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Bidding War

Sold! on online auctions.

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This story appears in the December 1998 issue of Entrepreneur. Subscribe »

More trustworthy than classified ads and cheaper than a retail outlet, online auctions are rapidly becoming the most cost-effective way for small businesses to buy or sell goods on the Internet. Since Web sites such as Onsale Inc. (http://www.onsale.com) began appearing in 1995, the popularity (and revenues) of online auctions has soared, generating nearly $3 billion in business-to-business sales in 1997, according to Forrester Research Inc. in Cambridge, Massachusetts.

There is no direct state or federal government oversight of online auctions, so fraud is still a real concern for participants. Those who run the auction sites, however, have come up with some ingenious ways of addressing these fears, says e-commerce analyst Erica Rugullies of Cambridge, Massachusetts-based Giga Information Group. On some sites, says Rugullies, "Buyers are given an opportunity to post opinions about sellers and their equipment, so word of a bad apple gets around real fast."

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