Implementation of Auctions in Websphere Commerce Suite (WCS)

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Implementation of Auctions in Websphere Commerce Suite (WCS)

1              Introduction

Auctions or brokered sales are the norm in the business world for negotiating trades of large value. But consumer sales and small-scale purchases traditionally used fixed (posted) prices mechanism, perhaps because of the high overhead cost of using the auction or brokerage method. The new economics of the Internet has made auctions popular in consumer and small business transactions also. Lee and Clark [5] present the economic rationale underlying this transition. Several success stories about Internet auctions are cited by Turban [10].  Finally, the success of ebay underscores the emerging importance of auctions in consumer sales.

Many types of auctions are practiced in different real world situations to achieve different business objectives in various social and cultural settings. The business objectives can be obtaining the best price, guaranteed sale, minimizing collusion possibility, etc. Ralph Cassidy [1] presents an extensive survey of auction practices around the world. It is the interplay of sociology, psychology, economics, optimization theory, organizational theory, and several disciplines of computer science in developing a comprehensive auction system that makes auctions research truly exciting

Game theoretic treatments of different kinds of auctions can be found in McAfee and McMillan [7], Milgrom [8], and Milgrom and Weber [9], while some experimental results are reported in Kagel [2]. There have been many papers [6], [3], [4], [12], and [13] that describe the salient features of Internet auctions and issues arising out of using auctions for trading over the Internet over the last couple of years. One of the early papers that discuss real time and performance issues in the design of auction servers is that of Wellman and Wurman [12]. They discuss the advantages of decoupling the bidder interface from the auction processing completely. Wurman et al [14], present an extensive breakdown of the auction space that captures the essential similarities and differences of many auction mechanisms in a format more descriptive and useful than simple taxonomies. 

We implemented an auction system on IBM’s e-commerce platform, the Websphere Commerce Suite (WCS). The auction system has been available as a commercial product for the past two years. Looking back at our research and design experiences, four topics stand out, which are subject of this paper.

 

The first issue was to design the auction subsystem in a manner that allowed it to be integrated with existing commerce platform. The implementation had to be modularized to support the wide variety of auction formats practiced around the world. In Section 2 of this paper we discuss how our design handled this issue. The second challenge was of managing performance. The main challenge here is in processing bids efficiently in an open cry auction, particularly when proxy bidding, i.e., bidding by an agent is allowed. Details about the nature of this problem and our solution are discussed in Section 3.

Having implemented a system that could support a wide variety of auction styles, as we demonstrated our system, especially the auctioneer interface that allowed the seller to set up an auction, we were surprised by the confusion that the flexibility had engendered. The result was the re-implementation of the single panel auctioneer interface as a three-tier interface to support auctioneers with different degree of auctioneering skills. The details of the auctioneer interface implementation are briefly discussed in Section 4.1. In Section 4.2 we discuss several interface design issues from the bidders’ perspective. Finally in Section 5 we conclude with a discussion of what in our opinion remains not done and suggestions for some interesting research opportunities in this area.

 

Figure 1: Auctioning process in WCS.

2              Overview of Auction Implementation in WCS

From a bidders’ perspective participation in an auction involves the following four steps: 1) registration, which could be optional for an observer but required for participants placing bids; 2) Navigable catalog to find products on auction and learn about them; 3) Interface for bidders to bid for products on auction, keep track of their bids and learn about competing bids as consistent with the auction rules; 4) Settlement at closing of the auction if the bidder happens to win. As shown in Figure 1, the first, second, and fourth steps are common to fixed price based trading in conventional e-commerce systems, Websphere Commerce Suite (WCS), being an example of one such commerce system. Therefore, to support auctions in WCS we implemented just the bidding subsystem, ensuring that it interfaced seamlessly with the payment and fulfillment subsystem and the catalog. Minor changes were needed in the catalog to display products on both auction and fixed price sales. Details of the bidding subsystem our outside the scope of this paper but Section 4.2 contains the usability perspective.

From the auctioneer’s/seller’s perspective the auction process consists of six steps: registration, catalog setup, auction setup, auction closing, capturing and processing orders, and payment/fulfillment. The seller’s auction process could have been segmented differently, but the chosen segmentation simplifies the integration of the two auction related processes, auction setup and closing, with the remaining four auction support processes, which are also common to fixed price selling. The catalog setup process is modified so that when describing a product, the seller can specify that the product will be sold through an auction. At the close of the auction the winning bids are captured as orders.

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The key components of the bidding process are rules governing minimum increments on bid values and quantity bid on, the information about the competing bids that is visible to all bidders during and at the close of auction, and rules/penalties for withdrawal of bids. The two key components of the auction close process are choosing the time at which auction closes and determining the payment to be made by the bidder. The auction closing can depend on a combination of specified deadline and the level of bidding activity. The payment made by the winning bidders is not necessarily the bid ...

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