Dynamic Auction Pricing Mechanism for Social Commerce
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Solution Overview
Problem
In social commerce, advertisers face challenges in maintaining service quality due to excessively discounted prices and overissuance of coupons, leading to customer dissatisfaction and potential shop closures, as they struggle to guarantee appropriate product prices that allow for stable service provision.
Innovation Solution
An auction method and server system that allows sellers and bidders to determine prices within a specified range, selecting the lowest successful bidder's price as the sale price for all successful bidders, thereby ensuring the seller can provide stable service and bidders receive a discounted price, with the surplus profit potentially used as an auction commission.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Quantity of substance
If advertisers provide excessively discounted prices and overissue coupons to attract customers, then customer acquisition increases, but service quality deteriorates and advertisers suffer losses
Solution Approach 1:
The patent implements a dynamic pricing mechanism where the final sale price is not fixed in advance but determined through real-time bidding. The system allows the price to fluctuate and be optimized based on actual market demand and competition, enabling advertisers to achieve both customer acquisition and service quality maintenance through adaptive pricing rather than static deep discounts
Solution Approach 2:
The system changes the pricing parameter from a predetermined fixed discount to a dynamically determined auction-based price. By transforming the pricing mechanism from static to dynamic, the system enables advertisers to set minimum acceptable prices while allowing the market to determine the actual transaction price, thus preventing loss-making sales while still attracting customers
2Ease of operation
If advertisers set fixed discounted prices in advance, then customers can plan purchases, but advertisers cannot guarantee appropriate prices for stable service provision
Solution Approach 1:
The system performs preliminary actions by setting a minimum reserve price before the auction begins. This preliminary price setting establishes the advertiser's底线 (bottom line) for acceptable pricing, ensuring that even if the auction results in a low price, the advertiser's service stability is protected. Simultaneously, customers can plan their participation based on the known price range
Solution Approach 2:
The auction system acts as an intermediary between the advertiser's predetermined minimum price and the market-determined final price. This intermediary mechanism reconciles the conflict between advance price setting and flexible pricing by introducing a bidding process that respects both the advertiser's price floor and market forces
3Productivity
If coupons are overissued to increase sales volume, then wholesale and promotion effects are achieved, but advertisers become unable to provide predetermined quality service
Solution Approach 1:
The system replaces static coupon discounts with dynamic auction-based pricing. Instead of issuing fixed coupons that guarantee deep discounts regardless of market conditions, the system allows prices to adjust dynamically through bidding, enabling high sales volume while maintaining service quality through market-determined pricing
Solution Approach 2:
The auction system introduces feedback mechanisms where the bidding process provides real-time information about market demand and price sensitivity. This feedback allows advertisers to adjust their minimum prices and understand customer willingness to pay, ensuring that high sales volume does not compromise service quality
4Device complexity
If a uniform discounted price is applied to all customers, then simplicity is maintained, but both seller and bidders cannot determine appropriate prices at their own discretion
Solution Approach 1:
The system segments the pricing process into distinct phases: advertiser sets minimum price, bidders submit bids within the range, and the system determines final price through auction rules. This segmentation allows each party to exercise discretion within their phase while maintaining overall system coherence, balancing simplicity and flexibility
Data Source
AI summary
Provided are an auction method and server that enable a seller and bidders to determine the price of a product at their own discretion by enabling the bidders to participate in a bid between the lowest price offered by the seller and the highest price of the product, and give benefit to both the seller and successful bidders by applying the successful bid price of a lowest successful bidder to all the successful bidders as a sale price.