A New York Times general article on Online Auctions. Plenty of competition here, though most are private companies. Does AWEB principally auction refurbished monitors, as I have been told? Are there plans to do more?
Businesses Explore Online Auctions for Equipment, Parts
By CLAUDIA H. DEUTSCH
When Mark Weimer talks about Internet auctions, both delight and frustration play in his voice. For six months, his Del Ray Beach, Fla., company, INXS Inc. -- pronounced "in excess," an apt name for a dealer in surplus and used equipment -- has been selling slow-moving microscopes and accessories, even old gas chromatographs, on an online auction run by Labx Technologies Inc. He has cleared about $15,000 for items he had been ready to throw out, and had an absolute ball doing it.
"It was such a kick, watching guys electronically beat each other up, raising their bids by $1 a pop," Weimer said.
So why the frustration? Because he cannot forget the items he did discard. "I figure I could have gotten $2,000 each for machines I threw out," he said. "Now, I throw nothing away without checking Labx first."
Chalk up another convert to the brave new world of business-to-business Internet auctions. They are already growing common for commodities like oil and gas. And now, a whole new industry is forming around the idea that business people are as likely to bid electronically for machine tools and computer parts as consumers are to bid for sneakers and personal computers.
"Auctioneers without Internet auctions will be out of business in five years," said Michael Brader-Araje, chief executive of Open Site Technologies, which sells auction software. It sounds self-serving, but the numbers are on his side. Forrester Research Inc., which analyzes the impact of technology, estimates that $8.7 billion worth of business-to-business goods will be auctioned online this year, growing to $52.6 billion in 2002.
The growth is no surprise. This is a low-cost, low-risk business for all sides. Sellers pay nothing if their products do not move. Buyers can stop payment on checks if the goods are not as advertised. And the auctioneer's costs, limited to software and advertising, plummet once it has a solid base of buyers and sellers.
Then there is the fun factor. "This is a novel way to buy things that adds real entertainment value to some stodgy industries," said Scott Andrews, president of Sciquest Inc., which will soon auction laboratory equipment on the Net.
The list of auctioneers hawking business wares is growing fast. Labx already auctions lab equipment, while Fast Parts Inc. auctions surplus electronic parts.
Next Monday, Norman Levy Associates, a huge industrial equipment auctioneer, will hold its first Internet auction. Next month, H.K. Equipment, which sells used vacuum furnaces and other laboratory items, will start auctioning them on the Net. And before year-end, Internet Liquidators International, a consumer cyberauction company, will test two auction formats: one for diverse wares from a single source -- say, a corporate liquidation; the other for similar wares from different vendors -- say, agricultural equipment or used cars.
"There's so much custom-made equipment that gets sold for scrap, because no one realizes that it fits perfectly for a project being done half a world away," said Paul Godin, president of Internet Liquidators.
Cyberauctions are not problem-free. Although vendors post descriptions and photographs of their goods, bidders are really buying blind. The anonymous nature of most auctions -- bidders show up on the screen as, say, Paddle 7 -- makes it hard for sellers and buyers to gauge negotiating styles or form relationships.
And it presumes that all potential buyers are comfortable surfing the Web. "I don't even have a computer, so how could I bid?" asked Charles Yanoff, president of Pattern Metals Co., a steel distributor.
There are other problems in the wings. Anyone with the software and a Web page can run an auction, and auctioneers worry that fly-by-night operators will crowd the field with shoddily run sales. "Let's face it, Internet software is a dime a dozen," said Bob Kafuto, president of Labx.
And the novelty of online bidding can attract mischief-makers, who clog the process with bogus bids. Although most auctioneers do a cursory check of each bidder's legitimacy, most acknowledge that a determined prankster can get through.
"There's still the small problem of, are the buyers real, will they pay, will they pick up the equipment on time?" said Stuart Feldman, director of the IBM Institute for Advanced Commerce.
Most cyberauctions work like this: Bidders key in their bids, and are told immediately, either on screen or by e-mail, if their bid is topped. There are official closing times, but the electronic gavel rarely comes down until at least two minutes go by without a bid. At that point, the auctioneer puts the winning bidder in touch with the seller, takes a commission from both and bows out.
But there the similarities end. Some auctions last an hour, some a week. Some auctioneers hold separate auctions for each item; others hold regularly scheduled auctions of assorted items. Still others hold auctions only when they have enough wares to draw a big bidding crowd.
At least one, Freemarkets Online, holds reverse auctions -- companies describe what they want to buy, and vendors bid for the contract. "We provide a level field, where a small company gets the same data as General Motors," said Glen Meakem, chief executive of Freemarkets.
Kent Brittan, vice president for supply management at United Technologies, has bought numerous plastic parts, machined items and the like through Freemarkets. "We've saved at least 10 percent on everything, and we've met suppliers that we'd never have known of," he said.
Indeed, since bidders can participate without leaving their desks, and since business cyberauctions often operate round the clock, their potential audience is huge. "When you're holding a live auction at 4 p.m. in Detroit, it's rough for someone in Paris to bid," said Robert Levy, Norman Levy's president.
Aficionados of cyberauctions list other pluses:
-- The auctions let companies push older models off their shelves and off their books. "When we need inventory space, auctions are our first choice," said Steven Miles, sales manager of Analtech Inc., a maker of laboratory equipment.
-- They obviate the need to transport equipment to a live auction. "I'll happily take a lower price for the convenience," said William Nagy, president of Technik Machine Tool Inc., which hopes to sell surface grinders at Norman Levy's auction.
-- They let equipment dealers buy and sell goods without moving them to their own warehouses. "I can buy equipment in Vermont once our auction is up," said Peggy Skelly, a sales representative at HK Equipment, in Wilmington, Mass.
-- They let companies unload excess parts anonymously. "No one wants to tell the world they lost a big order," said Kristine McCusker, marketing manager for Fast Parts.
-- They help companies that have closed or modernized plants place unneeded tools. "Used-equipment dealers just never give you full value," said Gary Lyons, a plant manager of Chanute Manufacturing Co., which just switched to numerically controlled drills, and will soon auction off its manual ones.
Even Yanoff, the self-described computer illiterate, is putting a metal-forming machine into the Norman Levy auction. He expects to get $65,000 for it.
"We don't use it anymore, but I hadn't tried to sell it," he said. "It would be hard to get what it's worth by just advertising locally."
Where to Go
The number of Web sites offering auctions of industrial and scientific equipment, and of electronic parts, is growing exponentially. Here are a few that are up already, and a few that will soon be.
FastParts Inc., Elmhurst, Ill.
Auctions off electronic components, chips, and memory modules.
Internet Liquidators International, Inc., Toronto
Will soon test two auction formats: one for diverse wares from single sources, like corporate liquidations, the other for similar wares -- say, used cars -- from different vendors.
FreeMarkets Online, Pittsburgh,Pa.
Runs a buyeris auction -- companies say what they want to purchase, vendors bid for the contract.
SciQuest, Inc., Research Triangle Park
By fall, will be auctioning scientific equipment.
Labx Technologies Inc., Winnipeg, Canada
Auctions scientific equipment and materials
Norman Levy Associates Inc., Southfield, Mich. Will hold its first industrial equipment cyberauction on June 8.
HK Equipment, Wilmington, Mass.
Will soon start auctioning used vacuum furnaces and laboratory equipment.
Opensite Technologies
Maker of auction software.
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