What is a Dutch Auction?
by sir_snipes_alot

A Dutch Auctions is an auction format that eBay offers to sellers who have more than one of an item to sell - allowing them to auction off as many of their identical items as they would like.

It is sometimes very difficult to know if an auction is in a Dutch Auction format, especially if the seller has not listed the term 'Dutch' in the item title. The best way to identify a Dutch Auction format is to look on the item listing page - giving very close attention to the quantity number. If the quantity number is greater than (1) then the auction is a Dutch Auction format.

Dutch auctions are very different from the single item eBay auctions that most users are accustomed to. The buyer may bid on one or more items - you must determine how many you want to bid on, as well as how much you are willing to pay for each item. Your total winning bid cost is a calculation based on the following formula: (total items) x (bid amount) = total winning bid (of course you should also add in shipping costs for as many items as you have bid upon).

Dutch auctions are also very different from the single auction listings as you will not necessarily pay your bid amount for the item. All winners of a Dutch Auction format will pay the same amount per item bid upon - this bid price is determined by the lowest winning bid price. For example: if there are 5 bidders for a Dutch Auction and each bidder places a bid for one item - the winning bid price that all bidders will pay, is the bid of the 5th highest bidder (or lowest winning bid). You may have bid much more than the lowest winning bidder, but you only need pay what that lowest winning bidder placed their bid for.

Another major difference between the Dutch Auction format and the single item format is that proxy bidding is not used - the price you bid will be your bid - regardless of starting price or the bidding actions of other bidders. Your bid amount does not start at the lowest possible increment and only advance as needed to keep you in the lead. The full amount of your bid will be registered as your bid on the auction item/items.

You may increase your bid on a Dutch Auction at anytime during the open auction period - however, when raising your bid the "total amount" of your bid must increase. You may continue to bid on the same number of items with a higher per item price. If, however, you want to decrease the number of items you are bidding on - the total amount of your new bid must increase. For example: you enter an initial bid of $5.00 for 5 auction items at a total bid price of $25.00 - you then wish to place a higher bid, but only bid on 4 auction items - you now must enter a bid for (4) items but your bid price must increase to a point where the total bid price is greater than the original $25.00 - in this case your bid for the (4) items must be greater than $6.25.

Key Points to remember regarding Dutch Auctions:

• You may bid on one or more items
  
  

• Your total winning bid amount is calculated as follows:
  (total items) x (bid amount) = total winning bid
  
  

• You may increase your bid at anytime during the auction, but your total bid price must increase
  
  

• The winning auction price is determined by the bid of the lowest winning bidder - all winners pay the same price for the item/items.
  
  

• Remember that each auction item carries it's own shipping and handling price - don't assume that the seller will combine the shipping costs for you. Ask the seller before bidding if they are willing to combine shipping for multiple items.
  
  

• If you are the lowest winning bidder on a Dutch Auction, but have placed a bid for multiple items and your winning bid entitles you to less than your total item number - you are not obligated to buy any of the items. You may buy as many as are left available to you, but are not obligated to buy any.