wsj article and on level ii qxl looks like a stalemate with good support at 15 7/8 and resistance at 16 1/4. of course we have almost zero volume. tomorrow should be telling.
Dow Jones Newswires -- October 12, 1999
WSJE: E-Commerce: Europe's Fast-growing Auction Sites Brace For
Battle With The U.S. Online Giants
By Kristi Essick
Go to ibazar.com or qxl.com, and Web surfers can check out thousands of items up for auction. Fancy a purebred Arabian stallion, a 1977 Cadillac Eldorado or a Mediterranean cliff-top villa? You can view -- or buy -- from the comfort of your very own chair.
This is a rather new option in Europe. Dozens of online auction sites have sprung up, and nearly every Western European country has at least one. The U.K., France, Germany, the Netherlands and the Scandinavian countries each count several.
The numbers coming out of America no doubt encourage Europe's new e-entrepreneurs: U.S.-based online auctions generate hundreds of millions of dollars in sales each year, led by companies like eBay Inc., Amazon.com Inc. and Yahoo! Inc.
While many European start-ups look longingly at the performance of the U.S. players -- some even modeling their businesses on them -- they also must get ready to do battle with the big boys of e-commerce. Unless they are quick on their feet, the famous call of the auctioneer, "Going, going, gone," might well describe the European sites' market share in a year.
"If eBay said they were coming tomorrow, I would do what Hungary did in World War II: surrender," says Claes Tunalv, chief executive officer of Bamba Auktion, a unit of Astromedia AB. He expects eBay to arrive with a thud in his backyard sometime in the next six months. "We are trying to keep our heads over the waterline," he adds. "We can't sit back and wait until the thunderstorms begin."
There are two kinds of auction sites. Person-to-person sites, like eBay's, allow individuals to list items for sale and set a starting price; buyers then bid for the goods. Merchant-sponsored sites enable retailers to offer unsold goods like plane tickets and discontinued product models to online shoppers.
Person-to-person sites appear to be growing faster than merchant-sponsored sites. Several of these sites are rapidly gaining consumer and investor recognition, including iBazar Group SA's ibazar.com in France, U.K.-based QXL Ltd.'s qxl.com, ricardo.de, the German site of the recently listed Ricardo.de AG, and bamba.nu of Sweden.
One of Europe's first auction sites was qxl.com. Launched in September 1997, it now operates in Germany, France and Italy as well as the U.K.; QXL plans to expand into Scandinavia, the Netherlands and southern Europe. In the U.K. alone, it had about 100,000 simultaneous person-to-person auctions in early August. Clearly on the move, the company recently acquired U.K. auction start-up Humpty Dumpty Ltd., secured 11.75 million euros in venture capital, and filed to list shares on the London Stock Exchange and the Nasdaq Stock Market in the U.S.
In France, ibazar.com stands out. The company says the site, which began operating in October 1998, averaged 20,000 listings in early September, up from 11,000 in August. Goldman Sachs has provided 85 million French francs (13 million euros) in venture capital to the company.
In Sweden, Bamba Auktion says visits to its bamba.nu site have increased between 10% and 15% a week since its launch in May, but declined to provide figures. Starting with just three staff, the company is hiring additional staff and is seeking partners. It recently received first-round venture financing, and the company hopes to increase business tenfold in coming months.
What's crucial is getting a solid footing ahead of massive competition from the Americans: eBay, Amazon and Yahoo. So far, the European thrust of eBay -- by far the largest person-to-person online auction house in the world, both in terms of user numbers and revenue -- is primarily in Britain and Germany. In February, it set up ebay.co.uk, with local management and staff; in June, it acquired Alando.de AG, which operates alando.de, one of Germany's leading sites. While the $3.7 million (3.6 million euros) of goods traded on its infant U.K. site in the quarter ended June 30 was dwarfed by the $622 million traded on its U.S. site, the disparity probably underscores the potential for growth in the U.K.
What the U.S. companies have going for them is capital, recognized brand names and experience running online auctions, says Jill Frankle, an analyst at International Data Corp. in Framingham, Massachusetts. "eBay has tons of cash, can brand heavily overseas and look for acquisitions," she says. "They understand they can't just slap up a Web site; they may have to partner with, or acquire, local companies."
While acknowledging its interest in European acquisitions, eBay doesn't rule out tackling markets alone, as it did in the U.K. In Germany, it acquired alando.de because the German site "out eBay-ed eBay," says Michael van Swaaij, vice president of eBay Europe. "There are many auction sites, but very few are actually successful, and there is very little point in acquiring a company run by people who basically don't get it," he says.
For instance, eBay says it will enter the French market without buying a local company. "We are all geared up to go into France on our own," says Mr. Van Swaaij, rejecting analysts' predictions that the giant would approach iBazar. Next on the list, he says, is the Nordic region, adding that "very quickly we will be in Italy and Spain."
Europe won't necessarily become the domain of eBay. European companies have the potential to come out on top -- if they move quickly to play up their local-market expertise, says David Henderson, head of PriceWaterhouse Coopers' IT strategy group for Europe, the Middle East and Africa. Since they are likely to have an innate understanding of their own markets, he says, "it will take a bit longer for the big U.S. players to make an impact, because they aren't as culturally sensitive as they need to be."
Most markets will, however, have room for several players, he predicts. So while a shakeout is likely at some point, Mr. Henderson doesn't foresee a "clear sweeping away of all the new start-ups." If promising companies can avoid being bought out, and they invest in branding and pan-European expansion, he says, they stand a clear chance at outperforming the Americans.
Nick Jones, an analyst at Jupiter Communications in London, says local companies have an advantage: They know their markets "not just in a `touchy-feely' way, but in being closer to suppliers and understanding the business markets." However, to come out on top, European auction companies must quickly add features to their sites that U.S. auctioneers already take for granted, such as quality assurance, escrow mechanisms -- whereby funds are held by an intermediary until the goods are delivered -- and specialized shipping services.
Local start-ups have little to fear, according to QXL's CEO, Jim Rose. "eBay missed a big window of opportunity," he says, adding that the U.S. company should have launched in the U.K. six months earlier to capture significant market share. And limiting pricing initially to U.S. dollars also put off U.K. users, he adds. "eBay doesn't have the appropriate management to drive forward a European proposition," he says. "They don't know how to organically grow businesses in Europe."
Tell that to eBay's Mr. van Swaaij. "We are much, much bigger than QXL in Europe," he counters.
Despite the posturing, a lack of comparable data from the companies makes it impossible to say whether eBay or QXL is leading in Europe overall. While QXL won't disclose its revenue, Mr. Rose says the company's sites counted a "couple of hundred thousand" users in August. Meanwhile, eBay says that at the end of June it had 32,450 users in the U.K. and 90,000 users in Germany, with numbers continuing to rise.
What is clear, though, is that the fight for dominance in Europe's online auction market will be fierce. As the battle gets underway, the Europeans will continue to watch eBay -- but not necessarily to mimic it.
"We admire what eBay has done in the U.S. and have regarded it closely," says Marc Piquemal, general director of iBazar. "But we don't have to evolve in the same way as eBay has -- and, in fact, we are learning from their mistakes."
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Ms. Essick is a senior editor at Tornado-Insider.com in Paris.
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