He prefers to deal in cash, but sending paper money, even by registered mail, can be risky. It depends a lot on the personal integrity of buyers and the sellers, but also depends on an efficient postal service and the presence of appropriate financial infrastructure. The latter may be a particular problem as Asian websites jump into the auction game. In the first trial, Netease sold 150 Great Wall personal computers, drawing some 20,000 bidders. But William Ding, Netease chief executive, says that it is not certain that auctions will work on the mainland.
Delivery systems are unreliable.
Credit cards are scarce and electronic payment networks are undeveloped. To cut down on the chances of fraud, Netease is considering setting up an escrow service. In that way a trusted third party could accept, verify and hold payments until products are delivered, thereby acting as a go-between for buyer and seller. In the U.S., several online escrow services are already serving auction site participants successfully. Sometimes the quality of the goods available on the electronic block creates friction.