Aucorrecently invested R5.5 million in creating a "virtual auction site", launched on 15 September. Since then, the site has had more than a million hits and according to MD Brian Winterstein, is expected to outstrip the organisation`s conventional trading in the next two years.
ITWeb: How much time went into developing the site?
Winterstein: It`s important to point out that our Web site has been the process of two years of research and development. There`ve been quite a lot of online auction houses coming online right about now, but basically speaking, they have loaded off-the-shelf [OTS] software and become auctioneers. We didn`t do it on that basis. We identified the marketplace; we are auctioneers, and we have the experience and knowledge of the auction industry. Instead of using an OTS program we decided to develop our own software and create what we call a virtual auction house, as opposed to an online auction house.
We`ve had our problems; it`s taken us time, and we did originally plan to go live on 4 July. But we delayed it to the beginning of the month (September), and then delayed to mid-month. Even though I believe our software is slick, hot and beautiful, we still had our teething problems.
ITWeb: What kind of feedback have you experienced?
Winterstein: We had just over 200 people registering [in the first two days] since the site went live. We had an initial report of 380 impressions on the first day. There were some people that had problems registering, and to compensate them for their troubles, we gave them what we call "e-centives".
As of 31 October, we`ve had 1 264 424 hits and 380 117 page impressions.
ITWeb: What, essentially, does the Web site do?
Winterstein: It`s very different to a regular online auction house, where people would bid on something, and at the end of the day when the auctions are closed and there`s an acceptable bid (in other words, over the reserved price), they e-mail the buyer with the seller`s e-mail address, and vice versa, and then it`s up to the two of them to negotiate. But this lends itself to Internet fraud, which has happened in America already, with the biggest online auction houses, where the sale goes through, and the buyer accepts the money for goods that don`t exist.
So, this is one of the reasons why it`s taken us so long to develop our Web site. We approached it from an auction point of view, where you have that facility on our Web site to use if you want to. If you want to take those risks, it`s there. If you don`t want to take those risks, and if you want to bid on something for which you`ll be guaranteed delivery, then it follows a totally different route.
Basically, to bid on an item, you`ve got to place a 10% deposit on it. Then, once you`re successful, you`ve got to pay the balance of the money, plus shipping costs, plus VAT, plus whatever other charges there may be, into our account. Once that`s in our account, we arrange for the shipping to take place. Once the item arrives at your place, and you`ve had it for seven days, and are satisfied that it is as described, that`s when we will pay out the seller. If you`ve overpaid for it, that`s your problem.
So that protects you as the buyer. By the same token, it protects the seller, because he`s now letting go of his product, but he knows that we have the money, so unless he`s described it incorrectly, he`ll get his money in due course.
ITWeb: South Africans have been reluctant to jump on the e-commerce bandwagon. Do you foresee this having an impact on your turnover?
Winterstein: I think a very big problem is the fact that the major players, like the banks, the e-commerce providers in terms of software, and others, don`t do enough [to support e-commerce] in terms of media. There`s plenty of media in newspapers and on TV warning people against using their credit cards on the Internet, and that`s actually frightening people. And in very many instances, they`re a 100% right, but I think that there are certain banks, and certain e-commerce enablers that have got this so securely tied up, that you actually can securely utilise your credit card, and it is secure.
We want to bring this to as many people as we can, so if you want to bid, you`ve got to pay up front, and that goes into your "trust" account. We accept credit cards, but we also wanted to have a debit module, where you authorise us to debit your account, so you don`t have to keep on putting in money. For that reason, we had to open an account with every one of the major banks, to enable people to bid on our Web site in real-time, and that was one of the biggest problems that we initially experienced.
ITWeb: Does Aucor inspect each item that goes online?
Winterstein: No - we can`t inspect every item. We do step in as an arbitrator/mediator if there is a dispute. If the seller has blatantly misrepresented an item on the Web site, we immediately refund the buyer his money in full, and we will then blacklist the seller. A list of blacklisted sellers can be found on our Web site.
ITWeb: Who do you consider to be major competitors?
Winterstein: There are online auction houses, but I really don`t think they can compete with ours. Don`t take my word for it - just go to their Web sites. There`s auctionlink, auctionalliance, thelot, coupons, sellingandbuying.com. Those are the real main competitors.
ITWeb: What sort of filtering process is there when people enter items onto the Web site?
Winterstein: Our Web site has certain key words which are searched for when a member of the public enters something on the Web site. For example - I don`t want someone selling an AK47 on my Web site, so we won`t allow that to come on. In addition to that, we download all the new entries to our Web site on a daily basis and just go through it to make sure that there`s not something that`s gotten around these keywords. We will not allow anything illegal or offensive to be placed on the Web site.
ITWeb: Has the transition from brick and mortar to online been difficult?
Winterstein: It`s been very hard. One needs to understand that Aucor`s been in this business for 30 years, and for 30 years you get the experience and capability and knowledge and the know-how. Now, what we`ve tried to do, and I think we`ve managed to achieve, is this: Auctions are really about fun and excitement; you`ve got to create the right atmosphere. And I think we`ve managed to do that on a cold machine.
ITWeb: Would Aucor consider shifting its primary focus, if the online aspect turns out to be more successful than the real thing?
Winterstein: I believe that`s definitely the route that things are going - there`s no question about it. Having said that, I don`t think that a computer will ever replace a real live auction. I think what we`ve got is the best of both worlds. I think the way world economies are going, there`s no question about [the success of] e-commerce, and how people are starting to buy online.
ITWeb: How would you describe your short- and long-term goals?
Winterstein: Short-term, I`d like to see it taking off like wild fire. A little bit longer term is obviously that it`s got to internationalise itself. I believe that our project is right for SA, but it`s also right for the rest of the world as well. We actually haven`t targeted anywhere out of SA yet, because we believe that we have to get this one settled, and make sure it`s 100% right before embarking on the long-term strategy. But we do plan to expand internationally.
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