Counting Once, Twice, Thrice...

Does two plus two equal four? Not in statistics! That’s because the possible number of events that

can happen with four individuals or two sets of two individuals each, is more than four. And that’s the basic axiom for any auction web site, where the final result is a statistical outcome of the number of people bidding. “Actually liquidity, or the mass of buyers and sellers is absolutely critical at any web site conducting transactions, whether it is consumer to consumer (C2C) or business to consumer (B2C) or business to business. Buyers come if there are sellers, and there are sellers only if buyers have come,” points out Niren Shah, CFO of Baazee.com. The site has 300,000 listings, which get consumed and updated within 15-30 days by 1.4 million registered users. Transactions are worth $2 million a month, a respectable figure. 

Haggling for the right price is a natural trait displayed by the Indian consumer. The fact that a consumer is in control of the price accounts for the continuing popularity of this site. On a larger scale, eBay, a global auction site, one of the few profitable dotcoms, has exceeded analyst predictions for the last 18 consecutive quarters. It has 22.5 million registered users, sells 6 million items a day and its annual revenue exceeded $0.5 billion last year. “We started Baazee with the idea of creating a business,” points out Shah, making a distinction between the early combo of gold digging VCs and dotcomers. “Right from day one we said we would break even by Q1, 2003 and that has not changed.” Baazee’s founders are from successful brick and mortar businesses and the dotcom has a rock steady foundation of investors. Incorporated in the US, Baazee.com’s Indian subsidiary’s investors include ICICI Ventures, Star TV, US based Global Bridge, Singapore based Newbridge Association, a French Venture Company and has LN Mittal of the UK-based Ispat group, on board. 

The buyer-seller cyclic relationship is both self-sustaining and self-consuming. Increase the numbers and the benefits literally multiply. Get sloppy and let the numbers fall, the mess hits sooner than you think. It’s for this reason, Shah points out that Baazee sells more vehicles in a month than most of the Indian auto portals. And that’s why liquidity is or should be an obsession for any progressive dotcomer–a key reason for Baazee’s recent acquisition of the Indian operations of Bidorbuy.com. While Bidorbuy.com continues to operate in South Africa and the US, Baazee has acquired the 800,000 registered users in the country, out of which 40% are first time users. Going by Shah’s explanation, the benefits are not just a neat summation of the two masses, but amount to more than that. 

Technology gains



Building liquidity was only one of the objectives of the acquisition. The other was technology transfer of Bidorbuy’s globally tested and more scalable auction engine, which is now jointly owned by Baazee.com Inc and Bidorbuy.com Inc. After the November acquisition, the challenge in subsequent months has been to integrate back ends operations. Bidorbuy’s infrastructure was partly hosted in India and the US. The static content and GIF images were hosted on US servers, while the Indian servers had HTML files with text updates. Since HTML access accounts for 90% of a web site’s network traffic, routing to the local content was optimized by using an Indian data center. But all that has changed–Bidorbuy has since moved its India related content to Baazee’s servers collocated at NetMagic, a Mumbai based data center. Part of the challenge was to migrate Bidorbuy’s user base to Baazee. Since both sites have star ratings to indicate the credibility of sellers, (some sellers are common to both sites), the history of transactions of each registered user had to be merged to consolidate ratings. The easy part was to redirect registered users from Bidorbuy.com to Baazee.com, while maintaining users’ IDs and providing alternatives wherever necessary. Since the business logic powering both sites was similar, the Bidorbuy user does not encounter a significant difference using

Baazee. 

But Baazee was really looking at replacing its auction engine with the rugged Bidorbuy one. Clarifies, John Clegg, CTO of Bidorbuy, now working for Baazee, “The key is to build the server farm to allow scalability in transactions and users.” Prior to the acquisition, Bidorbuy’s auction engine and user database were running on Sun Solaris servers. But after the merger, Clegg is moving both Baazee’s and Bidorbuy’s back ends to Hewlett Packard 8-way servers running Linux operating systems. Since server farms using vendor Unix or Windows are expensive, web sites with large transaction loads like Amazon and eBay use Linux based farms. Clegg, who has been using Linux for the last eight years, points out other advantages of this operating system. They are quick to set up, easy to configure, can be managed remotely, have no overheads of costly service and most importantly aren’t prone to virus attacks. The disadvantage, Windows certified programmers are in abundance compared to certified Linux guys.

The auction engine is essentially a state-less architecture sitting on an application server. It uses Oracle 8i Enterprise to manage the concurrency of users bidding for the same item at the same time. Identification takes place by a cookie in the user’s system and the application and database servers track session details. Shah also points out that an auction-based site is a complicated one, because each time a user bids for an item, the entire site has to be updated. Other than some more specific functionality, Clegg points out the idea is to keep the entire process as simple as possible and reduce the number of points of failure. And Oracle 8i’s concurrency and transaction management delivers the rest. The Baazee and Bidorbuy sites now collocated at Netmagic’s datacenter are also scalable in terms of network traffic. The service level agreement with NetMagic allows bandwidth to their site to scale in burst’s depending on user overloads above a specified average.

Looking ahead



Bidorbuy uses the same auction engine to power its B2B site in South Africa. And that means Baazee can also metamorphose into a B2B site whenever it wants. Considering the depth of experience that is has acquired in B2C and C2C transactions and the fact that most B2B portals are in abysmal shape, Baazee could become another success story in this segment as well. In the past, Baazee has simulated B2B auctions
by setting up select user access for companies wanting to sell off excess stocks to its distributors. But Shah says his hands are full. And the B2B expansion plans are on hold for now. Maybe it’s just a matter of time before the Baazee itch brings another auction site

under its fold. But this time it may lie outside the  consumer space. 

Arun Shankar  In Mumbai The author has been executive editor of Dataquest.