Go online for some hot auction action

Fancy a nuclear-fallout shelter, one of Elvis's teeth or the world's longest potato chip? You could have bought all or any of them at internet auctions in recent months. Whatever you want, or want to get rid of, the chances are you will be able to find it or sell it at an online auction.

The size and growth of online auctions has been awe-inspiring. The world's biggest auction site, eBay, reported sales by its members of $5.6bn (£3.49bn) for the year to July, up 66 per cent year-on-year. It claims to have 70 million users worldwide and eight million in the UK. During one month alone, up to 35 per cent of the people using the internet in the UK log on to eBay at least once.

And QXL, a European rival, offers a similar service, although it has fewer members. More recently Amazon, the online book store, also began to offer people a way to sell direct to each other.

The majority of users of the sites are amateurs wanting to sell unwanted collectables, books, music, in fact almost anything you can imagine. But the growth of the sites, and the opportunities to make large sums, have also given rise to a new breed of traders who make full-time livings from their home computers.

Pat Austin, 43, from Walsall, left her job at a book publisher two years ago to trade books and comics on eBay. She says: "The average mark-up I get is 600 per cent." Mrs Austin is coy about how much she earns, but admits it is more than in her previous job. She hopes she will be successful enough for her husband to be able to give up his job and join her working from home in a few months.

Success, as a buyer or a seller, is not a matter of luck, but neither is it rocket-science. The sites are thankfully simple, as are the strategies used by professionals and amateurs to get the best from their deals.

The most important thing for a bidder, the professionals say, is to know what something is worth before bidding. Relying on the auctions to throw up a fair price is a dangerous strategy and can leave bidders paying well over the odds. "I have sold an item one week and got £50 for it and sold a similar item the next week and got £5," Mrs Austin says.

There really is not much in bidding tactics. Whether you bid early or late you will win the lot only if you have the highest bid. It will pay to be online when an auction for an item you want is closing, because bids often pour in at the last moment.

Some buyers claim to be able to track bargains by searching for items that are poorly described or do not come with a picture. These tend to attract fewer bids and thus less money, but there is a higher risk of picking up something that is not what you expected or in poor condition. It can also be a tiresome process. Bidders should be careful to include shipping costs when they are working out how much to bid. Products from outside the UK do have VAT added on, and you will have to pay customs duty.

Before bidding on the internet you may want to see if you can buy an item for less in the real world. Some experienced players believe online auctions rarely throw up bargains. Mrs Austin says: "I don't buy very much on eBay. Most of my purchases are from car-boot sales and live auctions, where I find you get better prices."

Bargain hunters using the internet also need to be careful or they could be stung by unscrupulous sellers. The Department of Trade and Industry last week warned consumers to use caution over internet bargains that seem too good to be true.

People selling goods via internet auction sites are often private sellers, rather than a business, so are not covered by the same consumer laws as shops. Gerry Sutcliffe, the Consumer minister, says: "Buying from private sellers is similar to buying goods privately from classified adverts in newspapers. Consumers have fewer rights, so it is important they are careful about what they buy and from whom."

He points to an example of one consumer paying £1,770 for a 42-inch plasma screen television over the internet, but the TV did not arrive. The only contact he had for the seller was an e-mail address, but he got no replies to his messages. Another bought five laptops at £820 each that were never delivered. The customer had an address for the seller but all correspondence sent to it was returned. Mr Sutcliffe advises buyers to find out before they buy to find out what action they can take if things go wrong.

Online auctions seem to provide a far happier hunting ground for sellers. They can quickly access a worldwide market for little cost and without the problems of setting up their own website.

George Crudgington, 69, of Chesterfield in Derbyshire, began to trade online when his business folded in 1998, leaving him with little money and few job prospects. In just under five years he built a porcelain figure trading business with a turnover of more than £100,000 a year.

He says: "The reason my business works is that the products I sell are popular and difficult to get overseas. I found a market in America for British-influenced products that are made in Britain. America is the market you have to tap into if you want to be successful because they have the money and there are so many of them on the site."

As with all sales pitches, presentation of your item for sale is vital. Mr Crudgington says: "A good picture and a good description are the most important thing. They give people confidence to bid. It is also important to remember that whilst the Americans speak English it is an Americanised version of English. You have to be aware of how they spell and call things by different names."

A good description serves another important purpose. Auction sites use a browser, much like any other web browser, to direct people to the items they want. Failing to use the common descriptor for a product can mean few people will see your item. The easiest way to get the description right is to look at similar items and copy the way they are described.

Timing of an auction can be important, too. Mrs Austin recommends letting auctions run for seven to 10 days and finishing them late at night in the UK. "I always try to finish an auction when America is awake, because that is where the bulk of buyers is."

And finally there is service. The auction sites carry ratings of sellers from their previous customers. The ratings are based on the speed of response to e-mail questions, the quality of products and the speed with which they arrive. Mr Crudgington says: "I am a 'power-seller' on eBay, which means I have reached and maintained a high level of service over time. This gives people the confidence to deal with me." A good reputation on eBay can add up to 8 per cent on sale prices.

THE BASICS OF BUYING AND SELLING

SELLERS

* Registration on all the major auction sites is free to buyers and sellers;

* Sellers can set a minimum price and determine the time the auction runs for, typically three to 10 days;

* Sellers pay to have their items listed on a site as well as paying a percentage of the final sale price. Ebay has recently hiked its fees, by up to 45 per cent for some items;

* Payment methods are determined by the seller with most accepting personal cheques, postal orders and PayPal, which is an online payment system.

BUYERS

* The buyer with the highest bid when the auction closes wins the item;

* Read the terms and conditions:- is postage included in the costs? How will it be posted?;

* Decide the highest price you are willing to pay before you bid.

CONTACTS

eBay UK www.ebay.co.uk

QXL UK www.qxl.com

Amazon: www.amazon.co.uk

PayPal: www.paypal.co.uk

ONLINE AUCTION FACTS

The most expensive item sold on eBay was a Gulfstream jet for $4.9m (£3.1m);

A meal with Warren Buffett, the so-called sage of Omaha, sold last year (2003) for $250,100;

A decommissioned nuclear bunker in Pickering, North Yorkshire, sold for £17,100 in June last year;

A tooth reportedly belonging to Elvis Presley failed to sell online when no one matched the asking price of $60,000;

The largest lot offered on eBay is Bridgeville an 82-acre former gold rush town in California. The town, described by its owner as a "fixer-upper", was sold for just under $1.8m.