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New Trends in Internet Commerce


By Mark Atlas
E-mail: mark@going-going-sold.com
Web Site: http://www.going-going-sold.com

The author, Mark Atlas, is a principal in Going, Going...Sold

On-Line Auction Emerges as New Forum for Sales to Corporate Customers

Corporations have been wary of buying and selling on the World Wide Web. On the surface, their trepidation is surprising. After all, corporate purchasing departments are already computerized, so Web access is easy. Technophobia is no longer a widespread problem. Nor is availability of the myriad things corporations seek. For buyers, the Web has become a veritable cornucopia of goods and services. For organizations with goods to sell, itís a venue rich with eager customers.

So what, then, is the problem? It is simply that, until very recently, the Web failed to support important facets of Corporate Americaís buying and selling processes.

Itís a different story for individual shoppers. Sites like Amazon.com are the electronic equivalent of retail: customers choose their merchandise and close the deal with a credit card transaction. The process is simple: browse and buy. Because customers donít have to leave their desks to shop, and because they can scan options more quickly than in a retail store, many individuals find cybershopping to be more convenient and more interesting.

But corporate purchasing departments have different needs, particularly when it comes to non-commodity goods. Corporate buyers are rigorous comparison shoppers. They get quotes from multiple vendors, then they start negotiating price. But many vendors are unwilling to post prices on the Web. Without the ability to "shop around" in cyberspace, on-line negotiation just doesnít make sense. Whatís more, most purchasing agents arenít willing to risk their jobs by issuing payment for a high-ticket, non-commodity item sight unseen. Security is a big issue and not one that any Web-based vendor had adequately addressed, until recently.

Over the past few months, a handful of Web innovators have created a forum for commercial exchange that is sensitive to the unique needs of corporations. This forum the real-time, on-line auction has succeeded in reaching vast corporate audiences by giving them both security and the chance to dictate price. It has become the safest and most effective way for organizations to sell surplus goods or to purchase quality, second-hand equipment.

New Corporate E-Commerce

One such auction site that targets corporate customers is Going, Going...Sold! http://www.going-going-sold.com . This group auctions used scientific instrumentation within the biotechnology, pharmaceutical and environmental testing industries. It is the first company to sell used capital equipment on the Internet through a process that does not involve an on-line financial transaction.

With Going, Going...Sold!, the traditional security concerns associated with Web-based shopping have become moot. All buyers are given a 15-business-day evaluation period in their own labs to ensure that the products they purchase meet their expectations. The evaluation period is made possible by holding the buyerís money in escrow after the close of the auction. The process allows financial transactions to be performed off-line in a safe environment.

This format also empowers buyers to dictate price. Buyers state what they are willing to pay for an item, with the sale going to the highest bidder. Whatís more, the company has built in price protection for the seller. All items have a minimum reserve so that the seller is guaranteed close to the asking price.

The model has multiple other advantages, too. Biotechnology and pharmaceutical companies that want to sell surplus capital equipment, as well as refurbishers of used equipment, can better network with potential buyers through the auction format. The auctioneers are not only bonded (as are all auctioneers), but are also experienced in sales of lab equipment and provide unbiased guidance to potential buyers and sellers. Going, Going...Sold! manages packaging and shipping for the seller to make selling an almost effortless process. The companyís auctioneers will even visit a potential sellerís facility to evaluate warehouse surplus and arrange convenient methods to list surplus equipment on the Web site.

The laboratory isnít the only wing of the corporation that can benefit from on-line auctions. Another Internet innovator, Fairmarket www.fairmarket.com, specializes in products typically purchased by corporate information technology groups: computers, desktop printers and the like. (See Information Week, Sept. 15, 1997.)

First to market

Onsale Corp. (http://www.Onsale.com). In 1994, under the guidance of founder Jerry Kaplan, Onsale created what was likely the first successful real-time, on-line auction. It quickly became a hotspot for buying and selling used computer equipment. Though addressing individuals, not corporations, Kaplanís innovation brought to life a marketplace in which purchase prices were engendered by consumer demand rather than created by a vendor. Onsale leveraged technological advancements that made possible interactive bidding on the Internet. In 1997 it achieved annual sales of more than $100 million. In fact, Onsaleís success has spurred rapid growth and diversification of its on-line auction enterprises. Today, it offers everything from Omaha steaks to new automobiles.

Thanks to Onsale Corp.ís initiative, on-line auctions are now widely accepted as a highly effective sales format in the world of electronic commerce. More than 150 real-time, on-line auctions can be found on http://www.usaweb.com.

As stated earlier, it is only until recently that auctions began to address the needs of the corporate community. For instance, Going, Going...Sold! just began on-line operation in August of this year and has proven successful in its ability to sell items which originally priced new over $100,000.