Page 131 - Introduction to Electronic Commerce and Social Commerce

4.3 Selling via E-Auctions 111

The Benefits of Auctions on the Sell-Side Using Intermediaries in Auctions

Many companies use forward auctions to liquidate their sur- Several intermediaries offer B2B auction sites (e.g., see
plus products or capital assets. In such a situation, items are assetnation.com and liquidation.com). Some companies
usually displayed on an auction site (private or public) for specialize in government auctions while others focus on sur-
quick clearance. Forward auctions offer the following bene- plus stock auctions (e.g., govliquidation.com). An interme-
fits to B2B sellers: diary can conduct private auctions either from the
intermediary’s or from the seller’s sites. Alternatively, a
company can conduct auctions in a public marketplace,
• Revenue generation. Forward auctions support using an intermediary (e.g., eBay, which has a special “busi-
and expand online and overall sales. Forward auc- ness exchange” for small companies).
tions also offer businesses a new venue to quickly Using an intermediary to conduct auctions has many ben-
and easily dispose of excess, obsolete, and returned efits. The first is that no additional resources (e.g., hardware,
products (e.g., see liquidation.com). bandwidth, engineering resources, or IT personnel) are
• Cost savings. In addition to generating new reve- required. There are no hiring costs for using corporate
nue, conducting e-auctions reduces the costs of sell- resources. B2B auction intermediary sites also offer fast
ing the auctioned items, which helps increase the time-to-market as they are capable of running the auction
seller’s profits. immediately. Without the intermediary, it can take weeks for
• Increased “stickiness.” Forward auctions give a company to prepare an auction site in-house.
websites increased “stickiness,” namely, potential Another benefit of using intermediaries relates to pay-
buyers stay there longer. Stickiness is a characteris- ments, which are handled by the intermediary.
tic that measures customer loyalty to a site that For an example of using an intermediary in B2B auction
eventually results in higher revenue. services, see Liquidity Services Inc. (liquidityservicesinc.
• Member acquisition and retention. Registered com).
members of auctions can invite their business con- For more about B2B online auctions, see vasthouse.com/
tacts. In addition, auction software aids enable sell- b2b-online-auctions.php and liz.petree.tripod.com/test_2/
ers to search and report on virtually every relevant auctions.html.
auction activity. Such information can be analyzed
and used for business strategy.
Examples of B2B Forward Auctions

The following are examples of B2B auctions:
Forward auctions can be conducted in two ways. A
company can conduct its forward auctions from its own • Whirlpool Corp. sold $20 million in scrap metal in a sin-
website or it can sell from an intermediary auction site, gle auction via equipmentone.com; the sale price
such as liquidation.com or ebay.com. Let us examine received was 15% higher than prior e-auctions.
these options. • Sam’s Club (samsclub.com) auctions thousands of items
(especially electronics) at Sam’s Club Auctions (auc-
tions.samsclub.com). Featured auctions include the cur-
Auctioning from the Company’s Own Site rent bid, the number of bids, and the open and close date.
They liquidate overstock items, returns, and out of style
For large and well-known companies that frequently con- goods.
duct auctions, it makes sense to build an auction mecha- • Yahoo! conducts both B2C and B2B auctions in Hong
nism on the company’s own website. Why should a Kong, Taiwan, and Japan.
company pay a commission to an intermediary if the
intermediary cannot provide the company with added To learn more about B2B auctions, see vasthouse.com.
value? Of course, if a company decides to auction from its
own site, it will have to pay for infrastructure, and operate
and maintain the auction site. Note that, if the company SECTION 4.3 REVIEW QUESTIONS
already has an electronic marketplace for selling from
e-catalogs, the additional cost for conducting auctions 1. List the benefits of using B2B auctions for selling.
might not be too high. 2. List the benefits of using auction intermediaries.