InformationWeek.com

Welcome Guest. | Log In| Register | Membership Benefits

October 4, 1999

Going, Going, Gone!

continued....page 3 of 3

Illustration by Elwood Smith

Related links:

sidebar: For Sale: Telecom Capacity

And from our sister publications:

Computer Reseller News Reseller's Web Site Wizardry

TechWeb Next Wave Of Internet Commerce?
Eventually, in yet another round of disintermediation, exchanges may cut out many traders and liquidators. "Buyers will be able to aggregate their buying power by teaming with other companies and probably will get a better price via an exchange," says USBid's Ormesher. Sellers, on the other hand, get access to more buyers, while exchanges are in the middle handling transactions and even getting into settlement and other services (see "Bazaar Advantages").

The benefits will mean increased pressure on sellers, too. "You have to respond very quickly to the prices coming in from competitors," says Niul Burton, a VP of the operations practice at A.T. Kearney. "We can easily have suppliers from Taiwan and India competing with U.S. suppliers."

Entrepreneurs smell opportunities in the air, and the online bidding market is flush with activity. CommerceBid.com and Trading Dynamics, for example, are offering software and services needed to sell products using fluid pricing. OpenSite Technologies Inc. this week will move up from supporting relatively small auctions to the enterprise market with a product called AuctionNow. The company is also introducing a dynamic pricing toolkit for companies that want to add flexible prices to existing online stores. "The trend is toward online merchants extending their normal online commerce activity into the dynamic pricing area," says OpenSite CEO Kip Frey. Infospace.com is in the process of buying OpenSite.

Also this week, Moai Technologies will introduce Live Exchange 3.0, its enterprise auction software that will include both buy- and sell-side functionality as well as the ability to check customers' credit and other features. For its part, Free Markets Inc., which operates customized auctions for companies buying industrial materials and also runs a coal auction site called CoalHub, is planning an initial stock offering.

Farm Aid
One sure sign of online bidding's increasing penetration: its effect on traditional markets. Deere, for example, recently conducted its first online auction for used farm equipment on behalf of its 650 dealers around the country. It started with 15 items auctioned last month at a public Web site called Machinefinder.com.

pie chart "This is our first one, so we limited the number of products," says Nancy Headly, Deere's operations manager for remarketing. Deere, which is hosting the auction on its servers, wants to offer new markets to dealers whose products might not be in demand in their geographic area. "It gives them another tool," says Headly, "and helps move products in different regions of the country."

It's an anything-goes environment, and businesses of all types are experimenting with auctions to explore new products and relations with customers. PNC, a $75 billion bank, accepted bids from customers for interest rates on $5,000 certificates of deposit. Customers submitted bids for 50 one-year CDs on the bank's Web site for interest rates ranging up to 8%, and those with the 10 lowest rates got the deal. All the winners rates were greater than 6%, and higher than the number posted in the front window of the bank's branches.

Even if it doesn't catch on, there's little to lose. "It's picking up on a wave of consumer interest in having a say in setting a price," says Martin Evancoe, PNC's senior VP of E-commerce. "It seems like the enthusiasm consumers have expressed for that could carry over into financial services."

There are still a lot of wait-and-see attitudes among businesses. A handful of exchanges in industries such as plastics, chemicals, and steel are operating on the Web, but they have yet to attract a significant number of deals. Mark Walsh, CEO of VerticalNet Inc., an early implementor of business-to-business auctions, says the company has sold less than $1 million in products, even though it's been online for about five months and has $30 million in inventory posted on its sites in industries from agriculture to construction.

Auctions and exchanges are complicated new frontiers, and companies need to consider how they will affect existing business relationships and internal procedures. It may be that the middlemen are under siege from E-commerce yet again, but dynamic pricing will be tough on sellers, too, as companies around the world more easily mix in international marketplaces. As A.T. Kearney's Burton says, "It potentially introduces a whole new world of competition."

return to page 1, 2