Online auctions have completely changed the auctioneering and fundraising landscape. Today, individuals and organizations can auction goods quickly and globally, completely changing the game for nonprofits in particular.
With unparalleled accessibility and reach, your nonprofit can easily host online auctions that increase your reach and raise the necessary funds for your cause. But how, exactly, do online auctions work?
Let’s look at the different types of online auctions, the bidding process, and important things to know when hosting a virtual auction.
Online auctions come in several formats. Each caters to different needs, goals, audiences, and the type of fundraising event you want to host. Understanding these types can help you determine the best campaign and fundraising approach.
Traditional online auctions mirror what most people think of when they think of an in-person auction—only this auction takes place online.
In a traditional virtual auction, bidders are introduced to the auction items and allowed to place their bids on the pieces. Patrons then bid until no one is willing to raise the bid price, and the person who placed the highest bid wins the item.
This all takes place online, which is a great way for nonprofits to raise money without committing to hosting a whole in-person event. Hosting an online auction is much more cost-effective as you don’t need to book a venue, worry about catering, or prepare the space for your bidders. All you and your bidders need is internet access and the right online auction software.
When hosting a penny auction, participants pay a small fee to place a bid. This usually only costs a few cents, hence the name penny auction.
Although items may sell for less than their retail value, participants’ cumulative bidding fees contribute to the seller’s profit. Although these auctions are typically used for entertainment rather than charitable fundraising, they can inspire innovative online auction strategies.
Silent auctions are another popular online auction option for nonprofits and charities. During a silent auction, participants place bids ‘silently’ (privately). Bidders register, view, and submit their bids through the auction software. No auctioneer calls out bids, hence the “silent” part of the auction.
Once all bidders have made their offer, the platform will notify the winning bidder that they have won the bid item.
A successful virtual silent auction can be an amazing addition to any nonprofit’s fundraising strategy. Because of the privacy of a silent auction, you can prevent competitive intimidation among bidders, ensuring a fairer bidding process and a larger audience.
No matter the type of auction you run, the process tends to follow the same bidding format:
Most auctions start with bidders browsing the available bid items, usually through a catalog. Catalogs include photos of the bid items, descriptions and short histories where relevant, and starting bid prices. A lot of nonprofits also use the catalog to highlight how the funds will be used to support their cause.
Once bidders have taken a look at the catalog, they can register to participate in the bid and place bids for items or services that appeal to them.
Bids need to exceed the current highest bid by at least the minimum increment specified by the auction organizer.
Many platforms allow bidders to set a maximum bid, automating their participation by increasing their bid incrementally as needed.
Bid increments represent the smallest amount by which a bid can increase. For example, if an item’s current bid is $50 with a $5 increment, the next bid must be at least $55.
When no one challenges the highest bid, the highest bidder receives a notification letting them know their bid was the highest and the item is theirs.
Online auctions use certain terminology to ensure everyone is on the same page. Understanding these terms will help both you and your bidders navigate the online auction process more confidently.
Once the bidding is over, the auctioneers need to finalize all payments to complete purchases.
It’s a good idea for auctions to offer multiple payment options, including popular payment platforms like PayPal, credit cards, and direct bank transfers. Offering multiple payment options guarantees accessibility for all participants and opens the door to more bidders. Always clarify what payment methods your auction accepts before the auction starts.
As soon as payments are cleared, you’ll need to start arranging the delivery or pickup of the items.
It’s important to be upfront with participants about any additional shipping and customs fees from the start. Surprise costs are never fun. And being vague about additional costs can negatively impact your participant’s experience with your NPO.
Online auctions are a versatile and cost-effective way for nonprofits to raise funds and reach large audiences.
Understanding the online auction process is crucial for maximizing your nonprofit’s fundraiser earnings. This will allow you to create a smooth and engaging auction for your bidders and encourage more participation.
Simplify and streamline your next online auction with BiddingOwl. Whether in person or online, BiddingOwl puts all the tools you’ll ever need right in your hands.
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