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From...

Confessions of an online auction addict

May 19, 1998

Web posted at 3:22 p.m. EDT

by Mark Tebbe

If you haven't tried a Web auction, you should. In response to my Internet-commerce column two weeks ago, many readers wrote in to "inform" me about this growing online phenomenon. They didn't really need to. I'm a regular online customer at several auctions, and like many readers, I'm already addicted to these services.

Although this form of purchasing started out as consumer entertainment, corporations are joining the game for their own purchases and using auctions as a new sales channel for their existing commodity products. And given some of the new tools recently announced, this type of impulse buying is bound to become even more convenient, targeted, and irresistible. Done right, it will change the meaning of "suggested retail price."

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For the uninitiated, here's how an online auction works. Visit the site to see a listing of what's on the auction block. At OnSale, for example, it's mostly sports stuff and computers they get refurbished from manufacturers such as Sony, Dell, IBM, and Hewlett-Packard.

eBay caters to collectors who sell anything from old coins to cars to timeshare vacations. Although there are many auction formats, each sale item usually comes with a date and time when the auction will be closed. You place a bid by clicking on the item you're interested in and then filling out a form. The site will identify the current leading bid for each item.

Frankly, this area is exploding. Together, OnSale and eBay sold more than $250 million in products in 1997 and expect to significantly contribute to the $1 billion projected for 1998 online auction purchases. What explains this phenomenal growth? Addiction.

If you don't believe me, just ask Scott, my chief financial officer at Lante. We have a love-hate relationship on this front. He is ecstatic to learn that we now have a new source for well-priced computers, printers, and supplies. We have bought both new IBM and refurbished Dell laptops for somewhere between 25 percent to 60 percent off the current list price. We have gotten refurbished color printers for 20 percent off.

We're not alone. I have seen bidders who are buying computers 30 at a time -- I doubt they are buying them for home use. Although this channel still has some support concerns (such as limited warranties), we play it safe by only buying existing corporate standards.

Even so, Scott is frustrated. Why? Because I have become a corporate treasure hunter. I have been known to purchase unplanned monitors and hard drives simply because they were at a good price. My 21-inch NEC color monitor for 25 percent of list price is a good example. Or let's talk Microsoft (and not the Justice Department stuff). A new Microsoft Intellipoint mouse can be bought for $22. Looking for Windows NT Workstation 4.0? How does $6.50 sound? NT Server? $126. And we're not talking one-offs here. These products are available by the hundreds.

Online auctions may prey on impulse, but in most cases you still need to take the first step, by visiting the site. However, recently released technology from companies such as Narrative will now bring the sites to you. Why go to the auction site when a subset can be targeted at you? These same tools are also bringing sales sites like Eddie Bauer, 1-800-Flowers, and Procter & Gamble to you.

And the real beauty of these new interactive sales tools is that they exist in a banner ad! That's right, you can buy a new pair of chinos without ever leaving the Web site. Trust me, I have a pair of tan chinos on route to me (you know, research for the column). Scott is just glad that I didn't buy another monitor.

So if you bump into me at an online auction, all I ask is that you kindly place your bid on a different item. If I don't keep finding bargains, Scott may take away my purchasing privileges. And I need my daily auction fix.

Do you use auctions for miscellaneous corporate purchases? Have you investigated using this sales medium for your corporate commodities? E-mail your comments to me.

Mark Tebbe is president of Lante Corp., a consulting and integration company in Chicago that serves clients worldwide, including several high-tech companies. Send e-mail to mtebbe@lante.com.

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