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November 1999

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The Buyer Is King: The Next Huge  E-Commerce Opportunity


Commerce, as we know it today, has taken thousands of years to evolve. Think back to high school history class when you learned of people trading items such as flints, silk, rum or spices and the traders who journeyed vast distances just to get their hands on valuable products in far-away lands. I was reminded of the evolution of commerce as I recently toured northern New England, visiting many of the companies you read about in this magazine. I had unintentionally timed the trip during the best part of fall when the multi-hued foliage is dazzling. While the colors of the season are striking, they also symbolize the end of the growing season in this part of the country — except for one crop: that of the tag sale sign. Amid the beautiful colors, I was amazed by the multitude of tag sale signs that adorned the scenic neighborhoods along the way. As we drove along, I witnessed buyers and sellers haggle, and wondered if this scene, so familiar to so many, would one day be a thing of the past as a result of the Internet, which has changed all the rules of commerce. After all, millions of dollars of venture capital are betting that we will never again buy or sell products in the same way. Ready or not, the Internet is about to change the rules of commerce, supply and demand and Economics 101 yet again!

Amazon.com was one of the first companies to change the way we purchase products, leveraging the Internet and passing on incredible savings resulting from incredible purchasing power. This was a vast improvement over brick-and-mortar stores in that it allowed us to shop at our convenience and have available a wide array of products often unavailable at the corner bookstore. This service provides a one-to-one relationship between the seller and the buyer. Amazon's strength is that it allows a limited amount of products to be purchased by a limitless number of people.

Of course, only vendors that Amazon.com selects will benefit from selling products on their site. The number of products you can purchase on Amazon.com is limited by the number of vendors with whom Amazon.com can effectively make reseller agreements. A more open approach, which allows anyone to sell products on its site, is eBay, the famous auction site. eBay allows buyers to post products and customers to bid online. The buyer with the highest bid gets the product. What a great concept! It is working so well that people are quitting their jobs to sell products on this service. The strength of eBay is that it allows a limitless number of sellers to post products to be bid on by purchasers.

Reverse Auctions
So what about the losers of the bidding process on eBay? Shouldn’t they be allowed to purchase online as well? For these people, we have the concept of the reverse auction, which refers to the concept of letting a buyer request a product they need and the seller decide whether to accept the bid. Priceline.com is a famous example of such a service that allows people to bid for hotel rooms, airline tickets and some other items as well. Airlines are already a natural for this type of service since no two people seem to pay the same price on the same flight anyway. The strength of Priceline.com is that it allows a limitless number of buyers to purchase from a fairly limited number of sellers.

What’s Next?
Although Amazon.com represented a tremendous paradigm shift in commerce, eBay extended the shift by allowing anyone to participate in the buying or selling process. eBay doesn’t have to get involved in reselling every product on the site as called for by the original Amazon.com business model. Priceline.com opened up the bidding process to the buyers, empowering them to decide how to pay for products. It is, however, limited to the vendors Priceline.com selects. The next phase of commerce will represent the power of eBay’s business model multiplied by Priceline’s business model. The future of commerce will allow an unlimited number of buyers to list their requests for goods and have them filled by an unlimited number of sellers.

The Internet is allowing for buyer-initiated commerce, something not possible in the brick-and-mortar world. You can’t just go into the mall and scream, “I want to buy a Rolex for less than $5,000.” There are some huge players betting on this new paradigm. Already more than $100 million of venture capital is flowing into a number of firms to make this happen. The companies in this infant industry are all struggling to differentiate themselves, one of which is eWanted.com, calling what it provides an “upside-down auction.”

IMA, one of the longest-standing players in the call center software market, has launched an entirely new division, buyingedge.com, that will address this new market. I entered a request on buyingedge.com to purchase a stereo receiver and an extremely detailed form was presented to me. This site seems very well thought out. The market for what I call buyer empowerment services is growing so quickly that it already seems to need categorization, as I have done below. As these services are dynamic and ever-changing, I expect them to evolve quickly, so check them out for yourself to keep up-to-date.

Quote Services. Some of the companies in this field are currently providing quote services from a variety of suppliers. These companies consist of buyingedge.com, Respond.com and Imandi.com. Since buyers are presented with numerous suppliers, it becomes possible for the buyer to always get great deals from a number of suppliers.

Demand Aggregators. The concept here is that by aggregating consumer purchases within a certain time frame, the service can drive down prices by negotiating with a set of suppliers. Think of this as a consumer co-op with no negotiating. Two major players here are Mercata.com and Accompany.com.

Upside-Down Auction. Although eWanted.com uses the term upside-down auction as a slogan to differentiate themselves from the field, I expect the concept to be widely adopted by others in this market as well. Buyers are able to post their need for any product and sellers compete to sell their wares to the buyer. Although the sellers are not predetermined, a rating system will eventually emerge on all these sites and perhaps a universal rating system will emerge among all of these services as well. By allowing limitless buyers as well as sellers, this category has enormous potential to drastically change commerce. This type of service provides the best value proposition for the buyer, presents a much more targeted contact than a cold lead for the seller and is tremendous time saver for both the buyer and the seller.

Volume Auction Seller Automation Services. The ability to offer your products on various auction sites is limited only by your capacity to interface with the buyers on every auction site that is springing up in the market. Andale.com is a service that automates the process of offering your goods and services to various auction sites. The goal, of course, is to provide maximum efficiency by eliminating as much human interaction as possible.

While researching this story, I learned that many of the companies involved in this market think that auctions will redefine commerce as we know it and wreak pricing havoc. Everyone will have to compete for the buyer’s business and this will lead to a dynamic pricing revolution. I must concur.

Perhaps the best twist on this story is IMA’s buyingedge.com, which is making the technology of reverse auctioning available to any company that wants it. IMA calls its technology demand chain management. Regardless of what you call it, you had better be aware of it because it is bound to change every business in the future. This technology allows your customers or potential customers to bid for your products online. Although this concept may seem radical to you, if you have competition in your market and you don’t embrace this concept, your competitor probably will, leaving you in a very unfortunate situation.

If you do have a unique product, this technology allows you to manage your sales process more effectively. Its strength really shines if you are struggling to make a quota and are behind. You can reduce your acceptable price at various times throughout the year to increase your sales levels or decrease inventory.

The Internet is breaking down commerce barriers at a dizzying pace, and e-commerce is rewriting purchasing and selling rules that have been set in stone for millennia. The future of commerce is that of giving the buyers of our products the best pricing possible. If you think this is ridiculous, then a competitor will emerge that doesn’t share your view. With no brick-and-mortar constraints to limit new competitors, a new paradigm has indeed begun to take form and in the future there will be two types of companies — those that collect many new sales online and those that collect dust. If you want to be in the former category, then repeat after me: “Hail to the e-customer, for the customer is king.”


Rich Tehrani
Group Publisher

Give A Man A Fish And You Feed Him For A Day; Teach A Man To Fish And You Feed Him For Life

I love this expression. As a former MIS director I had to use it often to make sure my users understood why I valued training. To truly understand and benefit from anything, we must really understand it. To fully understand any topic, it is imperative that you participate in it and get your hands dirty. It’s the difference between being a passenger and actually driving. There is no substitute for hands-on experience.

This “learn by doing” approach is why we have so many live demonstrations on the exhibit hall floor of CTI™   EXPO, December 7-11 in Las Vegas. Out of the many shows I attend in the technology field, I have never seen the amount of live demonstrations on any show floor that we provide at CTI™  EXPO. We are obsessed with giving you the best show possible.

So obsessed, in fact, that we have teamed with at least 50 different leading companies in the communications industry to provide you with objective information on every facet of communications today. From learning centers focusing on Linux CTI and Wireless CTI to the Office of the Future and a live CRM demo, there is something for everyone. Here are brief descriptions of the attractions as well as some of the participants that we’ve signed on so far. This list will no doubt change, so please check our Web site for updates and additions.

Six Learning Centers
These learning centers will focus on the most important technologies affecting communications today.

Linux CTI: This will be an awesome learning center! Open source finally comes to telephony. Participants so far include White Pine, which makes a variety of video conferencing and collaborative computing products; Quicknet, makers of the Internet Phone Jack; and Aculab, one of the DSP resource board makers that has thrown its full support behind this new and exciting platform.

Testing/Development: Hammer and Teltone will be demonstrating their testing and network simulation technology respectively while Brooktrout and Pronexus educate you on the latest in development tools.

CT Media: This is the latest open telephony standard for building open client/server communications systems and the first major standard in the industry to have the backings of all the major industry players as well as Microsoft and Intel. Participants will include Dialogic, one of the major architects of CT Media, as well as many of their partners. As of this writing, we can expect Telekol to show their latest unified messaging technology.

Next-Gen Call Centers: Expect leading-edge demos from CosmoCom, ATIO and Telephony@Work.

Wireless CTI: Inspect the latest in handhelds and palm-based computers from a wealth of participants. We expect companies such as Nokia and Ericsson to participate.

Public Network CTI: Find out what products and services will be available on the public network from companies such as Net2Phone, VocalData and Motorola Computer Group.

Two Live, Working Call Centers On The Show Floor
At our last Spring show in D.C., the live, multimedia blended call center sponsored by CellIT and its partners was a huge hit. The agents in CellIT’s call center made and received more than 11,000 calls in just two days! The most amazing thing about their solution was that it looked nicer than any call center I have visited. Expect CellIT to top its D.C. live call center debut with a working call center that further will link to a live CRM Demo sponsored by Quintus.

The latest addition to the U.S. call center market comes from a European company called Vocalcom, which will be making its U.S. debut at CTI™  EXPO in Las Vegas. To kick off its U.S. presence, Vocalcom will have a live, working call center on the show floor. Vocalcom’s technology is a PC-based call center solution, which can connect with your existing CTI-enabled call center products such as switches, or can be the switch itself. Attendees will be able to interact with the agents on the show floor. A screen will allow you to witness exactly how calls are routed to the appropriate agent. CTI™   EXPO is proud to be the host of Vocalcom’s debut and we hope you will come to welcome them to the States.

Live Enterprise CRM Demo
Quintus Corporation, a leader in CRM products and technology, has joined forces with both TMCTM and CellIT to provide attendees the ultimate CRM demonstration right on the show floor. There is simply no place else where you will be able to witness an office of the future, a live multimedia call center and a live CRM demonstration in a single location.

But That’s Not All
At the Office of the Future you can get a glimpse of a state-of-the-art office of the future. Praxon will be demonstrating its award-winning voice/data switch (an IP-based PBX). PakNetX will demonstrate its IP-telephony-based call center solution. Picazo will show its PC-PBX products in action. Microsoft will show its latest software products, GN Netcom/Spectrum Technologies will show their latest headsets and Romak (the supplier of the furniture at TMC’s headquarters) will demonstrate its latest furniture designs.

We have been working for months to ensure that you will learn exactly what you need from CTI™ EXPO. If there is anything important happening in the world of communications, chances are, you will learn about it at CTI™  EXPO. There really is something for everyone. We look forward to seeing you in Las Vegas and as always, if you register online at www.tmcnet.com/ctiexpo your registration is free, saving you $25. I hope to see you there.

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