New ways to do your bidding

electronic commerce; Online auctions let you buy or sell from the comfort of your PC, says Richard Kelly Heft
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The Independent Culture
If you've ever wanted to sample the excitement of an auction but wished to start small, online auctioning is for you. It's a great place to pick up a $2,000 bottle of wine (reserve price for winebid.com's 1858 Chateau Lafite), a toaster, a lightning-fast computer, or almost anything else. And you can do it all in your bathrobe and slippers.

In the US, where the online auctioneering started, business is booming. Industry leader Onsale Inc (www.onsale.com), for example, had gross sales of just $15m in 1996. Last year that figure jumped to $96m and this year it is on track to exceed $200m.

Philip Leigh, an Internet analyst, believes the industry will double each year for at least the next five years - putting total sales at more than $2bn by the year 2000. Not bad for a business most people have never heard of. "It's revolutionary," he says.

Online auctioneers break down into two distinct groups: ones that sell new, discontinued or overstocked goods and act as brokers on behalf of a retailer; and those that sell used goods and antiques, bringing individuals together like the classified section of a newspaper.

There are huge numbers of these services - perhaps as many as 1,000 - with a handful of dominant players in the US market for new products, such as Onsale, First Auction, Internet Liquidators and PC Mall.

In the used market, eBay and Auction Universe are the market leaders, with others, such as the free 2j Auction, trying to elbow their way in. There is also a growing niche for sites devoted to specialities.

The used-product sites are so inexpensive - Auction Universe, for example, charges just 25 cents a listing, plus 2.5 per cent of the sale price - that they have changed people's selling habits. Many items would not be worth selling through the classifieds.

The services vary somewhat. For example, most sites selling new products allow you to see the offers as they come in (along with comments). The used and speciality services generally reveal only the current highest bid and the number of previous offers. When the process is kept confidential, bidders are informed by e-mail if there has been a higher offer, and asked if they would like to up the ante.

Typically, auctions last about a week, with the hour and day of the closing listed next to the product - all very civilised and, for many, a lot of fun.

"This is the first form of online commerce that truly engages the customer," says Jerry Kaplan, co-founder of Onsale. Many of the sites, such as eBay (which recently listed 345,130 different items for sale), have their own "cafes" where clients can brag about bargains they've found.

"I like to say it's classifieds on steroids," says Larry Schwartz, president and CEO of Auction Universe, a relative newcomer. "We're juicing up the idea of the old classified section, making it more interesting and more fun."

Users definitely seem to be responding, roaming an average of 23 minutes on each site per day, compared with the average stay of just five minutes at traditional retail sites such as booksellers amazon.com, according to Media Metrix. That could mean big new revenue streams to the auction services, most of which are still unprofitable. Onsale announced in January that it was ready to seek advertisers and Jerry Kaplan made it clear that this could mean big profits down the road. The fact that the Onsale has yet to turn a profit has not deterred investors; since November its stock has risen from $14 to $34. And, as the industry comes into its own, corporate buyers are slowly joining the ranks of the bargain-hunters.

David Klatman, for example, chief information officer at the software service provider Keane Inc, recently became Onsale's first $1m buyer. He now makes about 25 per cent of purchases through such sites. "For us it's just a price performance buy," says Klatman, who recently bought several IBM Thinkpads, saving about $1,000 a machine.

But while the savings can be substantial, you have to be willing to spend time hunting for deals, and be prepared for others to bid so high that they are no longer bargains.

There are other complications as well, especially with used products. Though most items include snapshots, there is no guarantee that products will arrive in the same condition - or even arrive at all.

While they don't take responsibility for deals that go wrong, many sites have come up with ways to soothe fears. EBay solicits feedback from buyers and posts the comments on its site. Any seller who receives too many complaints is barred, although that wouldn't prevent a crook from trying the same thing on a different site.

Still, where there's a whiff of a bargain, it's hard to keep people away.

New consumer goods

http://www.onsale.com

http://www.pcmall.com

http://www.internetliquidators. com

http://www.firstauction.com

Used

http://www.ebay.com

http://www.auctionuniverse.com

Speciality

http://www.winebid .com

http://www.philatelists.com

http://www.milehighcomics.com

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