The first and most important thing to understand about a Dutch Auction is that IT IS NOT like a standard auction.  While you want to be the winner, you don't want to bid the price of the item into outer space!  This is a very common occurrence with Dutch Auctions - I see it all the time. (View Dutch Auction).  Chances are if you are reading this - you've experienced the frustration of paying way too much for a Dutch Auction item.  However, in order to make it perfectly clear how these auctions differ - I need to explain how they work.

First of all the seller has multiples of one item to sell.  For example, they have 15 of the EXACT SAME yoyo to sell.  Instead of listing 15 separate yoyo auctions, it is done in one auction - a Dutch Auction. This type of auction is also referred to as a Multiple Item Auction.  (See e-Bay: Multiple Item Auction).

In the Dutch Auction/Multiple Item Auction format - the seller lists their 15 yoyos for sale with a starting bid of $2.99 each.  One of the headings on the auction item page will be "Quantity" and following it a number.  In our hypothetical example this is how it will appear: Quantity:  15 available

OK- this next part is extremely important.  DO NOT ENTER YOUR HIGHEST BID AMOUNT.  Why - because that is exactly what will be entered as the next bid amount.  In Dutch Auctions e-Bay's automatic bidding (aka proxy bidding) system DOES NOT WORK.  For example, the opening bid amount is $2.99 and you place a maximum bid of $20.00.  This will be the dollar amount the system takes - $20.00.  The auction will continue to do this for each and every dollar amount placed.  If someone else places a bid after you and enters a maximum bid amount of $40.00 - bingo- the yoyos are now selling at $40.00.  Instead the bidder should bid the amount that is prompted on the bid page - NOT THEIR MAXIMUM BID.

OK - now the confusing part.  The lowest bid amount placed will be the bid amount that wins. In other words - all 15 yoyos have $2.99 bids by the same bidder (see AAA).  Then you and other bidders bid in the next dollar amount prompted (see BBB, CCC, DDD), in this case $3.24.  The bidder with a bid on all 15 yoyos (see AAA) will have their number of yoyos decreased by the number of yoyos in subsequent bids and the Bid History page would look similar to this:

User Id       Bid Amount   Quantity Wanted  Quantity Winning  Date of Bid

DDD (156)    US $3.24           4                     4                       May 29, 2006  23:59:56

CCC (237)    US $3.24           5                     5                       May 29, 2006  23:59:44

BBB (14)      US $3.24           2                     2                       May 29, 2006  21:13:26

AAA (1859)  US $2.99**        15                    4                       May 23, 2006  10:11:27

** Bidder has been outbid on some items.

However, because wining a Dutch Auction is based upon the lowest bid amount placed - you would only be charged $2.99 for your yoyos!  The final Bid History page will look like this:

User Id          Bid Amount   Quantity Wanted  Quantity Winning  Date of Bid

DDD (156)    US $2.99         4                        4                          May 29, 2006 23:59:56

CCC (237)    US $2.99         5                        5                          May 29, 2006 23:59:44

BBB (14)      US $2.99         2                        2                          May 29, 2006 21:13:26

AAA (1859)  US $2.99**      15                       4                           May 23, 2006 10:11:27

** Bidder has been outbid on some items.

Another interesting aspect of a Dutch Auction is that a winning bidder has the right to refuse to complete the transaction if they are only receiving a partial quantity.  In the above example where bidder AAA has only won 4 out of the 15 yoyos thye placed a bid on, they could refuse to complete the transaction. The reason for this is because they only won a portion of the original quantity (15) bid.

The best way to win a Dutch Auction/Multiple Item Auction is to place your bid right before the auction ends. 

I hope you have found this guide to be informative and helpful.  In the event that I have not answered all your questions or I have missed something - please let me know.  I wish you Good Luck in your Dutch Auction/Multiple Item Auction bidding and winning!