Going ... Going ... Go Online
For all the press and attention it gets, sometimes it's easy to forget that the Internet is still a nascent technology. No one knows where it will be one, two or 10 years from now, and given its relative unpredictability thus far, a lot of experts are nervous to guess.Three or four years ago, for instance, if someone could have foreseen the current popularity of on-line auctions, they'd be doing pretty well right now. Web sites that are the equivalent of on-line auction houses, like eBay and first auction, are some of the most popular on the Internet.What's more, they're profitable. When it comes to Internet businesses, operating losses are part of the scenery. Internet companies, especially the bigger ones like America Online and Yahoo!, have little trouble finding investors but most are still operating in the red, garnering backers on speculation of future profits.Not so with sites like eBay, a hugely popular on-line garage sale that has on the auction block everything from Princess Di memorabilia to almost 20,000 beanie baby listings. Barely three years old, it's already turning a profit taking a small percentage, between 1.25 percent and 5 percent, off every transaction made through the site.The word "profit" in connection with an on-line company is such a irresistible novelty that when eBay went public in October of 1998 for $18 a share, the price doubled in a week. At last check, the price was well over $200 a share, just months after their initial offering.Eric Wescott, the owner of Unknown Comics on Mulberry Street in Scranton, said he's bought and sold a lot of computer software and comics over eBay and so far he's pleased with the results and then some."I've recommended it to all kinds of other people," he said. "It's one of those things like how everyone a few years ago -- my mother, my aunt, everyone was asking about e-mail. . . well, six months ago everyone started asking me about eBay. You can tell it's a hit."The process is simple enough and fairly uniform for most on-line auction sites. The seller places an ad on the site. The length of the auction is established, usually a few days and seldom more than a couple of weeks, and visitors who are interested in the item place their bids. Whoever holds the high bid at the time the auction ends is notified by e-mail either by the site or by the seller. Finally, the buyer sends his or her money and the seller sends the item.This cash-first approach obviously has a lot of potential for fraud. If the seller wants to keep the money and not send the item there's very little someone can do. To help its customers avoid this problem, sites like eBay have histories assigned to each user listing good or bad comments from people who have bought from them or sold to them in the past.In almost 40 transactions over eBay, Wescott said he's only been burned once and that was only for $10 or $20. Like anything else having to do with money and credit cards, he said, common sense should prevail."If I'm spending $20 or $30 I don't really care so much (about their history). But if I'm getting up near $100 or $200, I'm hoping they have 40 or 50 good comments next to their name," he said.Len Walter, a sales and marketing agent for the Alderfer Auction Company in Hatfield, said this potential for abuse by unscrupulous dealers is something that's going to have to be corrected before on-line auctioning can reach its full potential."All of the sudden there was a big influx of auctions, then there was a lot of fraud, then all kinds of questions like, 'Is it valid?,' 'Is it safe?,' 'Will I get ripped off?,'" he said.Technology is finally starting to catch up, he said. There are a lot more stop gaps in place now than in the early days of on-line auctioning.For instance, a lot of on-line auctions have turned to escrow accounts that allow the buyer to deposit the money for an item in their account, where it's held until the seller sends the item. If the item is damaged or not sent, the seller doesn't get the money. And if the item isn't all it was advertised to be, the whole transaction can be challenged.Protections like these are going to help, Walter said, but he's not exactly worried about his job yet. If anything he thinks on-line auctioning is going to bring more attention to "the gallery auction method and competitive bidding" not replace them."The QVCs and eBays and all that type of thing where all you have to do is turn on your TV or computer and bid on things with no hassle is an attraction to a number of people. It's opened a new awareness to the auction industry," he said.People like Wescott -- used to dealing with the accepted rules of retail business where bargaining or naming your price doesn't fly -- are finding the auction method of purchasing what you need holds a lot of advantages for the buyer."It's extremely efficient. You can find exactly what you want and if you're patient, you can get exactly what you want for a good price with the only negative being the looming fear of getting burned," he said. "But you can control a lot of that. You kind of assume the level of risk you're comfortable with."Even though his praise for on-line auctions is tempered, Walter said he doesn't think anyone in the auction business can afford to "bury their head in the sand." As a company, he said, Alderfer Auctions is looking into expanding into on-line business in the near future, and currently they utilize the Internet and e-mail for informational purposes like contacting potential buyers and alerting clients to upcoming auctions.Like much of the future of commerce over the Internet, the important thing is to establish confidence in the consumer that they aren't about to get ripped-off, he said."As long as it's controlled in a non-threatening way (on-line auctions) will continue to take-off," Walter said. "I think it's going to take a situation like a Sotheby's and like ourselves and other big name auction houses that do have credibility to begin with to get on-line and start using the technology."The thing is, sites like eBay and Onsale are already so established that if some of these big auction houses don't recognize the trend and make their move soon, they may find that no one's around to bid on their hand-carved Victorian furniture because everyone's on eBay trying to fill out their Beanie Baby collection.***Sidebar One: On-line Auction SiteseBay -- All discussion of on-line auctioning has to begin with this site. Currently it is valued at about $7 billion with more than 1.2 million registered users. This site has been described as an on-line flea market because it deals in everything from name-brand products to stuff somebody pulled out of their attic. It's impossible to list everything that's sold over this site but if you're looking for it, chances are, they have it. Their web address is: www.ebay.com.Onsale -- Along with eBay, this is one of the two most popular auction sites. Where eBay allows people to sell just about anything to one another, onsale is more for professional auctioneers to sell to consumers, usually close-out stock or upgraded computer products. Most of their products are computers and consumer electronics. Their web address is: www.onsale.com.First Auction -- How lucrative is this on-line auction business? Well, billionaire media mogul Barry Diller is in the game with a site called First Auction. Associated directly with the Home Shopping Network, this site offers individual items in bulk. Customers can type in a bid, for instance, on one of 2,000 sets of steak knives and wait to see if they've made the cut. Their web address is: www.firstauction.com.Z Auction -- This is another site devoted mostly to computer and electronic equipment. Definitely not in the same league as onsale.com but with fewer visitors and a smaller name, you're chances of finding a real deal might go up too. Their web address is: www.zauction.com.Curran's Cards -- Not only are there mega-sites that deal a wide range of products but there are also a lot of on-line auction sites devoted to specific hobbies and interests. Curran's Cards and Auctions is the number one site for sports cards, for instance. Winebid (www.winebid.com) is another such site, popular for buying premium wines at discount rates. Curran's web address is: www.curranscards.com.***Sidebar Two: Bidding and WinningAccording to the pros, there are a few things you can do to give yourself a better chance of getting the item you want, at the lowest price. Here are a few of the most common tips:Be First: To decide who gets an item when there are ties for the high bid, standard on-line auction procedure is that the item goes to the person who bid first. So if you see something you really want, get in with your bid early.Be Last: Standard on-line auctioning procedure is to wait until the last minute to place your bid, in hopes that you can snatch up the item at the last second. Hey, it's worked for plenty of other people, it could work for you too. On the other hand, to keep someone from doing this to you, you can bump up your bid a little bit just before bidding is going to close. Also, certain sites have software that will allow you to place your opening bid and enter an amount that you won't go over. This way, every time someone tops your bid, but still stays below your limit, a higher bid is entered for you automatically.Stand Strong: One of the reasons many people think these sites are so popular is the excitement inherent in the bidding process. Which is all fine and good so long as you don't get carried away. Know the value of the product you're bidding on, know what you want to spend and hold yourself to it. Or else you might find you've just paid more for something than you would have at the local mall.