It’s a nondescript room in a glassy building next door to Toronto’s Pearson airport.
A collection of flesh-coloured server shells sit on the floor and a spaghetti-like jumble of patch cords link 37 employees working at terminals inside the yellow second-floor offices.
The plainness of it all is eerie since these computers and the people who created and now maintain the technology are responsible for keeping thousands of customers entertained — all while moving massive amounts of merchandise.
Welcome to the world that is Bid.Com.
The folks who steer this busy on-line auction have quickly become proverbial e-commerce pioneers as they continue to forge, in giant swaths, new and high-stakes ground in Internet communication. And while bargain hunters flock to the on-line auction site, investors are taking the company for a wild financial roller coaster ride on the various stock exchanges.
Investors sent shockwaves across the financial community when the company’s stock tumbled on its debut on the Nasdaq exchange last month. Its stock plunged to US$11.13 after opening at US$16.63 and hitting an early high of US$17. And later in the day, the stock traded at US$14, down US$2.63 from its opening price.
During the past year, the stock reached $25 per share on the TSE, fueled mostly by rumours that the company would be taken over by rival eBay in the United States. While company officials have denied the rumours — calling them “hogwash” — the stock continues to peak and fall as news of the merger — or lack thereof — continues to make its way through the proverbial rumour mill.
Thousands of people across North America tap out commands on their PCs to submit bids to Bid.Com for a parade of merchandise ranging from sports memorabilia to electronics — including, of course, computers.
The on-line auctions evolve during the day as prices creep up before the cyber-gavel falls and the item is shipped to the highest bidder.
And all the data – offers from bidders, the credit card registration and even communication between Bid.Com and its suppliers – flows securely and hassle-free through cyberspace.
The trick to profitability is to make the auctions fun for bidders through technology – themes, graphics and the seamless function help to closely mirror a real-life auction, except for the crowded auction houses and yammering auctioneers.
Employee merchandisers with backgrounds in retail and advertising keep the auction moving and leave the technology to the geeks.
Bid.Com internally developed its auction management software called Bid.Com E-Commerce Platform that allows for alterations to the Web site without the need for an HTML coding with every change. The properitary software was rolled out in time for Bid.Com’s overhaul in January 1998.
“One of the keys for us was to redesign our architecture so we could have very few people running lots and lots of auctions with lots of products. Our competitors are much larger than us in terms of human resources,” offers Jim Moskos, Bid.Com International Inc.’s vice-president of technical operations.
By architecture, Moskos refers to all the layers of technology, everything from Web pages to its new server and customer software.
“By design, what we wanted to do was invest the time in building the architecture.”
Windows NT is the platform for this Web-based application which runs on a eight-way processor server. The auction management system was writtenusing C++, Java and Visual Basic development tools.
The solution currently accommodating more than 30,000 users, per day, and is equipped with a rich array of back-end administrative functionality that is processing massive amounts of information. Bid.Com runs up to three auctions currently with up to 200 items per auction. Each item must be presented with a photograph, a description and the tools for registering a bid.
Security comes thanks to a system in which all sensitive data such as credit card and other customer information flows separately from the Internet using a firewall. It all moves back and forth between customer and a SQL Server database using a virtual private network.
And the company is betting on the technology to catapult it into other non-auction-related e-commerce arenas.
It recently entered into an exclusive book selling partnership with Chapters that includes the development of a Chapters-branded book category on the Canadian portion of the Bid.Com Web site. There is also now a Chapters.ca merchant link buttons and Internet advertising throughout the site.
As part of the relationship, Bid.Com will sell and auction books on its Canadian site.
The idea is to allow Bid.Com bidder to browse and buy rare books, signed books and other Chapters merchandise on-line, reducing the amount of time traditionally needed to search for these hard-to-find items.
The genesis of the change came when Bid.Com founders wanted to expand beyond the constraints of the technology. They wanted to serve more bidders, sell more stuff and, of course, boost revenue.
The hope is that the investment — which officials are cagey about speaking about publicly — will pay off while Bid.Com works to boost sales, increase its technical capabilities to accommodate more bidders and to increase market share.
With that in mind, Moskos, a hot-shot techie from Ottawa where he worked for the federal government, was hired to lead Bid.Com’s march toward innovation.
“We already had a Web site and we were already doing business on the Internet. But we realized two things – we wanted to scale to the volume of business we wanted. The second thing is we wanted a new look. We wanted a competitive differentiation because all the players in the industry looked pretty much alike.”
There was a design change, upgraded server capacity and new software, which was built to run on top of Microsoft Access to enable non-technical staff to steer the auction.
This speed essentially invited the growth and made Bid.Com able to add far more content and accommodate far more customers more quickly.
The added auctions and ease of use on the front-end meant growth was inevitable. The number of bidders jumped from a daily maximum of 20,000 visitors to the site before the January 1998 re-launch to a dizzying 60,000 after.
“Our business was growing but it wasn’t that large. We realized the volume of the business that is on-line could mean that we would be required to accommodate thousands of concurrent users to be supported on our Web site at the same time, which is a huge deal.
“It sounds simple and it should act pretty simple and look pretty simple. But it was breaking a lot of ground that hasn’t been broken before.
“It’s one of the things that is neglected in this business. Everyone wants to get involved in the whole e-commerce game and then say ‘let’s go, let’s go. Let’s write some code.’ I think we are being vindicate in developing the sub-structure.
“If we didn’t spend that time up front we’d be in a bad shape.”
In the earlier days, the number of auctions and amount of merchandise was limited because the code had to be scripted with every Web page change. Now, a few keystrokes can kick-start the collaborative filtering technology and pluck data from the database. Using the Bid.Com E-Commerce Platform, information accessed from the database can be uploaded onto the Web site within minutes, complete with commands for size, movement and display.
“It is akin to a large library of potential products that are all linked to a smart environment that knows things about them and knows how to display them — so all we need to do is pull one off and put one on.
“That is a tremendous amount of work unless it can be completely driven from the database with a series of tools so that people don’t have to go in and write HTML code, which some of our competitors are doing.”
Moskos is especially proud of the technology because of its ease of use. Those with a head for retail can concentrate on creating product descriptions and designing auctions rather than fumbling with code. It also means a techie isn’t asked to perform non-techie duties.
“It’s more of a merchandising role than a technical role – we have tried to take the technology out of the function of the people who are merchandising and let them be merchandising people.
“You find a lot of on-line commerce sites where you have people doing dual duty. They don’t necessarily have the skill set to maximize the sales – we try to let the tools facilitate building the interactive show and let them concentrate on what they are good at.”
The technology also means it’s easy to increase the Web site’s entertainment value, as well as make it a place to get a deal on a Pentium, autographed football or video camera.
“That’s not to say that we are going more for entertainment than shopping. We want people to purchase. We want them to have fun while they are purchasing.
“People should be entertained and have a reason to do this aside of the obvious factors such as convenience and cost – we work hard to capture the element of entertainment within our site.”
Entertainment is an important feature of Bid.Com. Moskas is mindful that he’s competing not only with other on-line shopping services, but television, too.
This “fun to watch” mandate is still important to those steering the technology at Bid.Com. In April, Bid.Com added live streaming video to its site. The live shows bring real-movement to the Web page, which in turn is supposed to entertain bidders and kick-start sales.
So what’s in store for the future?
Tons said Paul Godin, the company’s founder during an interview back in January before his company’s roller coaster ride on the stock markets and the media scrutiny. At the time his hope was that Bid.Com’s youth and proprietary software would springboard the company into profitability, mass expansion and success on Bay Street.
Opinions about whether Bid.Com’s stock is over priced or under valued differs depending on who you speak to. Some believe the eBay takeover rumours are true and believe the company is undervalued and stock ownership is a steal at any price.
Others say the interest in the company is hyped and the stock will come crashing down once the current fever in all Internet and technology stock subsides.
“Obviously, many investors have made a lot of money, certainly more than the company has made,” said analyst Michael Simmons of Herche and Delloit in Toronto.
“There obviously is the flavour of the month thing happening, and Bid.Com is riding that wave. But there is a great deal of legitimacy. You have to look at their sales to prove that.
“We’ll need to see whether the eBay rumour is a rumour. And whether the stock falls or rises, and by much is dependent on what happens with that.
“But it’s sure fun to watch.”
The fourth-quarter results released by Bid.Com’s busy bean counters this spring show revenue continues to climb — from $1.5-million in 1997 to $6.4-million in 1998. The firm’s losses also mounted, from $3.1-million in 1997 to $5.8-million for the same period in 1998.
In January, Godin believed that the public’s increased familiarity with the Internet, the ‘Net’s remarkable convenience, and his software, were Bid.Com’s keys to big profits. The target is a maximum 100,000 bidders per day.
Godin, a former cellular phone salesman, and his team began four years ago knowing real profits were several years off. He christened Internet Liquidators International and later teamed up with fellow entrepreneur Jeff Lymburner (Bid.Com’s president) and re-named the company Bid.Com before launching the business and going “live” April 17, 1996.
The $22-million investment in technology will be recouped as sales continue to blossom and the proprietary software takes Bid.Com beyond the auction business.
And he said he’s found plenty who will listen to his pitch that Bid.Com’s e-commerce savvy will cut expenses, accelerate productivity and boost sales.
“The first 20 minutes of a presentation we used to make was ‘what was the Internet’ and then as time went on it was five minutes on the Internet and then ‘what was security’,” Godin said during the interview.
“The whole idea is to take this technology that Jimmy (Moskos) has built and take it to where the Internet is today to where the consumer is now.”
He sees liquidators using Bid.Com’s technology to sell off seized merchandise on behalf of other companies. As well, heavy equipment dealers could use it to sell their products without all the bother and expense of travel.
And he also sees on-line auctions in some type of merger with television to provide global live-feed auctions, complete with the e-commerce and interactive abilities of the Internet.
There have been a handful of cross-company promotion deals, the most notable of which has been with Rogers Media. The deal — a $6-million three year pact — will see the development of a co-branded auction site as well as enhanced media profile thanks to Roger’s placement in the Canadian economy and minds of consumers. There will be negotiation and partnered development for other schemes such as using Rogers cable technology to bring to consumers live interactive auctions and sales using television.
Godin, who first feel in love with the Montreal Dutch-style auctions (the price starts high and comes down) of flowers now sees endless e-commerce potential in just about every area of the economy.
“The potential that you could do this literally from anywhere in the world and do auctions globally is amazing,” Godin said in a January interview. “It was that open border concept of e-commerce. Wherever it can be sold and there is a market, you can go there. Imagine being able to take what we believe is a format that is dynamic, entertaining, is consumer dynamic and efficient, and then offer it to others.”
“(We’d like to partner) with either the one, two or three (players) in an area of business and partner up with them, e-commerce enable them, and add the value to their customers by bringing in this compelling auction process.
“That is what we do best.”
Andrew Matte ( firstname.lastname@example.org) is a Toronto-based freelance writer.
ON-LINE AUCTION STATS
Total spending will reach US$7.1 billion by 2002.
Number of people buying at auction sites will surge from 1.2 million in 1998 to 6.5 million in 2002.
source: Jupiter Communications January 1999.