B-to-b auctions: Hottest niche on Net

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Auctions are the hottest niche on the Internet, and they're now in the business-to-business space.

Buildscape Auction, Jacksonville, Fla., a building-product Web site, last month launched a b-to-b auction site to add to the growing number of such sites.

An auction site takes bids on an item for a set period of time, then matches the top bid and handles the transaction.

Power economics

"A manufacturer has a chance to put that product up for a week and at the end of the week, [it] can move that product," said Buildscape Senior VP Tom Sapinski. "Because the auction is open to consumers as well as business, you may get consumers buying at close to retail."

Buildscape, whose parent company also controls Wickes Lumber, recently hired an executive away from electronics distributor Marshall Industries, El Monte, Calif., to help turn its site into a "building-products portal."

The U.S. building industry represents hundreds of billions of dollars in annual sales, Mr. Sapinski said. For builders, remodelers, contractors and suppliers, the Web site is building forums, chats, databases, a directory of plans for building houses, and markets in several product categories, including financing.

But it's in auctions where the economics can prove most powerful to companies that make building supplies, Mr. Sapinski said.

Going once, going twice

"When you sell something for $100, your cost is $60, and the builder pays $200 while a consumer pays $220," he said. "The gap between cost and what the consumer pays is huge.

"The manufacturer would be happy to get $60 for some things, but if he puts it on auction, he can put a reserve on it at $20 to $25, so you have a price higher than what the liquidator would give. A consumer may be happy to get it at $150."

The place of auctions in the business-to-business marketplace is far from certain, but the success of the category in the general Internet at least has some companies pounding the virtual gavel.

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