EBay Gets Some Competition
From European Rival QXL
By THOMAS E. WEBER
LONDON -- From the busy neighborhood of Hammersmith, 5,000 miles from Silicon Valley, eBay doesn't look quite so invincible. Here at its headquarters, and throughout much of Europe, a three-year-old Internet auction company called QXL.com claims the home-field advantage.
Despite an often-awkward Web site and a name nowhere near as famous as eBay's, QXL (qxl.com) is well on its way to dominating the Net auction market in Europe. But rather than fielding one Web site for the entire continent, QXL has moved methodically from nation to nation, launching new sites in some and buying up established players in others.
For U.S. companies hoping to expand their Internet horizons around the world -- as well as for European startups wondering how to fend off competition from established Silicon Valley dot-coms -- QXL's approach offers a valuable roadmap. Thinking global, in QXL's view, means thinking local.
Yet QXL's success is by no means assured. EBay, which launched a dedicated site for the United Kingdom early in 1999, is coming on strong. And QXL's share price has fluctuated wildly. As QXL pursues its ambition, the auction war in Europe promises to provide a case study on how to exploit the Web world-wide.
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"We're operating in 12 different languages," says Jim Rose, QXL's 39-year-old CEO. "That means 12 different currencies, too. It's not that there's a difference between online auctions here and in the U.S. The issue is how you execute."
FOR STARTERS, THAT MEANS a fair bit of hand-holding to reassure Europeans who have never placed a Web bid before. EBay's auctions of Beanie Babies and baseball cards are old hat to U.S. Net surfers, but Europe lags behind in bringing consumers online. So in addition to merchandise for sale by fellow members, QXL lets users bid on goods from merchants. The logic: Give users who are wary of buying from strangers a chance to deal with an established retailer.
U.S. sites, most notably Onsale.com, have also offered such business-to-consumer auctions. But the sales never caught on the way eBay's consumer-to-consumer auctions did. QXL executives say they don't care about the long-term prospects of business-to-consumer auctions. They just want to make sure the millions of European Web users who have never used an auction feel comfortable.
QXL started out in 1997 as Quixell ("quick sell"), a site launched by Tim Jackson, a former columnist at the Financial Times. At the time, U.S. sites like eBay and Onsale had already demonstrated how the Internet could bring the auction format, usually used only for high-priced items like art and antiques, to a mass market. But the market in the U.K. and throughout Europe was wide open.
Now, including sites the company is in the process of buying QXL's reach extends to Germany, France, Italy, the Netherlands, Norway, Denmark, Spain, Poland, Sweden and Finland, including sites the company is in the process of buying. When QXL got big, Mr. Jackson stepped aside and the company now boasts a management team from across Europe. But it is led by two Americans. Mr. Rose, the CEO, came to the U.K. to work for Dun & Bradstreet and was recruited by QXL. The chairman, Jonathan Bulkeley, ran barnesandnoble.com.
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Stanislas Laurent, a 31-year-old Frenchman who serves as QXL's senior vice president for sales and marketing, jokes about the fact that Europe's home-grown auction site is run by Yankees. "That's sad, isn't it?" he says with a laugh. But, he adds, it reflects the fact that the European Web industry grew up later. "Two years ago, the Internet was still of very marginal interest for most senior executives in Europe," he says.
MR. LAURENT SPEARHEADS QXL's European expansion efforts, and he proudly shows off the company's sites. Though the QXL logo looks identical on each, the merchandise featured on the sites' front pages varies substantially. For instance, a merchant auction on QXL's German site features a vacation package to Majorca, a popular destination for German travelers. "You would never find that on the list for a U.K. promotion," Mr. Laurent explains. "In the U.K. it would be Madrid, or maybe St. Lucia."
To make sure its sites cater to their local audiences, each gets an office and a staff that customizes the fare and oversee local marketing efforts. QXL didn't apply that approach in Germany. When it tried to launch a site there by remote control from the U.K., the effort failed, and in May it decided to buy German online powerhouse Ricardo.de for $1 billion.
If each site needs so much tailoring, is there really an advantage to expanding across Europe? Yes, QXL executives say, especially when developing technology. QXL wants a single system that can be easily customized for each new country. "One of our top priorities now is increasing control for the local teams," Mr. Laurent says. "I doubt that would be on the top of the technology wish list for most U.S. companies."
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Users say QXL still has work to do in the technology department. "QXL is painfully slow and antiquated compared with eBay," says Heather Gardner, a 42-year-old bank clerk from Whitstable, North Canterbury who sells antiques and collectibles online. But, she adds, her merchandise sells far better on QXL than eBay's U.K. site. "For some reason I get the sales there," she says.
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