Newsday Photo/Kathy Kmonicek
Copyright © Newsday, Inc., July 22, 1998
Rauch says he often waits until
the last second to bid on diecast cars
being auctioned over the Net.
On the Block Online
By Matthew McAllesterStaff Writer
Copyright © Newsday, Inc., July 22, 1998
WHEN NIGHT FALLS on Jericho Turnpike even the stores that open late eventually turn their lights off and give it a rest for the day. On some nights, though, the lights of Rauch's Rare Coins and Collectibles glow alone in the dark of the strip in Floral Park.
Inside the store, Roy Rauch sits at his counter. His eyeballs flitting between two computer screens and his watch, his hand reaching out for his iced tea, he waits for the magic moment: 10:59 and 58 or maybe even 59 seconds.
At 11 p.m., the auction at the diecast model car Web site closes. By that time, Rauch's bid is in.
"That's how I get the good deals," Rauch says. "I wait for the last second."
Obviously, he's not the only one. There are hundreds of model car collectors and dealers who visit the site at http://www.diecast.org/diecast98/html/sections/auction/auction.htm, Rauch says, all hoping to pick up a deal.
The diecast collectors are not the only people who have turned corners of the Internet into feverish bidding zones. Once the property of Internet prospectors hoping to turn their Web sites into the Sotheby's of the online world, auction sites have become part of the permanent landscape of the Internet. In the past couple of years, the sites have caught the attention of many.
There are the stock market investors who have decided that Internet auction companies are worth plowing money into in spite of the fact that this sector of the Net industry is not tried or tested. There are the law enforcement agencies, keeping an eye on the scam artists who have inevitably flocked to this barely structured, unregulated and constantly changing marketplace. And there are the perhaps millions of consumers who log on to their computers and watch and bid as the items they covet are going, going and then gone. Many say the process is almost addictive.
"It's an entertainment mechnanism as much as a buying one," said Nicole Vanderbilt, senior analyst in the digital commerce group at Jupiter Communications, a New York City research firm that tracks trends in the Internet industry. "Auction sites are among the highest rated sites up there. People are always bidding, checking the current price on things. The early driver for business-to-consumer auctions were PCs and consumer electronics but certainly in person-to-person auctions . . . collectibles" are driving the market, she said.
So what's the difference between business-to-consumer and person-to-person auctions? Well, a business-to-consumer site is set up by a company, usually one that deals in computer products, and auctions its wares to the bidding public. These sites also allow other companies to sell their stock to the common people, using the site as a kind of go-between.
Among the most popular sites of this kind are http://www.onsale.com and http://www.fairmarket.com, which has a business arrangement with CMPnet, the online arm of Manhasset-based computer publisher CMP. The Fairmarket site, which is based in Massachusetts, lets computer retailers offload their outdated but still useful stock to shoppers who want a deal and don't mind having a computer that is not absolutely cutting-edge.
"You're getting 200 megaherz desktops for $600," said Greg Schwartz, senior producer of CMPnet. "But it won't be the glitz of today's machine."
Fairmarket makes its money by taking a cut from the seller, Schwartz said. (That is the standard way for sites to generate revenue.) The auction site is linked to from CMPnet's http://www.techshopper.com.
"I think there's nothing more fun than seeing a great price on a product and then competing for it with five or six people and making sure you don't top that number," Schwartz said. "Whenever you go to an auction you make sure you have a maximum limit in mind. Then it gets a lot of fun to see how much below your price you can get that product for. It's much easier than walking into a downtown Manhattan computer store and trying to bargain."
The other main variety of auction site -- person-to-person -- offers itself solely as a service, not a vendor. The most popular site is perhaps eBay, http://www.ebay.com, where vast amounts of people sell vast amounts of stuff. For this type of site, people all over the country can rifle through their basements, take a quick photo of their unearthed goods and try to sell them to people all over the country. These sites are also popular among smaller retailers, mainly antique dealers and collectible shops.
There are also numerous small and specialized person-to-person auctions, like the diecast site. Martin Perry, owner of a mail order baseball memorabilia company based in Hicksville, doesn't have a computer himself, but that doesn't stop him from using the Net as a place to find deals.
"I have a friend letting me try it," he says.
Perry, who has nearly 50 major league uniforms of his own, visits a site called Coaches Corner at http://www.user1.netcarrier.com/~ccsa. Like the diecast site, this is a place that appeals mostly to the avid collector or dealer. Baseball cards are just the beginning. Available here are all sorts of memoribilia -- uniforms, balls, bats, autographed gloves. And like Rauch, Perry can't help getting excited when the bidding comes down to the last minute.
"The two final nights, after two weeks, it really gets hot and heavy," he said, noting that bids on this site must be made by telephone. They then appear on the site. "As soon as they're called a bid gets punched in. When it gets to Thursday or Friday night, I'm checking on the Net . . . I only go for good deals. I don't overpay for anything."
Oh, the deals, the deals. That's the point of online auctions. Getting stuff for a song.
Many dealers who buy and sell online are a little cagey about the glorious profits they've made. Perry won't go into the details of his bigger deals but points out that he's bought major league uniforms worth $65 for $24.
Rauch is more open about his deals on model cars.
"We bought a few models, like the 1939 Maybach Zepplin, from the Franklin Mint, off the site for$120 and sold them retail for $350, all within a few weeks," he says.
Less circumspect is the buying public, the average consumers who try out the auctions and just can't believe what the mail carrier ends up bringing to their door.
"The first time I did it I got a lot of Eddie Bauer things," says Barbara Montheard, owner of Whyldweb Productions, a Web design company in Huntington. "I got eight pieces for $15, for things that I know cost $45 apiece. A dress, skirts, blazers, jeans. All hardly used. All my size. It's pretty incredible."
In the past year, Montheard has bought numerous items on eBay: Silver rings from New Mexico, black Doc Martens boots from Texas (for an amazing $15). "It's pretty addicting," she says.
The deals and the fun have Montheard pondering a new venture. "The next thing I'm looking for is a trip to take," she says. "I'm a little nervous about that, because it's kind of a big thing. I'd rather deal with a person who deals with vacations. I don't know how it works -- if I take someone else's plane ticket or what."
Be nervous, say federal and state law enforcement agencies. In fact, they say, everyone should be extremely careful when participating in an online auction. It's terribly easy to get ripped off, they say.
"You order a product and you don't receive your products," said Betsy Broder, assistant director in the bureau of consumer protections at the Federal Trade Commission. "Either you don't receive it or it's completely different. We're not talking, 'It was blue instead of green.' We're talking, you order high-end technology and what you get is a floppy disk."
In April, the FTC obtained a temporary restraining order against a Florida online auctioneer who the FTC says auctioned nonexistent computers for as much as $1,450. The FTC and the auctioneer, Craig Lee Hare, are in settlement talks, Broder said.
Like the FTC, the New York State Attorney General's office receives numerous complaints about Internet auctions.
"We've noticed an influx of complaints from people saying they won an auction, had the highest bid and were not sent the goods they paid for," said Eric Wenger, chief of the attorney general's Internet and computer unit. "Sometimes they received goods different from their order or they didn't get anything at all. The thing is, there isn't any clear pattern of one person behind it. It's a problem involving a lot of different individuals."
Wenger declined to say if his office is conducting any investigations into online auctions.
Both he and Broder urged consumers to be very careful when bidding online, because there is little in the way of consumer law to protect them from fraud in this new buying and selling environment.
Here are some precautions they suggest:
In spite of the problems some consumers are having with online auctions, many more appear to be taking advantage of them. And that might be what is partly fueling the auction sites' popularity in another, much bigger, auction: The stock market.
With what appears to be the now normal busload of faith bestowed upon just about any Internet company, investors have been snapping up online auction stocks like Onsale and Egghead with a passion akin to Rauch's on those dark nights when the eleventh hour comes around.
Unlike Rauch, investors can't be so sure they have a deal on their hands.
