and plural seller systems, said server system comprising:
- a seller interface for performing an online bid setup process including obtaining, from a given said seller system, price varying information and quantity information corresponding to said price varying information;
- a buyer interface communicating to select buyer systems bid information and product information and accepting, from a given said buyer system, a given quantity needed, the given quantity needed being an amount of units of a product a given buyer using said given buyer system desires to purchase, and accepting a given bid;
- a unit price adjustment mechanism for determining a given parity price for said given buyer, said given parity price varying according to said given quantity needed; and
- a bid manager for defining a given winning bid amount for said given buyer as a function of said given parity price and a rank of said given buyer in relation to other buyers.
2. The server system according to claim 1, wherein said products comprise goods.
3. The server system according to claim 1, wherein said products comprise services.
4. The server system according to claim 1, wherein said products comprise computer hardware and software systems.
5. The server system according to claim 1, wherein said products comprise personal computers.
6. The server system according to claim 1, wherein said bidding information comprises bidding period information.
7. The server system according to claim 6, wherein said bidding information comprises an auction start date/time and an auction end date/time.
8. The server system according to claim 1, wherein said price adjustment mechanism comprises a unit price adjustment mechanism for determining a given unit parity price.
9. The server system according to claim 1, wherein said bid manager comprises a mechanism for quoting as said winning bid amount said given parity price when said quantity needed is greater than a current high bid quantity.
10. The server system according to claim 9, wherein said current high bid quantity comprises the current highest quantity bid at a parity price for that quantity.
11. The server system according to claim 1, wherein said bid manager comprises a mechanism for quoting as said winning bid amount a value equal to said given parity price plus a bid increment when a sum of said given quantity needed and said current high bid quantity is greater than a total remaining quantity for sale.
Type: Application
Filed: Apr 18, 2005
Publication Date: Aug 25, 2005
Inventors: Kevin Growney (San Francisco, CA), Patrick Youssi (San Francisco, CA)
Application Number: 11/109,254