Here's the interview with BII's president from stockhouse.com
Could lead to some action tomorrow!
>>>Bid.Com International, Inc. (formerly known as Internet Liquidators International Inc.) was
founded in 1995 and listed on The Toronto Stock Exchange in February 1998. With offices in
Toronto, Ontario and Tampa, Florida, it is one of the Internet's leading online auction sales
organizations.
The company offers a compelling, entertaining, and cost-effective method of selling a wide
array of goods and services over electronic distribution channels. In addition to its strategic
alliances with America Online, The Toronto Star Newspapers Limited, and Rogers Media
Inc., the company enjoys distribution agreements with Yahoo!, Netscape, Metacrawler, and
more recently with ComputerShopper.com, a Ziff-Davis property. Bid.Com is strategically
positioned to leverage its technological leadership by offering the pre-eminent online auction
platform for license to business-to-business markets and for distribution through
broadband/cable media.
Stockhouse.com recently interviewed Jeff Lymburner, president of Bid.Com, about the
company's future. Dicussions on the company's future are very active at BullBoards. [CLICK
HERE] to join in.
• • •
SH: What is the nature of your US-Canadian relationship and business?
Jeff Lymburner: We began the business as an Internet auction
site and have been live online since 1996. The Rogers
development was just an extension of our business plan, as we
partnered with Rogers New Media in the Canadian market.
We've been running in the U.S. for the better part of two and a
half years. We just recently migrated into Canada. The ratio of business is running about 85 to 15:
USA to Canada. We're very pleased so far with (our launch into) Canada.
SH: Are you limiting yourselves to North America??
Jeff: We plan on expanding to a great many corners of the world. It has been a publicly stated
objective, for some time now, to open an office in Ireland, in the Dublin area. There are a number of
strategic implications to opening in that location. I think that will be our first foray into international
business, outside of North America, and that could easily extend to such far-flung places as
Australia. I would say that it is a strong probable at this point (Ireland) because of a number of
considerations - not the least of which is the Euro having created a much more manageable currency
situation. All the research points toward exponential growth in terms of Internet use in the European
community. It seems to be a more fertile environment.
SH: What is your business development plan with American Interactive Media?
Jeff: American Interactive Media is a content provider for the
cable sector. It would be analogous to a studio that produces
shows or programming to sell to networks. Our arrangement with
them puts us in a very exciting position of being offered as
content, for what is going to be a very broad array of broadband
distribution of opportunities.
SH: Does this mean you hope to emerge as the "Home Shopping Network" of the Internet?
Jeff Yes, we're talking about fully interactive television utilizing our auction infrastructure. I would
say we're talking months, not years. It depends on a number of things coming into play.
SH: You were once in Internet liquidations. Are you continuing in this sector of the market?
Jeff: The compelling reason that drives people to the world of
eCommerce revolves around value or perceived value. Certainly,
to that extent, while we are not specifying that this is liquidation,
we like to take advantage of opportunistic inventory situations
that arrive from time to time. That allows us to be particularly
aggressive in promoting them. Our distinction between our Dutch auction, our declining price
auction, from our bottom-to-top auction format - there is some distinction from real clearance and
auctioning of items that are available on a more ongoing basis. The Dutch auction is truly a market
adherence mechanism and as we expand that program in the coming weeks, we'll make that more
clear to people.
SH: How much of your business are Dutch Auctions?
Jeff: It is presently a relatively small portion of the volume, but it is substantially profitable. We're
growing almost daily. It's increasing and will continue to increase throughout the year.
SH: Traditionally, Auction houses are mainly mom-and-pop shops, which struggle to make money.
How do you plan to grow in the face of this reality?
Jeff: That brings into focus the whole advantage of electronic
commerce. And that is, one of the most fundamental limitors for
auction, or for that matter almost any type of commerce, is
geography - time and space. The Internet breaks down those
barriers to potentially attract an enormous audience that can
access your auction or sales site. That is an awesome difference from auctions in the past that were
very restricted by location, making it very physically difficult to get to a location.
SH: Are you going to focus on Micra Sound Cards the way eBay concentrates on Barbie and the
Beanie Babies? And what other areas are you expanding into?
Jeff: Some I can not discuss right now, but one that you've touched on is Micra Sound Cards. The
cards, themselves, allow a very broad array of content - from hockey players to entertainers to all
manner of high profile individuals. They can be very event-oriented. That, in themselves, is almost a
full set of categories. The auction product itself is expanding and even in the next couple of days
we'll be including a significantly increased addition of travel products, very destination-oriented.
There are really several key areas that we're flushing out right now.
SH: The online auction business is getting crowded. How do you plan to achieve profitability?
Jeff: We are creating diverse revenue streams in order to maximize the return to the business. One
is making straightforward gross margins on the sale of consumer products. Obviously, in the sector
such as the computer business, margins are very thin. We're finding by diversifying our product mix,
we are certainly able to enhance margins and have them improve dramatically. In certain sectors, we
receive the straight auctioneer's commission, irrespective of the price of the product.
Because we don't take an inventory position, because we are not
obsessively committed to volume growth irrespective of
profitability, that we also, as we build the business, do not have
the incremental personnel and infrastructure cost that characterize
other business models. That is a potentially significant issue
because your two largest overhead costs are typically advertising and people. We can see a
significant growth with a reduction of advertising costs and only a very modest growth in head
count. We're looking at 45 (staff) right now and growth will be nominal, almost a handful of people.
It will be unlikely to break somewhere in the 50's.
SH: Does that mean you will be moving away from the online auction format?
Jeff: Licensing has become a very attractive opportunity for us. Margins are extremely high. Overall
investment is largely a human resource and technology component than a whole lot of incremental
costs. I honestly can't be quite specific and it would be wrong for me to pinpoint that. Sale of
advertising on our site and a number of other opportunities, like the Micra Sound Card, are going to
be very profitable.
The online auction format will continue to grow in a fairly significant way, but there are other
elements of the business that are growing at least as fast or faster. As a composite, we like the
picture, such as licensing, business-to-business, advertising sales and the Micra Sound Cards.
SH: Your costs in advertising and promotion nearly quadrupled, as shown in your last financials.
Are you continuing to throw large sums of money into gaining market share?
Jeff: In fact, no. We've gone through a brand-building phase. I'm
very pleased because we gained the kind of profile we were
looking for, during that process. The Bid.com name ranks quite
consistently in the upper echelons of online auctioning, based on
any of the survey feedback I've been given. I think that people
will see, throughout 1999, is a more targeted approach that will allow us to work more
affinity-based programs and low-cost acquisition programs to build the business without a
commensurate increase in advertising.
SH: According to your last financials, the costs-of-goods-sold item squeezed out profitability.
Jeff: One of our objectives for 1999, as our business plan matures, is moving away from a "buying
at all costs" model to a more balanced business equation. That's what I mean when I say we have
developed comfortable revenue streams and we are expanding into those areas. We really think that
the focus of just moving enormous quantities of computer products creates a formula that has a
tough time of generating significant earnings. We think we can do better than that.
SH: Do you still expect to have revenues of $20 million for 1998 and $50 million for 1999?
Jeff I think that we will comfortably achieve our business-plan goals. I personally am optimistic that,
as our business plan matures, it is a very realistic one. I think that the $50 (million) figure is
something that, as a business-plan goal, is very realistic.
SH: Adam Adamou, the Taurus Capital analyst, announced very slim profit margins for your
business plan: 2.65%
Jeff: I would say that it may have been accurate for one
reporting period. No one in management has had any dialogue
with that particular person, so I'm not exactly sure how that data
was obtained. Nor does it seem that it would be reflective of our
business model.
SH: The big BullBoards topic of discussion is: When are you going to NASDAQ?
Jeff: I'm handcuffed by regulations. It's probably THE top management priority right now. I believe
we are very comfortable with our present position. Fortunately, or unfortunately, we're put under
some pretty severe restrictions about any other specifics. But I can say that our CEO spends an
enormous part of his time toward getting the necessary paperwork completed and doing whatever
has to be done. It is very much a work-in-progress, but I am completely restricted from
disseminating any details.
SH: Some say the Internet is in a "Goldrush Days" scenario, which brings to mind the sound of a
bubble bursting.
Jeff: I don't think so. In some respects, some of those analogies are tongue-in-cheek. They may be
kind of cute, but inapplicable. I would border on saying they are inappropriate and irresponsible.
The online commerce sector is one that certainly has achieved a degree of notoriety, unequaled in
the market place. But, at the same time, these are tangible to the extent that you can see, hear and
feel what people are selling online. You can see that whether it be a Yahoo or an eBay or any
number of US players, they have very significant support from what I would hope are very
respected investment institutions.
SH: How do you stack up against eBay and the others?
Jeff: We are somewhat different in that our business model has somewhat different directions. First
of all, the sector will easily accommodate a handful of big players. I think eBay's model is very
different because it is essentially a classified advertising model. Onsale's (model) is historically based
as a computer reseller. We do differentiate ourselves from what others are doing - although it may
not be a quantum leap from what others are doing, we think our emphasis is a bit different. Since
day one, we've never had a liability for unsold products. We've never taken an inventory position.
Right out of the gate, it certainly distinguishes us from a number other players in the sector in terms
of our inventory liability.
• • •
We want your thoughts on Bid.Com. Please post your comments, after reading this interview. Click
here!
QUESTION OF THE DAY: Is Bid.Com another passing fad or will this company survive, let
alone emerge as a market leader? <<< |
