Going once going twice

By CARL GIBEILY BEIRUT

One of the biggest web crazes of the last couple of years has been person-to-person auctions. More people than ever are flocking to eBay, Yahoo! and dozens of other auction sites and are turning that junk in their attics into cold hard cash (or exchanging it for new junk). Allowing customers to sell to one another is, at least in theory, a path to easy money. That's the beauty of being a middleman, and that's why the eBay model has being duplicated widely around the globe.

In practice, though, the equation is far from straightforward. "Arab startups read up on the theory and believed there would be an online fervor that they could cash in on," says Degaulle Azar, the deputy general manager and Internet analyst with Bond Communications. "With hindsight, they've come to the cold realization that they were quite wrong."

Hoping to emulate eBay's success, Lebanon, for instance, had two online auctioneers: Mazadi, part of E-commerce's family of companies, and el-Mazad. Both were looking for a piece of the auction market. Except that - and here lies the flaw in their calculations - the Lebanese e-commerce market is not booming and Lebanese surfers alone cannot sustain a Lebanese auctioneer.

Mazadi, launched last year, is all but dead with product lists that are down to an embarrassing cipher in every category. "We've had to abandon in the face of the stiff competition from el-Mazad," concedes Mazadi's general manager, Walid Hanna. "We just didn't have the advertising budget to make it a winner." The irony is that Mazadi sold its auction software at - you might have guessed - the auction giant eBay.

El-Mazad adopted the auction format several months after Mazadi, coming online in May 2000 with 18 categories that ranged from books to consumer electronics to toys. "I want el-Mazad to be the best place to sell anything," says Walid Tamari, el-Mazad's general manager. "The marketplace is what we focus on, the exchange between buyers and sellers; most others focus on being a shop or a collection of shops."

Both that optimism and an advertising campaign that included radio and billboard plugs has helped to attract surfers. The auctioneer has some 4,500 registered users, up from the 2,300 who rushed to the site at launch, but still a trifle when compared with the 10 million users who regularly consult eBay. And el-Mazad is still having problems generating enough revenue from its middleman fees to be called a success.

And other than internal organization, any purely Lebanese site will also have to face stiff regional competition that is trying to get in on the auction game, like MazadMaktoob.com and Kunoozy.com, a subsidiary of AtArabia.com Inc.

On target. Where el-Mazad's efforts have been national, both MazadMaktoob and Kunoozy target a wider Arab community by creating country-specific vertical exchanges and by bringing together multiple buyers and sellers either in consumer-to-consumer, B2C or B2B relationships in the Middle East.

Users in the region can buy and sell their items in various categories that are broken down by individual countries in the Middle East region - Kunoozy's country-specific auction sites include the UAE, Saudi Arabia, Bahrain, Kuwait, Egypt and Lebanon; MazadMaktoob adds Jordan, Syria and the North African countries to Kunoozy's list.

And unlike el-Mazad, both have gone for the global strategy by creating fully bilingual, English/Arabic platforms, thus - so the theory goes - opening themselves up to millions of consumers for both the Arab and Arabophile markets.

But for the time being at least, el-Mazad has still got the edge in terms of the number of products being auctioned - always an indication of online popularity. Kunoozy is so far the smallest of the three sites with a dozen categories, compared to MazadMaktoob's 15 and el-Mazad's 23. It remains to be seen how long el-Mazad will be able to hold onto its slim lead.

So what's going wrong? Is the Middle East market too thin on the ground to feed local auction houses? Partly, says Azar, but more damning is a general dissatisfaction that leads to a lack of any real intent to use auction sites. "Online auction sales have been touted as one of the biggest merchandising trends in e-commerce today," he says. "Yet unless site managers study their customer satisfaction, auction sites could be 'going, going, gone' sooner than they believe."

The top two complaints from auction users are high minimum bids and low product selection. At its peak, Mazadi only had 65 products in 10 categories; el-Mazad's lineup of roughly 1,000 items at any given time in 23 categories, though considerably better, does little to remedy the difficulty in locating desired products. Other complaints from consumers include poor to non-existent product description and graphics.

What should auction sites do to increase their user base? Improving product selection and making it easier to navigate the auction experience is essential, believes Azar, as is spending some money on the site to inform and attract consumers. "Of course, trustworthiness is also an issue," says Azar. "Especially for paranoid e-commerce shoppers like the average Arab surfer."

The sticky factor. Dotcoms all across the world also dream of adding that crucial element of "stickiness" to their website. eBay is not only the 13th most popular site on the web, according to US-based Forrester Research, but its users tend to visit the site more often and stay longer than they do on other e-commerce sites. "Local auction houses also need to evolve into a hybrid form of portal," says Azar. "Without deadening the senses with useless information, they should try to look at ways to aggregate eyeballs - one relatively straightforward technique, for instance, is to post a review next to the product being auctioned."

In the right circumstances, and with a balanced marketing mix, auction sites have proved that they can come into their own and see their listings grow. By the end of 2000, eBay averaged nearly 3 million daily auction listings, while Yahoo!, which rushed to add auctions to its services, had more than 1 million. And even e-tailing giant Amazon has had some sense knocked into it and has become the third-leading auction site, and a primary alternative destination for eBayers. But until Middle East auctioneers are able to generate enough interest in their sites, their e-ventures will always look more like insubstantial baubles than profitable bazaars.