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Online Auctions - For Better Or For Worse?
Ed Brindley comments on the controversial practice of online auctions and what pallet companies can do to fight back.

By Dr. Ed Brindley
Date Posted: 4/1/2003

Three years ago, online auctions were a hot topic for the pallet industry. As a new purchasing toy, corporate buyers rushed to join the e-revolution only to find it created a whole new set of problems. Many companies were burned by suppliers that never delivered on their promises. The price may have been right but what about the quality?

Likewise, suppliers complained that the online auctions created a false marketplace. Companies bid prices without having any capability of delivering on the bid due to poor prequalifying procedures. Many saw these auctions as online carpetbaggers preying on the market.

The media buzz surrounding online auctions has died down as reality has set in for corporate America. It appears the fad aspect of online auctions has come and gone. Some companies have identified online auctions as a valuable part of their purchasing strategies. Others have abandoned the process for good ole personal contact. Now that the waves have settled; it is appropriate to measure the impact of the online auction storm.

Have online auctions been a boom for your business? Probably not. Have they cost you either business or profits? It is likely that they have. Have they done nothing but squeeze suppliers into accepting lower margins and delivering a more inferior product than the customer had been receiving? The unfortunate answer to both of these questions maybe "yes."

If you have had experiences with online pallet auctions, both bad and good, you can easily share them with the industry. Dr. Bob Emiliani of the Center for Lean Business Management (CLBM) at Rensselaer Polytechnic Institute recently contacted me about his research on industrial online auctions. Like many of my pallet friends, Bob has found that the promised results have often failed to materialize. But as a legitimate researcher, Bob will let his data do the talking. The CLBM has conducted a study of auctions in the aerospace industry and is reaching out to expand its knowledge base to other industries.

Currently, the CLBM is conducting a survey of the pallet industry to gauge industry reaction to online pallet auctions. What I think is not what counts. What auctions have really meant to our industry does count. As an independent research organization, the CLBM has the ear of major corporations. What it reports likely will impact the way your customers view online auctions. Your input will make a valuable impact.

Good information requires good data input. Now is your chance to help Bob present a realistic picture of how online auctions impact business. Bob and his team have received many surveys in response to appeals in the Pallet Profile Weekly, our market report. But more useable surveys are needed to provide meaningful data on the topic. Thus, I am opening the opportunity to the entire pallet industry. All survey data will be kept confidential. General survey results will be made available to all participants, and an industry summary analysis will appear in our magazine.

Visit the Center's web site at www.theclbm.com/pallet_survey.html to complete a survey or obtain more information. You will also find some information related to the auction related research that has been done in the aerospace industry.

It is my pleasure to be able to partner with our new friends at Rensselaer Polytechnic Institute. Because of my own teaching background, it has always been my desire to use our contacts within the industry to participate in research that might benefit our readers.

It is common for people to complain about things that have a negative impact on them while refusing to do anything about it. Now is your chance to act. Now is your chance for your voice to be heard.

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