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Tuesday, December 7, 1999
E-Biz is killing fixed pricing, they say. As sellers lower prices to counter competition, and buyers shop for best deals around the world – in the Netspace, geography is irrelevant – auction is emerging as the best form of transaction. That's what has made e-Bay, the Net's premier e-auction venture, a resounding success, with revenue of $ 5.60 million and a market cap of $ 5.50 billion. That's what has forced e-companies like Yahoo and Amazon.com to set up their own e-auction ventures.
And that's what has persuaded the Chennai based Cyber Commerce, a subsidiary of the $ 4 million Silicon valley headquartered Cybernet Software, to establish India's first cyber auction, auctionindia.com, which was launched in August, 1999. Cyber Commerce – whose site is hosted on a dedicated server of its parent 's – is targeting buyers and sellers of second-hand industrial machinery, units, and infrastructure. At this online meeting, buyers can find sellers and vice-versa-for products like a hydraulic moulding press, an automatic lathe, a vegetable oil refinery, a clutch of auto ancillary units, and a panoply of industrial sheds all over the country. Small though the current crop of products put up for bids is, C E Karunakaran, CEO, Cyber Commerce believes that business will boom. "We expect to break even by the end of the second year," he declares.
The potential is on his side. The 150 and odd e-auction ventures-their ranks swelled by even real life auctioneers like Sotheby's, which has just forged an alliance with Amazon.com-are counting on Jupiter Communications' projection of $ 3 billion in online auction revenues by 2002. AuctionIndia has chosen to be a niche player, though-eschewing the business-to-customer auction route pioneered by e-Bay. Explains Karunakaran: " Concerned about the low penetration of the Net in India, we feel that it is safer to stick to business-to-business (B2B) auctions which, in any case, is set to soon outstrip person-to-person and business-to-person auctions in the West." Agrees Sandeep Mathur, 42, Country General Manager, Lotus Development International, whose Lotus Domino Notes collaborative computing infrastructure drives AuctionIndia: "Over the next 10 years, B2B commerce will substantially outgrow business consumer activity on the Net."
Of course, Karunakaran has had to start with a clean slate in India, "There is no real pre-existing demand. It is difficult to forecast future demand," he avers. Instead he is trying to build on a first-mover advantage. So far, that's not been difficult: no the other online auction site sells second hand machinery. Local auction-driven competition include wonderonlien.com (general purpose), desibay.com (consumer products), thomas-india.com (tea), and sukhani.com (stamps). However larger rivals are poised to bid too: Yahoo Asia and Rediff.com are planning to set up online auction sites as well.
So, Cyber Commerce wants to quickly convince brick-and-mortar businesses that online auctions are hard to beat in terms of efficiency, cost and time savings, and good deals. Affirms R. Shiv Kumar, 38, Vice President, Cyber Commerce: "The creation of an identity through our auction site is our immediate aim." And for that, auctionindia.com is targeting companies that want to offload their surplus inventories or end of line stocks, or want to auction their auction stocks to a large dealer base. Of course, its added USP is the same as that of all e-auctions. As Karunakaran points out: "Online auctions help prices find their true market value through a much higher efficiency of information transfer than is possible with tender offers or physical auctions. They help cut out middlemen profits significantly".
auctionindia.com's site-planning is simple. Its driven by customized software, developed over 6 man-months by Cybernet Software Systems, using the Lotus Notes Domino platform, which combines group-ware with web-based interactions. Although online auction software is available off the shelf-from SciQuest.com auctions for example, Cyber Commerce wanted a more robust and flexible system. The web server is physically stationed in San Jose, US, with connecting servers in Chennai. So, every action is replicated and communicated to the main server, which runs on a 400-megahertz parallel processor, with firewalls and proxy gates. Secure Socket Layer (SSL) technology encrypts the data being processed to and from the Web-server and Web-clients. Says D V Jagadish, 40, Country Manager (E-biz solutions), IBM India, a technology provider to Cyber Commerce: "The key considerations for next generation auctioning are scalability, integration and back office systems, and flexibility and security."
Registration to enter the restricted area is free, and the process is user-friendly. The company vets the item up for sale, and handles the publicity of the auction through traditional media and mailers. To start with, the online site tries to effect a negotiated sale between the buyer and the seller through direct contact. Or, prequalified buyers are given passwords to participate in the auction, which follows a Dutch Auctioning model where bids and offers are controlled by the site, and also proxy bidding facilities.
Adds Karunakaran: "No online payment is envisaged at present. All financial transactions are offline, and through conventional means." Cheques and demand drafts are preferred to credit cards. The company is also planning to tie up with an escrow agent who will look after payment intermediation if required. The takings? Says Karunakaran: "Our fee will, usually, be an up front payment plus a percentage of the final sale value."
Even as it waits for those transactions to yield further, auctionindia.com is innovating. Large conglomerates can create their private auction spaces within the site – free of cost. EID Parry, Lucas-TVS, and Godrej Foods have signed up for facility already. Classified columns have been introduced recently, and a customizable homepages for participants are in the works. But apart from building on the pleasure of striking a (secure) deal in a free (information) market, auctionindia.com has to attract good product variety and availability. Only, then will the click replace the hammer. |
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