Making an auction site successfulEven the most innate benefits won't stop your pet technology project from bombing if people don't use it. Early adopters say the danger with auction sites is even greater, because auctions aren't quite mainstream e-commerce yet.So if you build the site, also develop a marketing program that kicks in the moment the site is debugged, advises Nancy Headley, operations manager at John Deere Co., a farm equipment manufacturer in Lenexa, Kan. She speaks from experience. Immediate results of John Deere's auction site were less than enthralling. Headley wouldn't put a number on John Deere's auction sales from October's launch through January, but did say they were far below 50% of items offered. She remains confident that transactions will grow when John Deere initiates its marketing plan for the site over the next few months. "We've been getting the logistical and technical things right before we do a lot of publicity," she says. If your company isn't in a hot e-commerce vertical, auctions may be an extremely tough sell. Equipment Exchange Company of America, a $3 million used commercial kitchen equipment merchant in Erie, Pa., moves 250 to 300 pieces a year. It tried online auctions but pulled out after dismal sales deflated its plans. "We're not mainly an online company," says Bob Breakstone, president of the 21-year-old company. "It was another avenue of marketing our goods. It wasn't that work-intensive. It just wasn't active." Breakstone says the company only sold about three or four pieces of equipment in the four or five months it held the auctions. There simply wasn't a big enough auction-savvy market for his used kitchen niche, which includes industrial food processors and similar items, he says. Now Equipment Exchange is putting its efforts into simply featuring items for sale on its home page. But he adds, "It's not inconceivable that we would try again." Finally, for those who choose to join a third-party site rather than go it alone, make sure the users of the system are trained in the art of auction deal-making. Unlike their consumer counterparts, the goods don't always go to the highest bidder in business-to-business auctions. Increasingly, they are awarded to those that offer the best all-around business deal. "We're talking about more than an auction," says Michele Hincks, marketing manager at ChemConnect, a 4-year-old San Francisco Web site that moves bulk loads of chemicals, doing 10 to 15 transactions per week, with an average of $200,000 per transaction. "A seller doesn't have to accept a bid just because it's the highest price. Look at the financing terms or the better shipping options. It gives you room to negotiate. It gives you more flexibility." And that flexibility means better decisions - and better business, says Tim Minahan, an analyst with Aberdeen Group, a market research firm in Boston. "People have been doing dynamic pricing, going for the highest bid," Minahan says. "This is turning into dynamic commerce. It goes beyond price. You can take your three top bids and then go offline and check out the other conditions. Lead time, shipping, warrantees, financing terms . . . there's more to business than the best price." So ensure that the user interface of your auction system serves up more than just prices on the screen. It should allow bidders to see all the conditions of the deal, before they raise their electronic hand with an offer.- Sharon Gaudin
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