Taking on eBay - February 2, 2005

Taking on eBay

A Grants Pass online auction that had been discontinued, has resurfaced to face its largest Internet rival

By GREG STILES
Mail Tribune

A lot has happened in the five years since OnlineAuction.com was launched. Dot-coms crashed, terror became a vivid reality and OnlineAuction.com has come, gone and returned.

Chris Fain of Grants Pass relishes the resurrection of OnlineAuction.com every bit as much as when it first took flight in January 2000.

To some, the task might be more daunting than when the company first lined up against eBay. But while eBay has become synonymous with Internet buying and selling, there’s growing sentiment that it’s grown too big for its online britches. Complaints are reaching a crescendo as eBay prepares to bump up its fees Feb. 18.

Fain’s answer is similar to what it was five years ago: Offer more convenience and lower prices.

"eBay continues to shoot itself in the foot," Fain says. "It’s the pioneer and biggest player, but it continues doing things to make customers unhappy. We want to slip in behind them and show customers that our company in little ol’ Grants Pass, Oregon, can make them happy.

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"We really feel we can be competitive in the market. It doesn’t cost us any more if someone sells for $5 than if it goes for $25. The way eBay’s fees are, it’s not fair to the seller and that’s why everybody is going crazy with the e-mails."

eBay’s fees adjust based on the price of the product sold, while OnlineAuction.com charges a flat $8 per month.

That’s why, without a great deal of national fanfare, the Grants Pass company has already registered more than 3,000 sellers and listed more than 8,000 items in the past three weeks.

"eBay thinks it has no competition and they’re forcing quite a few of their clients out of (the site’s) business; it doesn’t pay for them to sell on eBay," says OnlineAuction.com Vice President Bernie Zieminski.

eBay has grown quickly and boldly, with customer sales hitting $7.1 billion in 2004.

"It was put together by a couple of computer nerds," Zieminski says. "Ours was put together by auctioneers."

eBay controls roughly two-thirds of the online auction traffic. But Fain figures there are plenty of customers itching for his services.

"We were in a big dot-com bubble back when we started," Fain says. "Everything was great when we were putting the auction online. There was always money available and everyone wanted a piece of it."

Then the bubble burst.

When venture capital dried up, Fain carried the company’s $30,000 to $40,000 monthly deficit himself for a while. He stopped the bleeding by merging with another Grants Pass firm — CD Micro LLC — that was selling software titles.

Fain became chairman of the board of the new CD Micro Inc., while Vince Webb controlled the company’s day to day affairs.

One of the first things Webb did in mid-2001 was unplug OnlineAuction.com. Although it bothered Fain to see his pet project shelved, what he discovered a few months later was far more disconcerting.

Webb’s CD Micro was giving away bogus copies of Symantec’s antivirus software for a $24.95 shipping charge. Fain checked with the California company to see if CD Micro was licensed to sell Symantec products — it wasn’t.

The chairman blew the whistle, exposed the matter at a corporate board meeting and alerted state and federal authorities. Lawsuits flew, but the one that stuck was from Symantec.

U.S. District Court in Oregon found CD Micro liable for infringements associated with selling counterfeit Symantec software in July of 2003 and held Webb liable for copyright infringement. Then in October of 2003 the same court awarded the software maker $10 million.

CD Micro and Webb went bankrupt.

Last June, bankruptcy trustee Ron Sticka sold off CD Micro’s assets in Eugene. But OnlineAuction.com and its software code, developed at a cost of $1.2 million, wasn’t listed among the assets.

Fain and Zieminski paid all of $777 for the works.

"After all the programming and work that went into it, I know what’s there," Fain says. "The URL alone is worth more than a million dollars by itself. I’ve had e-mail from people begging me to sell; the market is defined by those two words — online auction."

The company began in Merlin, but now is in a 15,000-square-foot historic building in downtown Grants Pass —120 SW J St. There are a half-dozen employees and Fain says there will be another dozen within 30 days and about 50 by year’s end. The original incarnation employed 20 prior to the merger and 65 at its height.

Save for a few minor server tweaks and upgrades to span the interim period, the system was ready to go.

Fain has no plans to expand the Web site’s scope.

"We’re going to focus on creating the finest online auction out there," Fain says. "There’s no purpose in cluttering it with a search engine or news page. It’s OK to have those things, but I don’t want to distract from what we are."

Reach reporter Greg Stiles at 776-4463 or e-mail business@mailtribune.com

Auction types

Classic — Seller can list item with or without entering a minimum bid amount or an equal or higher reserve price. The item is sold to the high bidder at auction’s end.

Absolute Auction — Seller lists item without entering a minimum bid amount or reserve price. This means the item is absolutely going to sell to the high bidder at end of auction.

Merchants Auction — Seller lists two or more identical items in one auction, entering a minimum bid amount for each. The items are sold to one or more successful bidders at the end of the auction. The bidder must meet or exceed the seller’s minimum bid, also entering the desired quantity. The high bidder reserves the desired quantity, and remaining quantities are passed down in order of bid amounts. Successful bidders pay the same final price as determined by the low successful bidder.

Sealed Bid Auction — Seller may list item with or without entering a reserve price. Bidder places a sealed bid, the amount not displayed. The item is sold to the high bidder, meeting or exceeding the seller’s optional reserve price. Sealed bid auctions display the current number of bids received. The winning sealed bid amount is displayed at end of auction.

Penny Over Auction — Often used for buying or selling single or multiple items. Bid of one penny over seller’s minimum wins auction. Remaining item quantity is displayed, reducing with each bid. Seller lists from 1 to 25 identical items in one auction, entering a minimum bid amount for each.