onsumer shopping on the World Wide Web has yet to live up to its initial hype, but one type of cyber-selling has succeeded beyond expectations: online auctions.
On June 18, one of the Internet's first consumer buying sites will adopt the online auction model when the Internet Shopping Network launches
First Auction
. First Auction will compete directly with
OnSale Inc.
, the largest Web auction site.
ISN, which launched in April 1994,
claimed to be the first Internet-only retail business. When ISN was acquired by Barry Diller's Home Shopping Network Inc. later that year, the deal was hailed as a stamp of approval for Web retailing. But ISN's results have been lackluster, with annual revenue of $11 million last year and projected sales of about $12 million this year.
By contrast, OnSale, in Mountain View, Calif., launched in July 1996 by Silicon Valley entrepreneur Jerry Kaplan, has surged to roughly four times the size of ISN. OnSale posted quarter- ly revenue of $12 million and a small profit in the period ended March 31, its first as a public company.
"We foresee First Auction as being a much bigger revenue source than the ISN site," says Keith Foxe, manager of promotions at ISN, in Palo Alto, Calif. "The Internet lends itself to auctions because you can have thousands of people bidding on an item, which you couldn't have in the physical world."
But observers are skeptical about ISN's high expectations. "It will be a hard sel
l for them against OnSale," says Erina Dubois, digital commerce analyst at Dataquest Inc. in San Jose, Calif. "What's the added-value proposition? You can't beat OnSale just by joining them."
Still, ISN expects much more traffic on First Auction than on the original ISN site, and it's gearing up with Oracle's most powerful database, Oracle8, which will be officially unveiled June 24 (IW, June 2, p. 14). ISN uses an Informix database to support its original site, but expects "big issues of scalability with First Auction, which is why we switched," says Foxe. The First Auction site will run on several Sun Ultra 5000 Enterprise Servers with Netscape Web server software and Internet application server from Kiva Software Corp., also in Mountain View.
Foxe says ISN doesn't expect First Auction to cannibalize ISN's own site because of a different merchandise mix and the different selling approach. The product mix on ISN's site is 98% computer hardware, software, and peripherals; First Auction will have mo
re consumer electronics and general merchandise.
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onsumer shopping on the World Wide Web has yet to live up to its initial hype, but one type of cyber-selling has succeeded beyond expectations: online auctions.
