Million-Dollar Ideas

11.Online Auctions

Hulking sites like eBay, and the new Microsoft-backed FairMarketPlace conglomerate might seem to block the online auction sun from shining on smaller start-up sites. But there are still ways to grab some of those rays. College friends Troy Smith (l.) and Jeff Dull, both 24, took a different approach when they launched AuctionWatchers, a site that compiles computer-related auctions from other sites in up-to-date searchable listings.

"Our focus was 'Don't try to do the entire market; do a section of it very well,' " Smith says. "We try to break down our items into intelligent groupings, so if you want to look for something, you can easily filter out irrelevant items." AuctionWatchers launched in 1998 from Smith's Chicago home, with internal start-up funds of just under $5,000. While AuctionWatchers took a build-it-yourself approach to the Web site, many companies offer auction-building services and software to help you if you're not so savvy.

Forrester Research calculates the online auction market will grow to more than $19 billion by 2003. Another research firm, Jupiter Communications, predicts the number of business-to-consumer auction users alone will grow from 1998's 1.2 million to more than 6.5 million by 2002. How to profit from those users? AuctionWatchers generates revenues through advertising and by charging listing fees to participating auction sites.

Smith still sees room for entrepreneurs in the online auction world, if they don't attempt to be all things to all people. "There will definitely be more consolidation as smaller auctions with a loyal following look attractive to larger sites [as potential acquisitions]," he acknowledges, adding, "I see specialty auctions, like an auction only in Depression glass, being a viable business." With up to half-a-million hits each month, AuctionWatchers has certainly found its niche.

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This article was originally published in the January 2000 print edition of Entrepreneur with the headline: Million-Dollar Ideas.

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