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Online auction powerhouse eBay Inc. is increasingly moving beyond its core consumer auction business to bring corporate buyers and sellers together. But challenges still remain to the companys efforts to bring its auction services to the enterprise.
While some enterprises are intrigued by the possibilities eBay could bring to democratize e-marketplaces, the same openness that eBay has built its business on stirs fears of channel conflict in some companies looking to embrace auctions as another sales channel.
Castle Rock Industries Inc., which makes commercial floor-cleaning equipment and chemicals, is looking to open a secondary market for sales demonstration equipment and returned off-lease equipment from customers on service contracts. Castle Rocks local salespeople must now find buyers for such equipment in their territories. But the Denver-based company is looking to auction that equipment online—exposing it to a wider group of buyers—using a hosted auction service powered by Comergent Technologies Inc.s C3 Auctions application.
“Its a conduit for Castle Rock and Castle Rock customers to hit that secondary market,” said Castle Rock CIO John Rough. Castle Rocks executive vice president of sales and marketing, Michael Malone, said the company intends to manage its way through potential channel conflicts as it runs the auctions. The success of the auctions will determine whether Castle Rock sells more products this way. “Were feeling out the market,” Malone said.
The company typically sells products through the janitorial products reseller channel and directly to large customers. Fear of alienating those channel partners and customers is keeping Castle Rock off eBay and on a private auction service where it can invite and authorize potential buyers.
“One of the advantages of Comergent versus eBay is that eBay is open to the world,” Rough said. “We want to be able to control who the audience is, whos invited to participate in the auctions.”
With an open, eBay-style auction, end-user customers or other parties could undercut Castle Rocks reseller channel and large customers, Rough said.
eBay spokesman Kevin Pursglove said sellers can set conditions to limit bidders, such as requiring a deposit or statement of financial support, but cannot actually limit whos invited and authorized to bid. But many businesses seem able to work out their channel conflict issues to sell on eBay. The online auctioneer, based in San Jose, Calif., opened its Business Marketplace in January to bring business buyers and sellers together in recognition of the increasing amount of business-to-business commerce at the site. Pursglove said business buyers represent about $1 billion in annualized gross merchandise sales on eBay across the capital equipment, office technology and wholesale lots categories.
eBay has made other inroads into enterprises. Last month, it bought FairMarket Inc.s intellectual property, which it plans to use to offer services to run loyalty programs and other promotional campaigns to its sellers, a key value-add for business customers. Also last month, eBay signed a pact to let customers of SAP AG, the worlds largest business application developer, sell idle assets and equipment on eBay. Sources close to both companies said eBay and SAP may extend this partnership to link eBays auction services to SAPs e-marketplace offerings. Pursglove declined to comment on speculation that a larger partnership is in the works.
Channel conflict aside, eBays auction model could be a breath of fresh air for the e-marketplace world, which never lived up to its hype. “I would think that they could be a legitimate source of opportunity for businesses and especially small businesses,” said Irving Tyler, CIO of Quaker Chemical Corp., in Conshohocken, Pa. “The larger e-marketplaces which have come and gone over and over again, I think are too specialized and dont have a setup in which the trading partners will all have common needs.” eBay could attract a more varied group of traders, have fewer rules and constraints, and no software needs beyond a Web browser, Tyler said.
“It might work,” Tyler said.