IT Week comment
Why IT vendors like eBay

IT Week comment

Some of the biggest names in IT are using online auction site eBay to
sell their products. But does this channel offer benefits to IT managers
when it comes to procurement, asks Ken Young

What do IBM, HP,
Dell and Sun Microsystems all have in common? They all sell new and
reconditioned products on auction site eBay in the US. HP also sells
reconditioned kit on the eBay site in the UK. And yes, you read that
right, even Dell uses eBay.

This is intriguing for several
reasons. First, it suggests that eBay has become a route to market that
large vendors cannot ignore. And second, it may mean eBay has developed
a service that vendors can use to reach new customers without
conflicting with their other sales channels.

But what is also
intriguing is that eBay is trying to encourage the big brands to join
without damaging the auction potential for thousands of small businesses
and individuals using the service to sell everything from family
heirlooms to jet fighters. Consequently there are almost no big brand
names on the eBay home page – most of these companies are lurking
quietly behind the “computers” category on the drop-down menu. Its
sobering to see these giants jostling side by side with smaller sellers.

The giants are only selling a tiny amount via eBay, say the sceptics. Not so.
At IBMs yearly knees-up for resellers in Las Vegas last month, the head
of its Personal Systems Group, Steven Ward, said the company was one of
the biggest retailers on eBay, and started selling there in 2001. Sun
Microsystems page auctions high-ticket kit items such as an enterprise
storage system currently on offer at £22,000.

In the US a firm
called AuctionAdvisor part-owned by eBay and opening in the UK this year
has signed up most of these IT vendors, and builds their sites and runs
their sales for them. All they have to do is ship the products when the
sales go through.

AuctionAdvisor says it has taught the likes of
IBM the secret of selling on eBay dont sell in job lots, but sell in
ones and twos to make buyers feel that the items are scarce, and
therefore more valuable.

So, should IT managers look to eBay or
even Amazon auctions? IBMs Steve Ward says that on average an IBM PC on
eBay costs $75 less than its PCs sold by other means, but you have to be
an expert at price comparison to know how the deals really compare.
Reconditioned stock is even harder to evaluate. Perhaps understandably,
eBay has fought legal actions to stop its auction prices appearing on
comparison sites in the US.

The trend for using auction sites is
likely to grow. Already eBay has 7.8 million users in the UK and 95
million users worldwide. It seems past predictions that giant tech
auction sites would appear were not entirely wrong.

But the fact
is that making online auctions work for all parties involved is a very
complex and subtle process and only eBay and the firms that have grown
up around it really understand the process. Most auction services during
the dot-com boom did not comprehend this complexity and suffered as a
result.

Leading IT vendors now use eBay as a cheap and cheerful
route to market and possibly new customers. But it is up to the IT
manager to decide whether to take the road less travelled or to stick
with what they know.