More from Bidding on Bay Street:
ADVANTAGES OF A US LISTING
DIFFERENT PARAMETERS
To explain why he believes BII shares will find better price valuations on a US exchange, Godin describes the differences in the parameters US analysts use to look at Internet/high tech stocks.
In Canada they look at the balance sheet. Period!
Godin says the balance sheet is important - in terms of seeing whether a company has enough cash to go forward. But after checking the cash account, US analysts then ask:
** who are your strategic partners?
** what is your technology?
** are you brandable?
** what gives you a competitive edge?
** are you part of the future, or will you just fall by the way-side because you don't have a business model?
HOW WILL BII COMPETE?
To succeed as an Internet company requires strategic alliances. This is all about distribution, traffic, eyeballs! BII's strategic alliances for distribution are Rogers and Torstar in Canada; AOL in the US (on board of directors for the last 3 years), and American Interactive Media, New York, on the cable side of the business providing new and emerging technologies, set-top boxes etc. to reach households. To succeed an internet company's technology, products and services must be transportable / migratable to other communication mediums like set-top TV to reach households via cable.
Host Pat Bolland noted BII would be competing against the Home Shopping Network on TV. Godin believes the auction format will be more compelling/entertaining on interactive TV than static pricing available through Home Shopping. Auctions empower the consumer, who decides the value of the product or service to him/herself.
SHOP NAKED!
90% of current revenues come from the US side of the business, but a move is on to increase the Canadian side of the business. In Canada, BII is currently involved in a big push for BII with Roger's New Media. There are 107 Billboards up in the Toronto area with the eye-stopping theme: "Shop Naked!" to empathize the ease and convenience of shopping from home. The catchy ads are designed to drive traffic to strong portal sites where BII is in partnership with Rogers.
While 90% of BII's revenues are in US$'s, because this is a Canadian company with its head office in Toronto, the 'back office engine' costs are in Canadian $'s, providing a competitive edge in terms of cost. Godin also finds Canada provides advantages in providing high quality talent on the technical and customer service sides.
EUROPEAN SIDE
After two years , BII is ready to open in Europe, within approximately 90 days. The Euro-office will be based in Dublin.
BID.COM BRAND
Godin explained the name change last March from Internet Liquidators to BID.Com as a means of providing a more consumer friendly name that is both 'brandable' and easy to remember. The new name gets away from the misconception that BII sells mainly liquidation-type goods. BII actually sells front-line goods that carry a full manufacturer's warrantee, backed up by 24 hour customer service.
The liquidation concept still survives but as a commercial and industrial brand, used only for bankruptcy and receiver actions on behalf of banks, trustees and 3rd parties.
DUTCH AUCTIONS
Once again, Godin describes BII's Dutch or declining price auctions as a "wonderful tool" to sell perishable, time dated products or services which if not sold lose all value e.g. airline tickets, special events, concerts, broadcast media etc. Dutch auctions typically last 3-5 minutes, with the price declining until it provides value to a bidder or it reaches a reserve price. There is a game- show-like quality to the Dutch auctions which provides entertainment as well.
COMPARING EBAY / UBID
EBay acts as a middle-person platform, allowing a buyer and a seller to come together. They do not really sit on top of that transaction from a customer service standpoint. It is a consumer to consumer business model and BII is not in that business at all, but rather uses a business to consumer model. UBid is part of a group selling computers peripherals and accessories.
BII is moving away from the computer periferals/accessories categories because "the margins are extremely compacted." The company is moving into a consumer products model: the sports memorabilia, entertainment memorabilia, travel and many other product categories with a potential for higher profit margins.
BUSINESS TO BUSINESS
Time ran out but Godin did say BII is now making a "huge push" on the B2B side of e-commerce.
bidbayst@nbnet.nb.caas
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