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Technology Stocks : UBID - an IPO spinoff of Creative Computers -- Ignore unavailable to you. Want to Upgrade?

To: Kip518 who wrote (450)	1/30/1999 10:24:00 AM
From: SHGLaw	Read Replies (1) \| Respond to of 581

Kip, first I agree with you completely that eBay and uBid are apples and oranges. One is a garage sale and the other is a store. Frankly, I thing eBay's model will die over time, but I can't stand garage sales so that's my bias. I use the comparison not because these companies are the same, but because they still tend to track as being part of the "online auction sector" and because is makes the discussion more understandable then trying to explain the difference in business models. But I don't necessarily agree that eBay's business model is in any way superior to uBid's. Granted, uBid has inventory costs which eBay does not. But we all need a place to buy things, and history has always shown that there is a place for merchandise in all economies. The question is inventory turn-over, not costs. If they are holding excess inventory, or unmarketable inventory, that would present a problem. But their inventory turn-over is huge, and the business model doesn't allow for unsaleable inventory. They put it out for auction at $7 per item, low enough that anything offered would sell, but the prices bid are very substantial and the number of bidders on every single item is very large. Watch the action and you will see that they have captured a market, filled a need and people are indeed buying everything they sell and paying very good prices for the item. It appears to be a win-win situation, since customers are getting lower prices than they would buying retail and uBid is getting damn good prices and turning over huge amounts of merchandise. Also, repeat business, a very telling factor, is 69%. This says that customers are very satisfied, enjoy the process and believe that they are getting value for their money. This is not surprising given the product line, since what is talked about as "old" merchandise may only be months away from being state of the art, given the industry, and sold at what is truly a bargain for all involved. So while there are certainly costs involved, so long as the inventory is turning over and the buyers are buying at good solid prices, this is not a problem but a demonstration that the model is valid and the medium is working. SHG