eAuction Idiocy

Internet Auctions have been bubbling under for a few years, creeping towards ever-greater credibility, mainly due to incredible PR coups such as the European 3G mobile phone licences and their mega-billion windfalls.  It has to be said that such affection can surely nowadays only exist for those that haven’t bought through one.

Yet the evidence for me, is that for anything other than a genuine commodity product, they are an absolute waste of time.  Here’s why my advice to any sales person asked to participate should be to say a big firm ‘No’ and walk away, letting the buyer deal with the fallout.  It’ll be more profitable in the long run by far.  And you can cite these two examples from 2005-06:

Beer Coolers

I’ve one client that sells anything that helps dispense, cool or promote beverages into pubs, bars and restaurants.  They were asked by global brand owner InBev (Bass, Stella Artois, Hoegarden, Beck’s) to take part in two web auctions.  Yet even with something seemingly so-commodity, like chillers (those cabinets you see behind a bar filled with lager bottles, preferrably Peroni or Corona!) or the plaques with the beer logo that sits on the front-facing font (the tap the beer flows from you get) purchase through an internet auction was exposed as bananas.  Painful experience soon suggested problems include:

• when the margin of a product had been so eroded, another supplier realised they couldn’t offer it, had no assurance that it would be a loss-leader guaranteeing future business at acceptable rates, so withdrew, meaning a start-over
• when the cheapest product was pinpointed, the purchasing guys (in the Belgium HQ) slapped themselves on the back, but then the people that had to work with the chosen product (in the customer-facing regions) refused to take any orders of it, as they said it was an inferior offering that would mean they did their job worse instead of better

The end result was that the guys I know well at this division of engineering conglomerate IMI earned a preferred supplier agreement stopping the engagement of any future eAuctions.

Fancy Software

From one multi-billion dollar outfit to another, this time energy monolith Shell.  They required software that would help with their franchisee retailer lease management.  As in the example above, the central Purchasing bods rushed in like knights in shining armour promising the best deal.  From the shortlist provided by the Technical expertise, the two potential vendors with the unanimously preferred ‘best’ solution to work with declined to participate.  The outcome?  The widely considered ‘worst-case option’ “won” the e-auction.  The users of the software then simply refused to accept it and a buying cycle began afresh with the two other vendors.  What a total waste of time and energy.  And all for a product whose range at most from any vendor was £15k-£20k.  Purchasing saw a £5k saving, the users saw thousands beyond that in productivity losses and future on-costs.  Typical.

Avoid web auctions.

Reminds me once more of Rockhound’s (Steve Buscemi) gem of a line in Armageddon as the shuttle was on the launch pad; “…all put together by the lowest bidder”.  And that was before the thing blew up for the second time.