Dell Computer's auction site is officially up and running, making the Round Rock, Texas-based PC maker one of the first PC companies to enter into the auction fray.
Dell will let third parties sell computer products--including equipment from companies other than Dell--through the auction site, including desktop and notebook computers, software, and peripherals, as first reported by CNET News.com.
The site will also offer auctions on used and refurbished Dell equipment. The company will get a cut of the action, as with other auction sites.
Dell will by no means be the last to offer auctions, though. Hewlett-Packard plans to offer auctions at its site by the end of the third quarter this year, and others are sure to follow if Dell and HP's efforts are successful.
Dell and other PC makers are entering the auction market and other new arenas to counteract the price war in the hardware business. Dell and Gateway, in particular, have been vigorous in moving away from a narrow focus on hardware sales, adding things like Internet service and sales of third-party products. Dell earlier this year opened up its Gigabuys online store for selling PC peripherals and software.
As with eBay, which is currently the leader in the online auction field, Dell will make money on the site by charging transaction fees. Dell will charge a small fee to advertise systems and another fee for completed transactions ranging from 4 percent for items up to $25 to 2 percent for items over $1,000.
Auction market taking off
Computer equipment auctions represent another attractive market for Dell and others. Forrester Research estimates that gross merchandise sales in the online auction market will grow from $1.4 billion in 1998 to $19 billion in 2003. According to Forrester, the market for sales of computer hardware via auctions will total about $600 million in 1999 but will grow to about $3.4 billion by 2003.
For the most recently completed quarter, Dell sold $18 million a day worth of goods over the Internet, representing about 30 percent of total sales, according to the company. Auctions will likely add to that figure.
To encourage online shopping, Dell said it would offer to hold funds for transactions in escrow until both parties indicate satisfaction with the purchase. Also, Dell said it wouldn't release personal information about buyers or sellers except for whatever is needed to finish a transaction.