All the (online) world's an auction

Silicon Alley panel says online prices will all be negotiable, shaking up the brick-and-mortar world

NEW YORK -- Fixed prices could become a relic of brick-and-mortar retailing, with everything for sale online essentially auctioned to the highest bidders.

At least that was the consensus from a panel here Wednesday at Silicon Alley 99, which suggested that online shoppers could soon find retail prices changing constantly as demand for products rises and falls.

The success of online auction companies such as eBay (Nasdaq:EBAY) and Priceline has demonstrated the viability of fluid pricing, said James A. Caccavo, president of Tickets.com, a Los Angeles-based online retailer of tickets for sporting events and concerts.

Caccavo sat on a panel of e-commerce experts that included Susan Solomon, CEO of online auctioneer Sotheby's.com and Henry Blodgett, e-commerce analyst at CIBC Oppenheimer.

"Ticket prices will be set by the market," Caccavo said. "If promoters and artists want to set artificial prices, fine, but they will have force that down the entire supply chain."

Already happening
Solomon said airlines are already moving to a fluid pricing model that is largely hidden from customers. That will change, she said, as more travelers buy plane tickets online.

For instance, ticket prices for a scheduled flight could rise or fall as the departure time draws nearer depending on cancellations and demand.

Under this model, fliers could bid up the cost of a trip, but conversely, they could find bargains when other travelers either elect to not buy a flight or cancel their trips.

The advent of intelligent agents, sometimes known as bots or spiders, that find the cheapest product prices on the Internet will lead to a kind of market transparency that will only encourage fluid pricing, the panelists said.

Online shoppers and retailers alike will be able to instantly monitor all available prices, leading to "e-markets" where products are traded much like stocks are today.

Making it anywhere
The birth of such e-markets could displace entire industries, another speaker said.

The previous day, Jack Hidary, president of EarthWeb (Nasdaq:EWBX), warned New Yorkers that they were risking losing entire industries as Internet entrepreneurs in other regions garnered early market share.

"New York has not retooled as a city, as an economy," Hidary said. The city is in danger of losing its hegemony in the financial, publishing and recording industries as they are moved to the Internet by new e-commerce companies such as California-based E*Trade (Nasdaq:EGRP).

If nothing is done to reverse this trend, he said, "most trading in stocks will not happen in New York in three years."

Blodgett -- who gained notoriety by successfully predicting that shares in Amazon.com (Nasdaq:AMZN) would one day trade at $400 -- said companies with apparently "insane" market capitalizations will grow into their valuations by increasing sales and acquiring other companies.