Web Extra: The Great Dot Com Firesale

Dovebid, a decades-old auction house that helps businesses liquidate assets, has found new life in the dot com fallout. In this
Q&A , Vice President of Marketing and strategy Daphne Li discusses how Dovebid is optimizing the sale of high tech assets in a new online auction model.

Q: Dovebid must be sitting pretty in the current dot com crash-and-burn cycle.

A: You have to remember that Dovebid has been around for 63 years. It was started by our CEO's grandfather. While we're taking advantage of this situation it's not the basis of our business plan. We don't just profit from bad times. During good times companies merge and they upgrade equipment. The equipment we focus on has high technical obsolescence but long user life. Computers, like used cars, can have a second life with a second owner.

Q: But in terms of the dot coms, have you seen an increase in business?

A: Yes. We used to see a couple of dot com failures every month. Now it's more like 10 to 40 a month. We have so many dot com clients, in fact, that we are starting to aggregate them into dot com exchanges, where we bring together the assets of 10 or 12 different companies for a single auction. They're not all failed dot coms. Some of them are just trying to improve their management of assets. The exchanges work well for the dot coms because it allows them to leverage their marketing dollars. And we create a bigger pool of assets, which generates more interest and attracts more buyers.

Q: How do you attract dot com business?

A: We attract the dot coms in several ways. One is old-fashioned marketing. We have a direct sales force that brings in the sellers. In terms of buyers, because we've been around so long we have a proprietary database of hundreds of thousands of qualified buyers. So we can look at auction and bid history. We can segment our buyers by geography, by the type of assets they're interested in, and so on.

Q: What kind of assets to dot coms have to sell?

A: When dot coms go down the most common assets we see are computer equipment such as servers and networking equipment as well as telecom equipment and office furniture. Dovebid is in 19 different vertical markets including many different high tech verticals so we can handle very targeted assets like semi-conductor fabrication equipment and printed circuit board fabrication equipment. We do big switches, too. Pacific Gateway is in bankruptcy and we're selling a number of switches and other equipment for them.

Q: Which dot coms have you done?

A: We did petstore.com, productopia.com and alladvantage.com. We just did the homegrocer.com assets, which were surplused when it was acquired by Webvan. We got distribution equipment like conveyor belts.

Q: Do you do online auctions?

A: Yes. With webcast auctions we go live to the bidding floor with a live auctioneer, which gives it the excitement and competitive bidding of a traditional auction. When we broadcast auctions live over the Internet people can bid from the comfort of their own offices. In the old days you had to fly to the auction, view the merchandise, stay overnight and attend the auction the next day. It could take most of a week.

The webcast side of the business is really growing. When we did petstore.com--one of our first dot coms--we had 100 people bidding live in the room and 200 to 300 bidding live on the Web. At our last one, which was a failed ASP, there were 300 people in the room and over 1000 on the Web. You can see the growth in both the number of dot coms we're helping with online auctions and in the participation rate. The 1000 registrants represented 17 different countries including Armenia, Australia, Costa Rica, Egypt, UK, Indonesia, the Netherlands, and Slovenia.

The international participation makes a lot of sense because manufacturing is moving out of the U.S. to places like the Dominican Republic. Foreign manufacturers are buying the equipment they need from U.S. manufacturers. That's the sort of thing that makes the Internet so important.