A variation of online-auction model would pay off for agencies

By J.B. Miles

Special to GCN

At its best, online shopping offers a broad range of choices for savvy buyers who cannot or do not want to look for bargains at local shopping malls. At its worst, online shopping can be risky and can compromise the personal privacy of buyers.

The latest darlings of the industry are online auctions. Market researchers predict the auctions will account for more than $125 billion in sales by 2002.

Who will gain the most from the action is anybody's guess. But I doubt that it will be either buyers or sellers who benefit.

If you check the phenomenal growth in stock prices of some online auction companies'Fortune magazine says their projected earnings don't justify such growth'you'd have to conclude that the folks who are making out like bandits are the auction companies themselves.

I have expressed my lingering doubts about online auctions before. What guarantees the safety of transactions? Who guarantees the integrity of the sellers? How do we know we're not paying way too much for items just because we want to make sure we don't lose out on a good deal?

I wouldn't buy a used laptop PC through the classified ads or at a computer fair, so it's unlikely that I'd buy one in cyberspace. (I would, however, buy a new one online from a reputable company.)

But maybe I need to rethink all this. While there are scam artists in every business, and Internet commerce is no exception, relatively few abuses have been reported by customers of online auctions. This is impressive, considering the dollar volume of daily trading that goes on at the sites.

The industry itself has taken some steps toward guaranteeing the integrity of the online trading process. In some cases, both sellers and buyers can send their payments and products to an independent escrow service recommended by the auction company. If all parties are satisfied with the transaction, the escrow company will send out the product and payment for a small fee.

And virtually all reputable online auctions now support the Secure Sockets Layer encryption system built into popular Web browsers.

Another notion I've had to dispense with is that online computer auctions primarily are places to buy and sell used computer equipment.

CompUSA, the national computer equipment retailer, recently unveiled a Web site,, at which customers can bid on commercial sales, returns and discontinued merchandise, much of which is new and still carries manufacturer warrantees. The company claims that all products are new unless otherwise noted on the site's home page. There are other sites that specialize in new and used computer gear as well.

If you want to play the online auction game yourself, keep five things in mind:

• Every online auction is governed by its own rules and protocols. It's a good idea to spend some time and get familiar with them before you make a bid.

• Investigate the auction's policies regarding ordering, shipping and returns.

• Pay only by credit card. Never, never pay cash.

• Make sure the 'new' product you bid on isn't a refurbished unit.

• Accept a discontinued item only if you know you can live with it.

• Investigate the seller's reputation. When in doubt, check with the Better Business Bureau, at, or Public Eye, at

So far, I've referred mainly to consumer-oriented auctions, but there is a relatively new business-to-business auction model that may be useful to government organizations looking to exchange computer gear.

The idea is astoundingly simple: Many companies now use online auctions to clear out old inventory and get good prices for discontinued products that were formerly sold below market value. In many cases, the target buyers aren't groups of individuals but other businesses that want to make volume purchases. Couldn't this same idea be applied to government organizations that may want to sell Pentium II desktop computers to another organization to make way for newer Pentium III models?

FairMarket Inc. of Woburn, Mass., at, is a company that develops turnkey auction sites for popular commercial online auctions such as Cyberian Outpost, PC Zone and It also developed the new CompUSA auction.

Using its proprietary AuctionPlace technology with Microsoft SQL Server and Windows NT to link to CompUSA's mainframe, FairMarket built the site and provided consulting services, training and management information about online auctions to company officials. CompUSA is free to set price guidelines and add graphics.

Show 'em how

This is a good model for government. There are companies developing online shopping malls for federal, state and large local governments, but if there are others such as FairMarket that build turnkey online auctions, I'd like to know.

J.B. Miles writes about communications and computers from Pahoa, Hawaii. E-mail him at [email protected].


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