Note: Descriptions are shown in the official language in which they were submitted.
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METHOD AND SYSTEM FOR PROCESSING
AND TRANSMITTING ELECTRONIC AUCTION INFORMATION
This application is a divisional of Canadian
National Phase Patent Application Serial No. 2,253,543 filed
March 19, 1997.
BACKGROUND OF THE INVENTION
1. Field of the Invention
The present invention relates generally to electronic commerce and
more particularly to conducting an interactive auction over an electronic
network.
2. Description of the Related Art
Auctions usually take the form of a physical gathering of bidders
assembled, together' within an auction house. A:;r;tions c~racenting more
'15 valuable, collectible merchandise, such as art, coins and antiques, are
often preceded by preparation of a catalog of merchandise, circulated to
interested parties in advance of the gathering at the auction house,
where bidding by those physically present will take place. For auctions
of more mundane items, such as household possessions, estate safes
and the like, the interested bidders simply appear at the appointed time
and place and bid on merchandise in which they are interested.
Traditional auctions requiring a bidder's physical presence
disadvantageously require that the merchandise lots up for sale be
ZfJ , available at the auction venue for inspection by the bidders and
subsequent pickup by the successful bidders. For many types of
merchandise it would be far easier for both buyer and seller to leave the
inventory at -'rts original source and ship purchased items to the
successful bidders at the end of the auction. Moreover, physical
auctions have the still further disadvantage that only one item may be
auctioned at a time. The auctioneer solicits bids from the floor for a
given lot, but once the highest bid has been accepted, the lot is closed
and the next lot brought forward. This sequential processing combined
with the finite amount of time available to a gathered group is inherently
limiting because multiple lots cannot be auctioned simultaneously to the
same group of people during their limited period of availability.
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Some changes in bidding requirements have made traditional
auctions somewhat more convenient for bidders. Many auction firms
allow bidders to submit their bids in advance of the auction. Advance
bidding may be done by mail as a convenience to the bidders so that
they do not have to be physically present at the auction. Also, the
advent of the telephone and facsimile machine allowed bidders to submit
bids in near real-time during the course of an auction. These
technologies free the bidder from being physically present at the auction,
thereby saving time and travel expense. To incorporate these
technologies into the traditional auction format, representatives of the
auction firm receive telephone or facsimile bids from their clients and
alert the auctioneer of these new bids. Similarly, the representatives
may relay information about the current bid items, such as the current
high bid, back to the telephone biddprsa
Bidding by mail or facsimile suffers a significant disadvantage as
compared to bidding in person or by telephone because the mailing or
faxing bidder has no opportunity to increase a bid in quick response to
competitive bids received from the floor or by telephone. Moreover,
although telephone bidding allows the bidder to avoid travel expense and
inconvenience, traditional auctions may be scheduled at inconvenient
times for many remote bidders. Also, because of the large number of
items or lots sold in a typical auction, which can number in the
thousands, it is impractical for a telephone bidder to stay on the line for
a two to eight hour period in order to be present when the few lots in
which the bidder has an interest come up for sale. The lots in which the
telephone bidder is interested-may be scattered throughout the lengthy
traditional auction. Time zone differences further diminish the appeal of
telephone bidding for an international potential customer bash.
All of these limitations and disadvantages of physical auctions,
even when telephone bidding or bidding by facsimile is permitted, serve
to discourage a large number of bidders and ultimately leads to lower
selling prices to the economic detriment of the auctioneer and seller.
Electronic auctions held over the Internet using electronic mail (E-
mail) have provided a minor innovation as compared to more traditional
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physical options. In E-mail auctions, an auction catalog is electronically
mailed to people interested in bidding. Subsequently, bidders submit
their bids on individual lots to an auctioneer via E-mail. The auctioneer
reads the electronic mail bids and enters them in a database of bids.
When the auction closes, the auctioneer notifies the winning bidders,
usually via electronic mail, and ships the merchandise to the winning
bidders.
There are several disadvantages to E-mail auctions: First, a human
auctioneer is required to prepare the auction catalog and to read and
process the electronic mail bids. This takes a considerable amount of
effort in a large auction. Secondly, it is difficult to keep the bidders
updated as to the current high bids on the various items. Electronic mail
ur'~ ii~s$ iat~~C Nu~liC iietv~iiriks, Su~l3 as the Internet, IS 10~~~"J~er
~riCSiIfiy
traffic than most, meaning it can take several hours for bids to reach the
auctioneer and for bidding updates to reach the bidders. Thirdly, as the
auction closing draws near, the volume of bids may prohibit the
auctioneer from sending out high bid information to the bidders because
of the time involved in reading the electronic mail bids and in entering
them into the bid database.
A recent innovation applied to E-mail auctions is the use of the
Internet's World Wide Web (WWW) facility to post descriptions of the
merchandise and show the current high bids. This innovation provides
the advantage of eliminating the need to electronically mail bidding
_updates to bidders. And since WWW traffic is much higher priority on
the Internet, bidders suffer less of a time lag in seeing updated Web
pages. However, a human auctioneer is still involved and is required to
manually process the electronic mail bids, enter them into the bid
database, and to update the World Wide Web pages with current high
bid information.
Sales firms other than auction houses have also used the
Internet's World Wide Web facility to post descriptions of their
merchandise and to offer the merchandise for sale at a set price. These
systems are automated and are capable of accepting an order from a
customer by having that customer fill out an online order form. This
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order information is taken by the system and placed, into an order
database or accounting system which then processes the order.
However, such systems sell merchandise only at a fixed price and do not
allow merchandise to be auctioned off, or to have their prices
dynamically adjusted in an interactive manner in response to bids and
other market conditions such as supply and demand.
Security brokerage firms for years have used automated
transaction systems for matching buy and sell orders for securities. For
example, the New York Stock Exchange's DOTS (Direct Order
Transmission System) and the NASDAQ's SOES small Order Execution
System) systems offer complete electronic matching of buyers and
sellers. However, these systems do not operate an auction. They
nnerely pair buy orders ~: a seii orders when the pricing criteria of both
sides of the trade are 'met.
A number of issued U.S. patents relate to various forms of
electronic commerce. These patents fall into three broad categories: 1 )
patents relating to on-line networks, 2) patents relating to electronic
commerce over on-line networks, and 3) patents related to various forms
of securities (e.g., stocks and futures) trading via electronic means.
from the first of these groups, on-line networks, U.S. Patents Nos.
5,406,475 issued April 11, 1995 and entitled Data Processing Network
Having A Plurality Of Independent Subscribers, 5,235,680 issued
August 10, 1993 and entitled Apparatus And Method For Communicating
Textual And Tsnage Information Between A Host Computer And A Remote
Display Terminal, and 5,310,997 issued May 10, 1994 and entitled
Automated Order And Delivery Systezm, are representative of the prior
art. These patents describe systems of terminals connected over wide
area networks to centralized computers. However, they do not disclose
the details of electronic commerce or auctions in particular.
In the second group, patents relating to electronic
cammerce, U.S. Patent Nos. 5,285,383 issued February 8, 1994 and
entitled Method For Carrying Out Transactions Using Electronic Title,
and 5,297,031 issued March 22 , 1994 and entitled Method And Apparatus
For Order Management By Market Brokers, describe various means for-
conducting transactions over electronic communications networks. They
also describe various means for displaying merchandise for sale to a
*Trade-mark
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o»~v-i.vv
plurality of customers connected to a central computer of a computer
network and various means for conducting simple sale transactions
where a buyer purchases an item at the stated price. As a group, these
patents do not disclose the means for conducting electronic auctions or
any.sales format other than a-simple or "straight" sale.
Ore particular U.S. patent, No. 4,789,928 issued
December 6, 1998, discloses a means for soliciting bids
over an electronic network from bidders that are remote to
and simultaneously transmits the current high bid from the floor of the
physical auction to the terminals of the remote bidders. However, this
patent does not disclose or suggest the concept of an electronically
conducted auction including a means for automatically closing the
auction under certain conditions and without benefit of a five human
auctioneer. Furthermore, this patent fails to disclose or suggest a means
for auctioning a plurality of items simultaneously: rather, the disclosed
system is strictly tied to the sequential proceedings of a physical
auction. Finally, this system contemplates only a simple "highest bidder"
auction where a single lot goes to an individual high bidder'. This system
cannot handle, a lot available for auction which includes a plurality of
items and where a plurality of winning bidders sufficient to match the
plurality of auctioned items exists.
In the third group of patents related to electronic commerce,
patents relating to securities trading, U.S. Patents Nos. 4,412,287
issued October 25, 1983 and entitled Automated Stock Exchange, and
5,077,665 issued December 31, 1991 and entitled Distributed
Matching System, disclose means for prospective buyers to. post offers
to buy a given security at a specific price and for prospective sellers to
post offers to sell a given security at a specific price. These automated
systems maintain lists of buy and sell orders. if an offer to buy a
security is placed at a price greater than or equal to an existing offer to
sell that security at a given price, these systems will automatically
consummate the trade by matching the buyer with the seller. While the
securities industry uses, and these patents disclose, such terms as
"auction" and "bid", they are actually referring to the process flf
matching a set of buyers' bids with a set of seNers' prices: There is no
auction in the true sense of a plurality of bidders simultaneously bidding
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in a manner accessible to ail bidders and sellers in order to achieve a high
selling price. In fact, these patented systems do not include disclosure
of the list of open buy or sell orders, thus depriving the seller of the
ability to openly solicit the highest price for securities. Instead, the
5' market price of securities sold through these automated systems
fluctuates up and down based upon the last successful match between
an open buy order and an open sell order when both the buyer and seller
have placed orders at compatible prices. There is no ability in such
systems to conduct truly competitive and open bidding.
The present invention overcomes the above-listed drawbacks of
the background art by providing a method and system for conducting
auctions and mark down sales of merchandise over a compu~t$r nerwo~rk
without the aid of a human auctioneer. The system is open to bidders
. anywhere in the world; leading to increased bid activity. Complete and
thorough,descriptions of all offered merchandise may be placed on-line,
since the costs associated with printing auction catalogs are minimized in
an electronic medium. An auction within the inventive system may be
conducted over a period of time, mitigating the problems of inconvenient
scheduling and. time zone differences. A variety of auction formats can
be employed within the inventive system depending on the type of
merchandise being sold. And finally, the method and system of the
present invention cart be conducted automatically without the need for a
human auctioneer, thereby allowing for a large number of items to be
continuously auctioned.
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SUMMARY OF THE INVENTION
To address the shortcomings of the background art,
the present invention provides a computer system for
conducting a network-based auction for an item over a
computer network, comprising: posting means for posting, on
a computer, descriptive information describing the item
available for bidding by a plurality of bidders during the
network-based auction; auction selection means for
associating the item with a selected auction format selected
from a plurality of available auction formats; bid receiving
means for receiving a bid related to the item during the
network-based auction; and closing means for automatically
closing the network-based auction based upon bidding
activity associated with the network-based auction during a
predetermined time interval.
In another aspect of the present invention, there
is provided a method for conducting a network-based auction
for an item over a computer network, the method comprising:
posting, on a computer, merchandise information describing
an item available for bidding by a plurality of bidders
during the network-based auction; associating the item with
an auction format of a plurality of available auction
formats; receiving a bid related to the item during the
network-based auction; and automatically closing the
network-based auction based upon bidding activity associated
with the auction during a predetermined time interval.
In a further aspect of the present invention,
there is provided a computer-readable medium containing
instructions, which when executed by a computer, cause the
computer to perform a method including: posting, on a
computer, merchandise information describing an item that is
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available for bidding by a plurality of bidders during a
network-based auction; associating the item with an auction
format of a plurality of available auction formats;
receiving a bid for the item during the network-based
auction; and automatically closing the network-based auction
based upon bidding activity during a predetermined time
interval.
To further address these challenges, the present
invention provides, in a computer network enabling
communication between a host computer and a plurality of
remote bidders, a system and method for transmitting and
processing auction information implemented as a computer
program within the host and network, comprising posting
means for posting information across the network, the
information being descriptive of a lot available for
purchase, bidding means available to the bidders for
submitting a plurality of bids across the network in
response to the information, receiving means for receiving a
plurality of bids sent across the network by the plurality
of bidders, and categorizing means for automatically
categorizing the bids as successful or unsuccessful.
The present invention further provides, in a
computer network enabling communication between a host
computer and a plurality of remote customers, an auction
information transmission and processing system implemented
as a computer program within the host and network,
comprising, a merchandise database connected in
communication with the host for storing merchandise
information, the merchandise information being descriptive
of a lot available for purchase by a customer, a bid
database in communication with the host for storing bid
information, the bid information being descriptive of a bid
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received from one of the remote customers, an auction
manager implemented in the server and in communication with
the databases, an electronic mail messenger in communication
with the auction manager and the bid database, a bid
validator, including means for receiving bids from the
customers, connected to the auction manager and in
communication with the bid database, wherein the auction
manager induces a customer to bid across the network on a
lot of merchandise by posting a descriptive merchandise
catalog page containing data from the merchandise database,
the customer views across the network the catalog page and
sends a bid to the bid validator across the network, the bid
validator determines whether the bid is valid, the bid
database stores the bid, the auction manager determines
whether the bid is successful,
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and the electronic mail messenger notifies the customer whether the
customer's Sid was determined to be successful by the bid manager.
To still further address the shortcomings of the background art,
the present invention provides, in a computer network enabling
communication between a host computer and a plurality of remote
bidders, a method of transmitting and processing auction information
implemented as a computer program within the host and network,
comprising posting information across the network, the information
being descriptive of a lot available for purchase, submitting a plurality of
bids across the network in response to the information, receiving the
plurality of bids sent across the network by the plurality of bidders, and
automatically categorizing the bids as successful or unsuccessful.
'i ~ A primary advantage of this system is that it results in greater
prices for merchants as well as broader distribution of their products. By
incorporating an auction format which is available to a wide audience via
electronic means, the inventive system and method results in more
bidders, greater demand, and hence higher prices for the seller. And
because this electronic system reaches a geographically diverse
audience, merchants' product lines become visible in areas where their
products are not normally distributed or advertised, resulting in increased
safes volume without increased marketing expense. As the network
grows, business grows. Furthermore, the electronic auction system is
automatic and does not require a human auctioneer, thereby allowing
many individual items to be auctioned during the same time period and
providing a decrease in costs associated with running an auction.
Indeed, it would not be possible to operate an equivalent twenty-four
hour per day, seven day per week auction with potentially hundreds or
even thousands of individual items and millions of potential bidders
without such an inventive electronic auction method and system.
BRIEF DESCRIPTION OF THE DRAWINGS
The aforementioned advantages of the invention, as well as
additional advantages thereof, will be more fully understood as a result
of a detailed description of a preferred embodiment when taken in
conjunction with the accompanying drawings in which:
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FlG. 1 illustrates a preferred computer environment for
implementing the system and method of the present invention.
FIG. 2 illustrates a merchandise catalog page offering an item for
sale via electronic auction on the Internet's World Wide Web;
FIG. 3 depicts a bid form for bidding on an auction item;
FIG. 4 is a block diagram of components illustrating a preferred
embodiment of the present invention;
FiG. 5 is a flowchart illustrating the bid validator and its method of
operation;
FIG. 6 is a flowchart illustrating the auction manager and its
method of operation;
FIG. 7 is a flowchart illustrating the bid manager and its method of
operation;
FIG. 8 is a flowchart illustrating the electronic mail messenger and
its method of operation;
FIG. 9 is a flowchart illustrating the standard auction format and
its method of operation;
FIG. 10 is a flowchart- illustrating the Dutch auction format and its
method of operation;
FIG. 11 is a flowchart illustrating the progressive auction format
and its method of operation;
FIG. 12 is a flowchart illustrating the buy or bid sale format and its
method of operation;
FIG. 13 is a flowchart illustrating bid quantity determination. and
its method of operation; and
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FIG. 14 is a flowchart illustrating the markdown price adjustment
feature of the present invention and its method of operation.
,pETAILED DESCRIPT10N OF A PREFERRED EMBODIMENT
_ 5 An inventive method and system is disclosed for conducting a
multi-bidder, interactive auction without using a human auctioneer to
conduct the auction. Preferably implemented in software, the electronic
auction system allows a group of bidders to interactively place bids over
a computer or communications network, automatically records the bids,
updates the bidders with the current auction status information, closes
the auction from further bidding when appropriate, and notifies the
winning bidder or bidders and loser or losers as to the auction outcome.
The inventive system includes a database for maintaining
a b descriptions of the merchandise for auction, the bids, and other relevant
information in a commercially available database system. Database
searches are preferably performed periodically to check for new 'ttems to
be made visible to potential bidders. Such periodic searching allows an
individual charged with maintaining this system to load relevant
information into the database at his or her leisure. Once the database is
loaded with information about the item and the item is scheduled for
presentation to potential bidders, the system takes the merchandise
information and creates a human readable catalog page for a viewing
over a public network such as the Internet's World Wide Web. Bidders
are then able to view the new item for auction and to place their bids.
_These catalog pages preferably contain the current high bid, bid
increment, quantity available, merchandise description, and picture of the
item.
Upon accessing a public network and seeing an item's catalog
page, the bidder may press a button on the catalog page or take some
similar action which causes a bid form to be displayed on the screen.
The bidder then enters the information necessary to place a bid, such as
their name and address, bid amount, payment information, etc., and then
presses a bid submission button, or takes a similar action which sends
the bid to the system.
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The system receives the electronic bid information and places it in
the bid database. Because this new bid will, in general, be a bid for a
higher amount than was last bid by another party, the system will
regenerate the item's catalog page. This updated catalog page will then
show the new high bid to any prospective bidders who later access that
catalog page.
Because most bidders will not, in general, be accessing the
network and viewing the merchandise catalog pages as they are updated
with new high bids, the system may send electronic mail notifications to
bidders who have been outbid by the just-placed bid. These electronic
mail notification messages preferably contain the relevant merchandise
information, the current high bid, the bid increment, etc.. and encourage
the bidder to submit a new and higher bid to outbid the ~urfent high
bidder. These electronic mail notification messages allow the bidder to
enter a new bid by replying to the electronic mail message and sending it
back to the system.
Upon receiving a new or revised bid via electronic mail, the system
follows the same set of actions as when the bidder places a bid using
the electronic bid form when viewing a merchandise catalog page,
namely, the system extracts the relevant bid information from the
electronic mail message, deposits this information in the bid database,
and then updates the merchandise catalog page as appropriate. Such an
electronic mail message bid may further cause a new round of electronic
mail notifications to go out to the recently outbid bidders.
This process preferably continues until the system detects that the
item is scheduled to be closed for further bidding or another closing
trigger is detected. At this point, the system closes the auction by
updating the merchandise catalog page with the final winning bid
information and by sending electronic mail notifications to both the
winning bidder or bidders and the losing bidder or bidders.
The present invention provides an electronic auction method and
system for presenting merchandise for sale at auction to customers over
an electronic network, such as the Internet's World Wide Web. Potential
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customers are presented with a series of descriptive merchandise catalog
pages through which they may navigate to find items (lots) of interest.
Upon finding a lot of interest, customers may click a button on screen' to
display a form for placing a bid on the lot. After submitting this bid, the
electronic auction system records the bid and updates the lot's
merchandise catalog page to show the current high bid or bids and to
whom such bids are attributable. When the auction is closed, after a
period of no bidding activity, at a predetermined time, or when a desired
sales volume is reached, the electronic auction system notifies the
winning and losing bidders by electronic mail and posts a list of the
winning bidders on the closed lot's merchandise catalog page.
The present invention is preferably implemented as a computer
program 248 running on a central server host computer 250, shown in
FIG. 1, attached to a wide area network 2"75 accessible by many
potential customers through remote terminals 210. A preferred network
for implementing the present invention is the Internet which is accessible
by a significant percentage of the world population, although the
network may also be a local area or limited area accessible network.
Potential customers are presented at screen 280 with merchandise
catalog pages, such as the one shown in FIG. 2, generated by
merchandise catalog page generator 25 shown in FIG. 4. Each
merchandise catalog page includes several action buttons 5 that allow
the customer to move from catalog page to catalog page and to place
bids using keyboard 240 and pointing device 260. The user may call up
an index of available merchandise by pressing button 7 or may return to
a central home page by pressing button 9.
By pressing bid button 1 in FIG. 2, the customer is presented with
a bid form such as the one shown in FIG. 3. The customer fills out the
required information in the bid form and presses "Place Bid" button 2 to
send the bid to the electronic auction system for processing. Other
equivalent means for submitting a bid could be used, as understood by
those skilled in the art to which the present invention pertains.
FIG. 4 illustrates a high level block diagram of the electronic
auction system of the present invention. As shown, information from
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bid form 20 is received by the electronic auction system where it is
processed by bid validator 21. Bid validator 21 examines the bid
information entered by the customer on bid form 20 to ensure that the
bid is properly formatted, all necessary data is present, and the data
values entered look credible. Exemplary functions of bid validator 21
include verifying credit card information entered by the customer,
checking that a complete name and shipping address has been entered,
that the proper state abbreviation and zip code have been entered, that
an appropriate bid amount has been entered, and that a telephone or
facsimile number has been entered. Once the bid information has been
validated, the bid validator 21 places the bid in bid database 31.
Auction manager 26 preferably frequently queries the bid database
31 to see if any new bids have been placed. If new bids are found
during the query, then auction manager 26 calculates the current high
bidder or bidders and instructs merchandise catalog page generator 25 to
regenerate a catalog page with the updated bid information.
Auction manager 26 is also responsible for opening and closing
auctions. This entails making merchandise lots available for bidding by
customers and disabling their associated buy or bid features on the
merchandise pages that have been posted to potential bidders but have
closed. When auction manager 26 determines that a new lot should be
opened for bidding or an available lot should be closed, it instructs
merchandise catalog page generator 25 to create or update the
merchandise catalog pages for the appropriate lots.
_ Electronic mail messenger 27 frequently queries bid database 31
for bids recently marked by auction manager 26 as having been outbid or
as having won an item in a recently closed auction. If such bids are
found, the electronic mail messenger 27 formats an appropriate
electronic mail notification message 24 and sends this message to the
customer. Many customers read their electronic mail throughout the
day, making this a convenient mechanism for keeping them informed
about the status of merchandise on which they are actively bidding.
Bidders may reply to an electronic mail notification message 24 informing
them that they have been outbid by including an increased bid amount in
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the reply message. An electronic mail bid 22 sent in reply to the
notification is received by the electronic auction system and processed
by bid validator 21 as described above.
FIG. 5 illustrates in detail the procedure of bid validation as
accomplished by bid validator 21 shown in FIG. 4. A bid is received by
bid validator 21 and the customer is looked up at step 41 in customer
database 28. if no customer record exists for the customer then a new
customer record is created 42 and placed in customer database 28.
From there, the bid information is validated 43 as previously described.
If the bid data includes one or more errors, then an error message is
returned 44 to the bidder, preferably in the form of a well-formatted
page posted across the network, itemizing the errors found in the bid. If
the bid is valid, as found in step 43, then the bid is placed 46 in bid
1 ~ database ~ 1.
FIG. 6 provides a detailed illustration of the procedures carried out
by auction manager 26. Auction manager 26 is preferably a
continuously running system that begins by getting the current time as
at step 51. It then checks to see if any new items for sale are to be
opened by examining the merchandise database to see if any new
merchandise items are scheduled to be made available for bidding by
customers at or before the current time. Operator 300, or some
automated substitute, may upload merchandise and scheduling
information to the database, as shown in FIG. 1. If new merchandise
_items are scheduled for posting, these items are opened for bidding 52.
The auction manager then examines the merchandise database to see if
any merchandise items are scheduled to be closed from customer
bidding. If so, these items are closed from bidding 53. Auction manager
26 then examines the merchandise database to see if any merchandise
items posted with a price markdown feature are scheduled to have their
prices adjusted. !f so, the prices of these items are adjusted 54 in
accordance with the particular item's price adjustment parameters. Such
parameters may include bidding activity over time, amount of bids
received, and number of items bid for. Auction manager 26 then
updates 55 the bid list for open items by recalculating the current high
bidder list and regenerating the merchandise catalog pages 56 to reflect
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these new bids. This step is more fully described below with reference
to F1G. 7.
FIG. 7 illustrates the procedures carried out by the bid manager in
updating the bid list for open items 55 as shown in FIG. 6: The bid
manager begins by checking 61 if there are more merchandise items to
be processed. If such items are found, the bid manager selects 62 a
merchandise item to process and queries 64 the bid database for bids for
this item. These bids are sorted 65 using a variety of different priority
ranking schemes depending upon the auction method and system used
for the particular merchandise item, as described in more detail below.
Then, the bids are marked 66 as either successful or unsuccessful
depending upon the bid price of the respective bids and the quantity of
the item being bid on relative to the quanti;y cf the ite;:; ~ai~~g
auctioned. In a preferred embodiment, a quantity of an item may be put
up for auction, and individual bidders may bid on any quantity of the
item desired, up to the quantity of the item being auctioned.
The bid manager then checks 67 to see if there are any active
proxy bids marked as unsuccessful. A proxy bid is a special bid type
that allows auction manager 26 to automatically bid on the bidder's
behalf up to a limited amount established by the bidder when his or her
initial bid is placed. The auction manager will increase the bid as
necessary up to the limit amount. This feature allows the customer to
get the lowest possible price without exceeding a limit preferably
established when the bid is entered. If there are active proxy bids
marked as unsuccessful, then- the bid manager increments 69 the proxy
bids by a preset bid increment. This procedure of sorting 65 marking 66
bids and incrementing 69 the proxy bids as required continues until
either there are no additional proxy bids marked as unsuccessful or the
proxy limits have been reached on the proxy bids. At this point, bid
database 31 is updated 68 with the marked bids. This process is then
repeated for each merchandise lot open at the current time for bidding
by customers.
FIG. 8 illustrates the procedures carried out by electronic mail
messenger 27 which notifies bidders when they have been outbid.
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When marked bids are updated in bid database 31 as shown in FIG. 7,
electronic mail messenger 27 detects 81 the presence of these marked
bids and then looks up 82 the customer's electronic mail address and
looks up 83 inventory information on the item desired by the bidder.
With this information, electronic mail messenger 27 constructs 84 an
electronic mail message informing the bidder that he or she has been
outbid. Once constructed, the electronic mail notification message 24 is
sent to the bidder as shown at step 85.
One skilled in the art to which the present invention pertains will
recognize that the various components of the electronic auction system
can communicate between themselves in a variety of ways: in a
preferred embodiment, bid validator 21, auction manager 26, and
electronic mail messenger 27 communicate by adding, marking, and
updating records in the various databases. Each of these components
periodically checks at least one of the databases to see if anything
relevant to their respective functions has changed and take action
accordingly. However, the components could send direct messages
between themselves or call each other by means of program subroutines
to signal important events that would require one or the other
component to update its state.
One skilled in the art to which the present invention pertains will
further recognize that a variety of different auction formats may be
implemented using the basic technique described above. The simplest is
the "Standard Auction" format, whereby the electronic auction system
awards the merchandise to the top bidder or bidders in accordance with
their bids once bidding has stopped. Using this format, if there is a ~-
plurality of a specific item, the system awards the merchandise to the
top bidders, Bidders may bid on more than one unit, and different "
successful bidders will, in general, pay different prices for an item. .
FIG. 9 illustrates the Standard Auction format where bid manager
55, shown in FIG. 6, determines which bids to mark as successful or
unsuccessful, as shown in step 66 in FIG. 7. Bid manager 55 begins by
sorting 91 the bids by amount of the bid. If there are bids remaining to
be processed, determined at step 97, the highest remaining bid is
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selected 98 to be checked. If the bid is below the minimum bid allowed
for the particular merchandise item, as determined at step 93, the bid is
marked 99 as unsuccessful. If not, the bid is checked 94 to see if the
quantity may be satisfied. A bid may be satisfied if the quantity of the
item bid upon is available. This information is available from auction
database 29. If not, then the bid is marked 99 as unsuccessful.
Optionally, the system could ask the user if a lesser quantity than bid
upon will be acceptable, as shown in FIG. 2 at box 310. If the bid
quantity can be satisfied, as determined at step 94, then the bid is
marked 95 as successful and the item quantity remaining, recorded in
auction database 29, is decremented 96 by the bid quantity. After the
quantity remaining is decremented 96, and if, as determined at step 97,
there are still bids remaining to be marked, the next highest bid is
selected q8 and the steps of Ft~: 9 arz repeated.
The electronic auction system of the present invention also
provides a "Dutch Auction" format, wherein the electronic auction
system awards the merchandise to all of the top bidders for whom there
is available inventory at the price bid by the lowest successful bidder.
This format may be preferred by customers for being the most fair when
a plurality of a specific item is being auctioned. As with all bidding,
there will be a range of bids submitted. In the Dutch Auction format,
the highest bidders are awarded the merchandise but at the same price
for all successful bidders, the price bid by the lowest successful bidder.
,
FIG. 10 illustrates the Dutch Auction format whereby bid manager
55 shown in FIG. 6 determines which bids to mark 66 as successful or
unsuccessful,-as shown in FIG. 7. Bid manager 55 begins by sorting 111
the bids by amount of the bid. If there are bids remaining to be
processed, as determined at step 97 the highest bid is selected 98 to be
checked. If the bid is below the minimum bid allowed for the particular
merchandise item, as determined at step 93, the bid is marked as
unsuccessful 99. If not, the bid is checked 94 to see if the bid quantity
may be satisfied. If the bid cannot be satisfied, then the bid is marked
as unsuccessful at step 99. If the bid quantity can be satisfied, then the
bid is marked as successful at step 95 and the item quantity remaining is
decremented 96 by the bid quantity: At this time the MinWin price is
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recorded 117. The MinWin price is the price above which a new bidder
must bid in order to be successful in the Dutch Auction format were the
auction to close at that moment. The MinWin price is, in general, the bid
price of the lowest bid that is marked as successful. After recording the
MinWin price at step 117, where there are still bids remaining to be
marked, as determined at step 97, the next highest bid is selected 98
and the steps of FIG. 10 are repeated.
The electronic auction system of the present invention also
includes a "Progressive Auction" format, wherein the electronic auction
system awards the merchandise to the top bidders based on price bid.
As with the Dutch Auction format, the highest price bids are awarded
the merchandise up to the quantity available of the item being auctioned.
However, unlike the Dutch Auction format, the system a~~~a~ds t1:
merchandise to the successful bidders at different prices depending on
the quantity bid. In a preferred embodiment, a successful bidder for a
single unit of an item is awarded the item at the price of the lowest
successful bid for a single unit of the item. A successful bidder for a
higher quantity of the same item is awarded the item at the price of the
lowest successful bid at that quantity or any lower quantity. For
example, a successful bidder for a quantity of five would pay the lowest
price for any successful bid for quantity one through five of the item.
The price paid for a given quantity is termed the NMinWin" price for that
quantity. The Progressive Auction format ensures that successful
bidders for a quantity of an item pay the lowest price paid by any other
_ _successful bidder at that quantity level or below. Use of this format
leads to lower prices for those who successfully bid on larger quantities
of an item, provides an impetus for volume buying, and therefore leads
to greater sales volume.
FIG. 11 illustrates the Progressive Auction format, wherein bid
manager 55 shown in FIG. 6 determines which bids to mark as
successful or unsuccessful 66 as shown in FiG. 7. Bid manager 55
begins by sorting 131 the bids by amount of the bid. If there are bids
remaining to be processed, as determined at step 97, the highest bid is
selected 98 to be checked. If the bid is determined to be below the
minimum bid allowed for the particular merchandise item at step 93, the
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bid is marked as unsuccessful 99, If not, the bid is checked at step 94
to see if the bid quantity can be satisfied. If not, then the bid is marked
99 as unsuccessful. If the bid quantity is checked and found to be
satisfied at step 94, then the bid is marked as successful 95 and the
item quantity remaining is decremented 96 by the bid quantity. The
MinWin price is then recorded 137. The MinWin price is the price above
which a new bidder must bid in order to be successful in the Progressive
Auction format were the auction to close at that moment. The MtnWin
price is, in general, the bid price of the lowest bid at the current bid
quantity or lower that is marked as successful. After recording the
MinWin price 137, if there are still bids remaining to be marked, the next
highest bid is selected 98 and the steps of FIG. 11 are repeated.
The electronic a~.~cti~n s rstem also includes a "Buy Or Bid" format
wherein the electronic auction system awards merchandise to bidders
who place bids at or above a posted selling price. The item remains for
sale until the available quantity is purchased. Bids that are below the
posted selling price are maintained in reserve by the system. !f a certain
sales volume is not achieved in a specified period of time, the electronic
auction system automatically reduces the price by a predetermined
amount or a predetermined percentage of the price and updates the
merchandise catalog page accordingly. The lower price may be at or
below some of the bids already in the bid database. If such bids are
present, they are then converted to orders and the quantity available is
reduced accordingly. Similarly, if a certain sales volume is exceeded in a
_ specified period of time, the electronic auction system automatically
increases the price by a set. amount or by a set percentage of the price
and updates the merchandise page accordingly. These automatic price
changes allow the seller to respond quickly to market conditions while
keeping the price of the merchandise as high as possible to the sellers
benefit.
FIG. 12 illustrates the Buy Or Bid format whereby bid manager 55,
as shown in FIG. 6, determines which bids to mark as successful or
unsuccessful 66, as shown in FIG. 7. Bid manager 55 begins by sorting
151 the bids by amount. If there are bids remaining to be processed; as
determined at step 97, the highest bid is selected 98 to be checked: if
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the bid is below the current price of the merchandise item, as determined
at 93, then the bid is marked 99 unsuccessful. If the bid is not below
the current price, as determined at 93, then the bid is checked 94 to see
if the bid quantity can be satisfied. If not, the bid is marked as
unsuccessful 99. If the bid quantity can be satisfied, then the bid is
converted into an order 155 at the current price of the item and the
item's quantity remaining is decremented 96. The bids remaining to be
processed, as determined at 97, are then checked and the steps of F1G.
11 are repeated. From time to time, the current price of the
merchandise item may be raised or lowered either by manual input from
an operator 300 as shown in FIG. 1 or'by automatically using the
"markdown" feature described below with reference to FIG: 14.
FIG. 13 illustrates in more detail the step of determining if the bid
quantity can be satisfied 94. If the bid quantity is determined to be less
than the available quantity of the merchandise item at step 171, then the
test is found satisfied at step 174. If not, then the bid is checked at 172
to see if the bidder is willing to accept a reduced quantity. Preferably,
when placing a bid, the bidder indicates its willingness to accept a partial
quantity in the event that an insufficient quantity of the item is available
to satisfy the bid if successful. If the bidder is found willing to accept a
reduced quantity at 172, then the test is found satisfied at 174. If not,
the test fails at 173 and the bid is marked as unsuccessful at, for
example, 99 in FiG. 9.
_ _ The electronic auction system also includes a "markdown" feature,
wherein the electronic auction system of the present invention awards
merchandise to buyers who place orders at the currently posted selling
price. The item remains on sate until the available quantity is purchased.
If a certain safes volume is not achieved in a specified period of time the
electronic auction system automatically reduces the price by a set
amount or a set percentage and updates the merchandise catalog page
accordingly. This lower price encourages buyers to take advantage of
the new price. If a certain sales volume is exceeded in a specified period
of time, the electronic auction system automatically increases the price
by a set amount or a set percentage and updates the merchandise page
accordingly. These automatic price changes allow the system to
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respond to market conditions while keeping the prices of the
merchandise as high as possible to the seller's benefit.
FIG. 14 illustrates the Markdown price adjustment feature
whereby auction manager 26, as shown in FIG. 4, periodically adjusts 54
the sales prices or minimum bid prices, of the merchandise items
according to a predetermined schedule as shown in FIG. 6. If more
merchandise items are found in the merchandise database at 181, a
merchandise item is selected 183 for Markdown. tf a Markdown event
has occurred for the item, as determined at 184, the item's price is
adjusted 185 according to the schedule preset for the individual item.
Alternatively, the adjustment could be relative to prices offered for the
merchandise. The merchandise item is then updated 186 in the database
with the new sale price or minimum bid price. The steps of FIG. 14 arc
then repeated for each successive merchandise item in the merchandise
database.
The electronic auction system of the present invention preferably
includes a "Proxy Bidding" feature that may be applied to any of the
auction formats described above. FIG. 7 fully describes auction manager
26 including the Proxy Bidding feature. When Proxy Bidding is
employed, a bidder places a bid for the maximum amount they are
willing to pay. The electronic auction system, however, only displays
the amount necessary to win the item up to the amount of the currently
high proxy bids of other bidders. Typically, the currently high bids
display an amount that is one bidding increment above the second
highest bid or bids, although-a percentage above the second highest bids
may be used as well. When a new bidder places a bid that is above a
currently displayed high bid, the proxy feature will, in general, cause the
currently high bid to move up to an amount higher than the new bid, up
to the maximum amount of the currently high bidder's proxy bid. Once a
new bidder places a bid in excess of the currently high bidder's proxy
bid, the new bid becomes the current high bid and the previous high bid
becomes the second highest bid. This feature allows bidders to
participate in the electronic auction without revealing to the other
bidders the extent to which they are willing to increase their bids, while
maintaining control of their maximum bid without closely monitoring the
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bidding. Participation is engaged in automatically on the bidder's behalf
by the inventive system. The feature guarantees proxy bidders the
lowest possible price up to a specified maximum without requiring
frequent inquiries as to the state of the bidding.
One skilled in the art to which the present invention pertains will
recognize that a variety of different auction formats may be implemented
in addition to those described above. One skilled in the art will also
recognize that the electronic auction system of the present invention can
employ a "Floating Closing Time" feature whereby the auction for a
particular item is automatically closed if no new bids are received within
a predetermined time interval. This feature would typically be
implemented in a manner similar to that used to close auctions of old
items, as shown at step 53 in FIG. 6. This feature forces the bidding
activity to occur within a shorter amount of time than would otherwise
be achieved because bidders are aware that the item will automatically
close if no new bids have been received in a timely manner. Thus,
bidders have an incentive to stay active in the bidding process to avoid
closure of an item before maximum, and most potentially winning, bids
have been entered. The Floating Closing Time feature also allows more
Items to be auctioned during a period of time since each item is closed
once bidding activity ceases; the bidding period is not protracted to an
artificial length as is the case when an item closes at a preset date and
time. The Floating Closing Time feature of the present invention may be
employed either in conjunction with or independent of a fixed closing
time for an item. When employed in conjunction with a fixed closing
time, the auction is closed either when the preset fixed time period has
expired for the item or when no bidding activity has occurred within a
preset time interval. This forces the bidding to cease at a particular time
in case the bidding activity becomes artificially protracted.
A general description of the present invention as well as a
preferred embodiment of the present invention has been set forth above.
Those skilled in the art to which the present invention pertains will
recognize and be able to practice additional variations in the methods
and system described which fall within the teachings of this invention.
For example, although a preferred embodiment of the present invention
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chooses winning bids according t.o monetary amount included in the bid,
preference for bids may also be determined according to time of
submission, quantity of merchandise bid for, total bid value, or some
other combination of these characteristics. Accordingly, all such
_5 modifications and additions are deemed to be within the scope of the
invention which is to be limited only by the claims appended hereto.
23
