B2B auction sites multiply
by Ed Sperling & John Moore, Sm@rt Reseller
A new breed of auction sites is sprouting up on the Web, peddling everything from spare parts to refurbished systems. Some sites cater to the channel, others to end users, and still others take a hybrid approach.
Business-to-business auction sites, also called exchanges, are struggling to win market awareness and a meal ticket that extends beyond the current round of venture-capital funding. The market is evolving and changing so rapidly that many online companies are being forced to put together new business plans every quarter.
One of the newest entrants to the market is TekSell.com, a Raleigh, N.C.-based start-up that offers to certify every product it sells. "The key was getting the price high enough to warrant touching it," says TekSell CEO Andy Cummins, who notes the average price of products sold on the company's Web site is $5,100. That average is based on everything from components for Sun Microsystems servers to high-end switches for phone companies.
TekSell targets both resellers and end-user businesses as customers. The company auctions vendors' and distributors' excess inventory via the Web, first to authorized resellers and integrators, then to the general public. TekSell reserves a password-protected portion of its site for VAR-only auctions.
Tradeloop Corp., meanwhile, positions itself as a channel-only B2B exchange. The Burlington, Mass., company offers a forum through which resellers, brokers and distributors can list and purchase computer equipment and parts.
Rohi Sukhia, president and CEO of Tradeloop, refers to rival exchanges as "disintermediation plays. They want to become the middleman. They are competing and trying to do away with the channel." In contrast, Tradeloop provides a neutral marketplace for resellers, he says.
Tradeloop soon will have company in the neutral exchange space. E-Exchange Ltd., a London-based B2B exchange active in Europe and Asia Pacific, plans to open shop in the U.S. market. The company, which trades in computers, components, peripherals and servers, is "perfectly suited for distributors, VARs, retailers, solution providers, and other channel players," says a FAQ file on e-Exchange's Web site.
Other B2B exchanges are, in effect, resellers themselves. Edgewood, N.Y.-based TechSmart.com, for example, audits, tests, cleans, packages and then remarkets the surplus IT gear it receives. The company sells directly to small and midsize businesses and home offices, and guarantees the products it offers for 30 days.
In all cases, trust is critical. "When it comes to IT, the trust factor is very important," says TekSell's Cummins. And there's no shortage of B2B exchanges vying to earn that trust.