Purchasing controls equipment on the Internet

BUYERS’ insatiable appetite for bargains and convenience has fueled the growth of Internet shopping, leading to online shopping experiences that rival traditional retail venues. Online auctions have sprouted among this Internet shopping frenzy to connect buyers and sellers worldwide with products sold to the highest bidder. 

Now, more individuals and companies are turning to online auctions to buy or sell industrial controls equipment. Why? For the same reasons people shop for traditional consumer goods.

At one of several major websites, a few dollars allows sellers to place a listing with exposure to viewers that literally spans the globe? Now, consider the alternative costs of placing a classified advertisement in all of the world’s major newspapers. The result of online listings is that sellers can quickly relieve inventory by unloading equipment that would otherwise be difficult to sell. Even more importantly, buyers can reap substantial discounts of 90% or more off list prices for new equipment. 

In times of reduced capital spending and cost reductions, companies are looking to maximize scarce capital dollars. “Companies need to be innovative and aggressively look for cost-effective solutions to sourcing materials,” says Peter Moretti, industrial supplies purchasing manager at our company, Innophos Inc., a specialty phosphates producer in Cranbury, N.J. “In today’s competitive market, companies are becoming more flexible in sourcing options to take advantage of benefits that electronic marketplaces allow, while maintaining quality controls.”

Purchasing new or used equipment from one of the many surplus companies is nothing new. These firms often advertise in the classified sections of magazines, or attract potential buyers through search engines on the Internet. They maintain large inventories, often guarantee the items they sell, and provide a respectable cost savings.

Online Auction Model
Online auctions, however, are a little less structured than the surplus markets. Typical sellers include individuals or companies, either inside or outside the controls industry, which acquire equipment from many sources. These may include inventory reductions, project surpluses, cancelled or abandoned installations, or bankruptcy sales. Many sellers simply have no familiarity with their products or their potential value. These items often are listed with a low starting price and no reserve. Then, they’re sold to the highest bidder at a price based solely on supply and demand. 

Listings for nearly any controls, instrumentation, or test equipment imaginable can appear at anytime during the listing period, which is usually a week or less. Next, it’s up to prospective buyers to find these online listings using keywords that match the item’s description. Depending on the popularity or the need for an item during its listing period, there may be little or no interest, which ultimately affects its selling price. Industrial controls items often are sold at a fraction of list price because they aren’t typical consumer goods that would attract scores of bidders. Also, many companies that might actually need these items still haven’t adopted a procurement policy for using online auctions. This usually leaves a relatively small number of bidders to compete for an item at any given time. Figure 1 below shows a sampling of some potential savings.

FIGURE 1: SAMPLE OF SAVINGS