Testing the waters in Baltimore market New Peoria: Start-up Sold! joins other companies in trying out products' appeal here.

December 08, 1998|By Kristine Henry | Kristine Henry,SUN STAFF

How much would you be willing to pay for a brand-new laptop computer? Ten dollars? Fifty? Do we hear $100?

A new company has entered the growing world of online auction sites, and Baltimore is playing guinea pig for the venture.

"Sold!" is a catalog -- in online (www.soldontheweb.com) and print form -- featuring electronics and household items that made its debut here last monthwith a circular in the Sunday paper, wedged in between the usual ads for Target and Best Buy. Shoppers were able to call or go online and, for a fee, name their price for an item. At the end of the weeklong auction, they found out if they "won" -- that is, won the right to buy the products.

Baltimore, which marketing firms say mirrors the nation in terms of buying habits, is gaining more and more attention as the Peoria of the 1990s. In testing the waters here, Sold! follows in the footsteps of Virgin Cola, Polaroid (X)00R sunglasses and Disney's ESPN Zone.

Ira Green, chairman and chief executive of Sold!'s privately held parent, National Auction Co. LLC in New York, said between 300 and 400 Baltimoreans bid on merchandise during the weeklong auction that ended Nov. 8, resulting in about 65 sales.

The next auction is scheduled for January, again in Baltimore. The catalog is also getting test runs in Cleveland, just to make sure the results here aren't a fluke.

The idea of online auctions is relatively new, but quickly gaining popularity. There are two types of online merchandise auction sites: those that sell directly to the public, such as Sold!, and those that serve simply as portals for person-to-person sales, much like the classified section of a newspaper.

The one to beat in the direct-sales area is Onsale Inc. (www.onsale.com) of Menlo Park, Calif. When the company had its initial public offering in April 1997, shares were going for $6. Although it hasn't posted a profit in the past six quarters -- it had a loss in the third quarter of $3.3 million on $57.8 million in sales -- its share price skyrocketed to $97.625 Nov. 27. It has since dropped to close at $42.4375 yesterday -- up $6 for the day.

Onsale sells close-out and refurbished merchandise that usually comes with a short-term warranty. Returns are accepted if a product is defective, and there is no fee to bid.

The Sold! operation is trying to set itself apart by selling only brand-new products and accepting returns for any reason. (The customers pay to ship returns.) It charges a bid fee, from between $2.95 and $12.95 per offer, which isn't refundable, even if you change your mind or have an unsuccessful bid.

Phil Leigh, vice president and Internet analyst at Raymond James in St. Petersburg, Fla., said there is room in the marketplace for another auction company such as Sold!, but Onsale will be a formidable opponent.

"Onsale has got a lot of momentum, it's not going to be easy to catch," Leigh said. "It's growing rapidly and gaining mind share; people that go to the Internet to go to an auction site think first of Onsale."

In the world of person-to-person online auctions, eBay Inc. (www.ebay.com) of San Jose, Calif., has captured the most attention. It's making money, with a profit of $660,000 last quarter on sales of $12.94 million, and its share price has climbed to close at $174.25 yesterday, up from its initial public offering price of $18 in September.

Both eBay and other person-to-person sites, such as Auction Universe (www.auctionuniverse.com) -- a subsidiary of Classified Ventures LLC, which is owned in part by The Sun's parent Times Mirror Co. -- make money by charging sellers a percentage of each sale. There is no fee to bid.

The wares available range from "wonderfully huge Capodimonte urns" to a "happy face super smiley magnet set" to a charity lunch with Buddy Hackett in Beverly Hills -- for which the bidding started at $550 -- that benefits the Los Angeles County Public Library Foundation.

William Shelleman of Columbia figured, "Well, what the heck?" ,, and bid on several items in the Sold! catalog. He walked away with a Toshiba laptop for $100, a pair of Motorola two-way radios for $25 and a Brother fax machine for $50.

"My family thought I was crazy," said Shelleman, 30. "My wife [Jennifer Shelleman] said, 'You're never going to get that stuff.' But I thought, 'What have I got to lose?' "

His family's reaction is not surprising. After all, it's a new company and handing over a credit card number to an unknown entity can be disconcerting.

"I had a lot of trepidation about giving two credit card numbers to this company," said Jeff Huddleston of Baldwin, who purchased a Compaq computer for $500 through Sold!'s phone system. "Honestly, I don't know if I would do it over the Web. I buy from catalogs over the phone, there's not as much fear."

Huddleston, 40, said he thinks he benefited from the fact that Sold! is new and so few people participated. His only regret is that he didn't bid on more items.

"I absolutely think it was an anomaly," he said. "I wish I had been more astute to what the anomaly was."

If the idea catches on, National Auction Co. could be sitting pretty. Aside from the money it takes in on bid fees and from the manufacturers who are featured in the catalog, it has minimal overhead with five full-time and two part-time employees, leaving room for profitable margins.

"Our products are delivered directly from the manufacturer or distributor," Green said. "It allows consumers to get the best price and one of the ways we get the ability to get the best price is that we don't have brick and mortar. We're a virtual warehouse."

Pub Date: 12/08/98

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