Once prevalent only in the consumer arena, online auctions are beginning to make serious inroads in the business-to-business and business-to-consumer marketplaces.
By taking advantage of an additional, untapped sales channel, organisations are realising quickly that Web-based auctions can have a significant and positive impact on their bottom lines. Furthermore, integrating auction technology into an existing electronic-commerce site provides differentiation from competitors and generates additional Web traffic.
Proof of the rising auction trend lies in the numbers. According to Forrester Research, a market research company in Massachusetts, 1998 saw business-to-business auctions generate an estimated $US8.7 billion in transactions. It also predicts that by 2002 the market will top out at a whopping $52.6 billion - dwarfing the estimated $12.3 billion generated by consumer-to-consumer sites such as eBay, uBid, and Bid.Com.
Analysts at Forrester Research predict sales growth in several areas, including the liquidation of excess inventory by manufacturers and distributors, as well as through commodity sales, including agricultural products, natural gas, and electricity. The remainder will come about through private auctions between companies and their resellers.
A number of technology providers are accelerating the auction push into the enterprise. For this analysis, we evaluated three turnkey packages - OpenSite Technologies' Auction Professional 4.0 Corporate Edition; Moai Technologies' LiveExchange 3.0, beta; and Emaze Software's Auction 2.11.
Each approach offers its own share of benefits and drawbacks. Fully outsourcing your wares eliminates staffing, development, and maintenance headaches at the expense of control and on-the-fly management.
Turnkey packages, on the other hand, require technical infrastructure and hosting hardware to be in place but do provide a maximum level of decision-making power. Of course, some companies, such as Moai, straddle both sides of the fence, offering turnkey applications combined with outsourcing services to provide the widest possible service to prospective clients.
All of these solutions allow your company to hold public auctions to sell goods and services using a variety of auction types in addition to allowing customers to make automatic bids, track auction status, and leave seller feedback. Midrange offerings let you provide additional auction types, including private auctions, as well as extend selling services to third parties and authorise credit card transactions. And the higher-end solutions offer robust administration tools, enhanced security options, and multiple storefront capabilities.
Emaze addresses low end
Emaze is an entry-level alternative to expensive auction software and services. It is based on Allaire's ColdFusion 4.0 Server, which acts as middleware between applications, such as Emaze, and back-end ODBC databases, such as Microsoft SQL Server. Although it isn't as flexible as the other solutions we considered - it does not offer as many auction types, only supports third-party transaction processing, requires extra modules at extra cost to offer selling services to third parties, and requires ColdFusion - companies with more basic auction requirements will want to consider Emaze.
Integrating the software into an existing e-commerce site is accomplished by editing templates through a series of Web-based administration screens. For a full-scale implementation, you'll need to edit the source code by hand, a task some sites might find a little daunting. End-user options include the ability to sign up for daily e-mail reminders of auction status, automatic bid options that automatically increment bids, and a feedback forum.
For its price, Emaze Auction offers a number of useful features, including invoicing capabilities, a credit card processing framework, and shipping and handling options.
As stated, it doesn't support the wealth of auction types you'll find in higher-priced alternatives but does support most of the popular models, including English, Dutch, and Reserve auctions. To provide maximum exposure to current auctions, Emaze is also compatible with BidFind, an external site that lists all open auctions from registered sites.
OpenSite Auction 4.0 is a very solid midrange alternative. This solution ships in professional, merchant, and corporate editions, each offered at a different price point, and is available on both Windows NT and Unix platforms. Offering multiple auction formats, secure transactions, and customisation options, OpenSite Auction offers a great deal of flexibility. This, combined with the professional consulting offered by OpenSite, makes it a product line worthy of serious consideration.
The entry-level Auction Professional offers a limited feature set that includes real-time bid processing, a variety of design templates, automatic invoicing, and a product search engine.
Auction Merchant, aimed at ISPs looking to offer an online auction community to their clients, adds a multiple-seller module, banner-advertisement integration, and the capability of handling multiple Web storefronts.
Auction Corporate, the Cadillac of the bunch, offers a slew of new or improved features and represents OpenSite's most robust online-auction solution. For example, the Corporate edition adds Reverse, Modified English, Sealed Bid, Private, and Consignment auction format types. Further, this version supports Oracle database integration. (This applies only to the NT version.) Future ODBC database offerings are in the works, according to company officials.
In all three versions, Template and Style editors let you edit and preview pages, as well as apply custom logos, fonts, colours, and layouts across all of the pages on the auction site. A built-in eAuctioneer automates many auction functions, including automatic bidding, invoicing, winner notices, and e-mail distribution to subscribers of auction mailing lists.
Security has also been improved; credit card and other personal data is encrypted in the user database, and the Secure Sockets Layer channel is used to encrypt information sent from users bearing digital certificates. Real-time credit card processing has also been added.
Reach for the top
Not to be outdone by OpenSite is Moai's LiveExchange, which also comes in three versions: Enterprise, Marketplace, and Application Service Provider (ASP). Each is aimed at a specific segment of the marketplace.
The ASP version aims at service providers that want to create online trading communities, and the Marketplace version targets companies looking to tap into a single market with multiple buyers and sellers. The flagship LiveExchange Enterprise is designed for businesses looking to establish an auction presence in multiple markets to generate added revenue streams.
We took a sneak peek at a beta version of the Enterprise edition of LiveExchange 3.0, and we were quite impressed with its feature set. Keep in mind, though, that all of these features are available at a premium price; LiveExchange is not an entry-level solution.
As does OpenSite, LiveExchange offers multiple auction and pricing formats, including English, Dutch, Sealed Bid, Reverse, and Fixed Price options. Formats can also be mixed and matched on the same auction site, giving you access to close to 100 different variations.
A Java-based administration tool lets you add and maintain data within LiveExchange quite easily. The product also sports multiple customisable interfaces, so you can build multiple stores with company-branded pages, targeted at specific groups of end users. It also offers shipping and order tracking and buyer and seller ratings. And a small Java-based trading and notification applet provides real-time information on offerings and bidding activity, a feature not found in other solutions we considered.
On the back end, LiveExchange supports both Oracle and SQL Server databases and operates on NT and Solaris. Moai offers an API that lets you integrate the product with your in-house payment and fulfilment systems, as well as third-party payment and settlement offerings. Credit card information and processing is available via CyberCash. Moai also offers a suite of professional services, including customisation and integration, training, and best practices consulting. Companies without the necessary infrastructure can turn to Moai for hosting options.
When it comes to auction technology, determining which solution makes sense for your company is largely a function of price, technical capacity, staffing, and hosting issues. But whether you choose an outsourced or in-house solution, auctions are a great way to augment Web site profitability.the bottom lineWeb-auction softwareSummary: Maturing products and enhanced service offerings make online auctions more accessible to the enterprise. Suitable solutions offer customisable templates, database integration, remote administration, and security options.
Business Case: Online auctions can boost a Web site's profitability, but unless your company is clear on the service it wants to provide and the goals it wants to achieve, implementation costs and routine maintenance can become prohibitive.
Pros: ¥ Integrates into existing electronic-commerce offerings ¥ Generates revenue streams ¥ Outsourced and in-house options availableCons: ¥ Less site control if outsourced ¥ In-house development possibly expensive and time-consumingWhat we testedMoai TechnologiesLiveExchange promises multiple auction formats, built-in beta security, credit card processing, and enhanced database integration. Moai also offers professional and hosting services.
LiveExchange, Version 3.0 is priced at $US50,000 for a one-year licence and $100,000 for a lifetime licence. http://www.moai.comOpenSite TechnologiesThis suite of programs ranges from entry level (Professional edition) to turnkey (Corporate edition) and offers all the bells and whistles. It supports credit card processing, multiple auction formats, and invoicing, as well as integration into legacy accounting and database systems.
OpenSite Auction, Version 4.0 is priced at $US5000 (Professional edition), $15,000 (Merchant edition) and $50,000 (Corporate edition).http//www.opensite.comEmaze SoftwareThis is an entry-level, ColdFusion-based auction tool that offers a limited number of auction formats, credit card processing framework, and shipping and handling options.
Emaze Auction 2.11 is priced at $1295 (Professional edition). http//www.emaze.comWhat's in a name?
Before you can set up your Web-based auction, you will need to decide on the bidding logic that is going to take place behind the scenes. For the most part, your decision will be dictated by the type and quantity of goods or services that will be auctioned, in addition to the traffic patterns generated by your Web site. A flexible auction service or software package should allow you to mix and match available models in whatever combination you desire.
Below we've described the most common Web-based auction formats.
Some combination of these auction types will be well-suited to your auction environment.
English. This is the most traditional and most common auction type, in which the highest bid always wins.
Reverse. This type of auction is commonly used in Request for Proposal auctions. Bids decrease in amount according to a set increment, and the lowest price bid wins.
Sealed bid. This type is a variation of the English auction, in which the highest bid wins; however, bid amounts are not made public until the auction closes.
Vickrey. In this type of auction, all winners pay the amount of the highest losing bid. All bids are sealed until the auction ends.
Dutch. This is essentially a descending-price auction. Bidding starts at a high price and falls progressively lower until a buyer claims an item.
Reserve price. This is an ascending-price auction, in which the goal is to reach the lowest acceptable bid that a seller is willing to accept.
Consignment. This form of auction involves multiple sellers that are selling goods at one auction location. An administrator runs the auction and then receives a commission.