Auctionwire - Case Study

Auctionwire was founded by Josh Gold and David Romeo in early 2004 and hoped to launch the company and service as soon as May 2004. They hoped to take advantage of the growing number of online auctions such as ebay in order to open up this sales channel to both corporations and charities. (Mark, K., & Comisarow, M.B., 2006) This was clearly a very ambitious project for two young men and so it is necessary to give consideration to their business plan and the software specification which they believe is required for the business.

When considering Auctionwire’s business plan one of the first points which catches one’s attention is that Gold and Romeo planned to launch the company in May 2004, leaving themselves with only 4 months to complete all the ground work and choose a suitable software package. This is an extremely challenging task as they would have to advertise the company to ensure that enough people were aware of their existence and this would be difficult to do until they had their systems fully operational as it is highly likely that any potential clients would want to see evidence to validate the company’s promises. It is therefore possible that the business plan has not been given sufficient consideration as Gold and Romeo appear too eager to launch rather than spending time nurturing the company.

Furthermore, Auctionwire plan on managing the complete auction process, including listing items, shipping items to buyers and collecting payment. (Mark, K., & Comisarow, M.B., 2006) This is substantially more than the current dominant player (ebay) does for clients as the sellers ship the items themselves and payment is done through PayPal. (Mark, K., & Comisarow, M.B., 2006) Although this can be viewed as providing Auctionwire with a competitive edge it is also possible that sellers are not too concerned with such additional services and so may not be willing to pay the greater commission charged by Auctionwire for the privilege. This is therefore possibly a further negative aspect of the business plan because Auctionwire is looking to provide a more comprehensive service than ebay despite the huge success of ebay and the fact that this will be a new company who needs to keep things simple in the beginning in order to minimise software requirements and start up costs.

Carrying on from the above, I believe that although the software specification which Auctionwire detail will be necessary in order for them to achieve their objectives, it may actually be too complex for a start up business. Auctionwire, in my opinion, are trying to do too much too soon and should consider simplifying their business plan and therefore software specification until they are more established and have the necessary skills in place to manage such a development.

One of the options available to Auctionwire is to purchase off-the-shelf software from outside companies but this has problems because Auctionwire need their systems to be integrated and are looking for several advanced features which may not be available. (Mark, K., & Comisarow, M.B., 2006) Furthermore, the software packages which were available were originally designed for ‘Powersellers’ who are individuals which should not be in the same league as Auctionwire. It is likely that they would require much more sophisticated software and so off-the-shelf solutions may not be appropriate. However, building software from scratch is not without its problems and so the off-the-shelf solutions must be given some consideration.

The first potential supplier is SuperAuction and it displays similarities to Auctionwire in that it also looks to provide access to a number of auction websites. (Mark, K., & Comisarow, M.B., 2006) This is a major plus for this package as SuperAuction already have experience of providing this level of service and so it should be able to cope with Auctionwire’s demands. A further advantage of this package is that an offline solution is available which should minimise any downtime and this was one of the main requirements as $1000 of sales are made every second on ebay. (Mark, K., & Comisarow, M.B., 2006) This means that any downtime could have disastrous consequences in terms of lost sales and commission and the loss of future custom. Additionally, this package comes in substantially lower than the $15000 budget but this may be due to its poor quality as Gold and Romeo would still be required to add extra programming and this would still not achieve full functionality.

Canauction was another contender but being a brand new software provider may prove to be its downfall in terms of winning the contract from Auctionwire as it may not be able to provide evidence of its reliability. Furthermore, many of the bugs within the system affect major parts of the software which makes this problem even more of an issue. Coupled with the inflexibility of the package it would appear that Canauction would not be a suitable option.

Another possibility existed in the form of Blackthorne Pro but this has the same problem as Canauction due to the fact that it is so new that it is still in the testing phase. The fact that Auctionwire wish to go live in only 4 months makes this option extremely risky as it is unlikely that sufficient testing will have been carried out by this time to guarantee its reliability and sufficiency. This package also has no offline solution meaning that any downtime will be exaggerated and the software is also not yet ready to be used in conjunction with websites other than ebay.

Clear-Bid would appear to be the worst of the off-the-shelf solutions because downtime will be exaggerated by its poor customer service and it is the most expensive of the outside solutions. It would therefore appear that SuperAuction is the only possibility in terms of off-the-shelf solutions.

Auctionwire could of course develop their own software and this would allow them to tailor it to suit their needs and would give themselves a degree of control over the package which they were using. This would be particularly useful if the system ever crashed as they would be the ones to fix it. However, this can be a very expensive route to take as they cannot even provide an estimated cost and it is expected to take 200 hours just to develop the system, meaning that the system may not be ready for the May 2004 launch.

In conclusion, I would recommend that Auctionwire purchase software from SuperAuction as it has experience in this area and can be implemented in time for the launch. A tailor made solution would be useful in terms of flexibility and control over the features provided but if the company wishes to take this path it must be willing to push back its May 2004 launch as it is unlikely that any custom built solution would be ready in time.