By Leslie Walker
Washington Post Staff Writer
Thursday, April 15, 1999; Page E1
Here in the Washington area, it's no stretch to imagine DC Coast, Citronelle and other restaurants using Web auctions to exact premiums for their best tables, or the Kennedy Center auctioning show tickets on the Internet. For that matter, imagine roofers and plumbers auctioning their services during a winter storm.
These were a few visions that popped into my head after I spent time clicking around BidStream.com, an electronic auction search service that was launched on the Web yesterday. For those of us trying to divine the future of electronic retailing, BidStream.com provides a startling glimpse of how far the dynamic-pricing revolution has spread.
That's because BidStream is a window on 100 Web sites, all specialty auctions of many flavors that have one thing in common: They use the same off-the-shelf software. Enter a term in BidStream's search box and it instantly searches the inventories of participating auctions.
Although still crude, BidStream.com is a pioneer in dynamic trade, the era of fluid pricing that is being ushered in lickety-split by the global computer network. By now, you probably know that a lot of people -- more than 2 million -- have registered to buy and sell goods at eBay.com. You may also have heard that bookseller Amazon.com added a copycat auction center to its Web site two weeks ago and announced this week that it is buying LiveBid, the Seattle firm that lets traditional auction houses broadcast their live auctions online.
But did you also know that thousands of other companies -- from mom-and-pop entrepreneurs to big, established retailers -- are doing their own versions of the Amazon and eBay thing? The online auction format is exploding in popularity, sending tremors through the economy.
Forrester Research, an Internet consulting firm, projects that online auctions aimed at consumers will gross $19 billion a year by 2003, up from $1.4 billion last year. And while eBay and other person-to-person auctions claimed 70 percent of Internet consumer auction sales last year, Forrester predicts that eventually two-thirds of the market will be businesses selling to consumers.
"People think of auctions as destination sites, but auctions are going to become a natural component of all e-commerce initiatives," said Michael Brader-Araje, founder of OpenSite Technologies Inc. and creator of BidStream. "You will see thousands of manufacturers and retailers start to use auctions as a component of their Internet presence."
You can get a front-row seat to the pricing revolution by running a few searches on BidStream.com, which links auctions run with OpenSite's software. Not all of the 270 auctions using OpenSite are listed yet, but most will be soon. Already, more than 80 percent of OpenSite customers report that they are profitable, Brader-Araje said. His claim was reinforced by the five randomly selected auctioneers I interviewed.
In an experiment that dramatically boosted its Internet sales, Sharper Image launched an OpenSite auction at the end of February. In March alone, the company's Web site sold $913,000 worth of merchandise. That was more than twice as much as in the previous month, and half of it came from the new auction area. Internet sales represented about 6 percent of the company's sales for March and are expected to total $25 million this year, the company said.
Another OpenSite auctioneer is Daddy's Junky Music Stores, a seller of used musical equipment with a catalogue business and 19 stores in New England. Daddy's started RockAuction.com in December 1997 and sold $1 million in merchandise at auction last year, a significant part of the company's $30 million in total sales, according to technical director Chris Pelick.
"You will see thousands of manufacturers and retailers start to use auctions as a component of their Internet presence."
-- Michael Brader-Araje,
founder, OpenSite Technologies Inc.
OpenSite's software comes at three prices -- $5,000, $15,000 and $50,000 -- allowing entrepreneurs to start on a low budget and expand. Later this year, the company plans an even cheaper $50-a-month option. That, along with similar auction products from competitors Moai Technologies and FairMarket, could spread the Internet auction bug even faster.
Anna Rue, who runs Cyberhorse.com from a horse ranch in Texas, was bitten hard. She has sold more than 300 horses online since December 1997 and said her site has turned a profit almost the entire time. "Now I spend 14 hours a day at this, and I love it," Rue said. "My husband has to drag me out to ride horses anymore."
WineBid.com, which launched in September 1996, also reports a booming business. With 10 employees, it auctions more than $300,000 in wine every month and takes a 25 percent commission for authenticating the bottles, according to co-founder Darren Nakos.
Maryland sports-card buff Brien Curran runs a two-person operation from his home in Anne Arundel County, selling about 25,000 cards a month at Curranscards.com. Many collectors start selling on eBay, Curran said, but find they can get higher prices from specialty auctions. As an experiment, Curran and another collector offered two sets of identical cards on eBay.com and Curranscards.com. Both lots brought 43 percent more money on Curran's site than eBay, Curran said.
The auction fever is just beginning. In time, retailers and service industries will find countless new ways to use electronic auctions -- some of them worrisome. After all, don't the rich have enough of an edge already?
Whole industries could be rocked, too -- real estate, for one. Imagine Weichert Realtors putting all its property listings into Web auctions, each lasting two or three months -- or until the reserve is met. It might revolutionize home selling because people would be less timid about low-balling.
While no one can be sure where the era of dynamic pricing will lead us, you can bank on it being a wild ride.
E-mail Leslie Walker: firstname.lastname@example.org
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