There are $400 billion worth of used capital equipment to be traded. eSprocket
wants to bring the business online without bypassing the processes and
brokers that make it work. eSprocket observes that less than 5 percent
of this huge market occurs in auctions. The reason, they suggest, is that
used capital equipment items are not commodity items, as new ones might
beyond the differences between models, each item has a unique use and
repair history, and each potential buyer and seller will bring a host
of logistical issues to the table. Therefore, eSprocket's strategy for
an online marketplace is to provide a way to enable (and improve) the
kind of complex negotiations that offline buyers and sellers engage in.
technical heart of their approach is the Negotiation Table, a private
environment that a prospective buyer and seller create for the purpose
of negotiating. A Negotiation Table is like a souped-up, two-person combination
of a chat room and forum, with other enhancements. The buyer and seller
can "meet" at the table for a live discussion, or can leave messages for
each other. The discussion thread can be bookmarked and, through features
of the Negotiation Table, can be used to build a contract. Both buyer
and seller can be engaged in multiple negotiations at the same time. Negotiations
around the purchases of large, used capital items equipment typically
take from days to months.
much of the trade in capital equipment goes through the hands of professional
brokers. These brokers add a good deal of value to the flow of merchandise.
They may purchase goods for which they have no immediate buyer, a boon
for the sellers, and can also testify to product features and equipment
eSprocket not only expects brokers to be participants in its market, it
encourages them. It has a partnership with the world's largest used equipment
dealers association; this brings eSprocket a starting inventory of more
than $1 billion, with potentially as much as $10 billion in the long run.
Dealers will be given a 30-day exclusive opportunity to respond to new
will also have its own experts in each significant vertical industry it
works with, reflecting their supposition that this is a knowledge-driven
business. They also plan to offer a range of value-added services, including
financing assistance through Fleet Capital Corporation and delivery services
through Hub Group, North America's largest shipping broker.
The eSprocket marketplace will be open for business in June.
Used equipment is a business that will get a significant boost from the
Web, and eSprocket is not the only company to have an interest in it.
From a wider e-commerce point of view, there are two general observations
that can be made as a result of this announcement.
this creates interesting opportunities both for asset management software
makers and for digital marketplaces. It is reasonable to expect the development
of an integrated set of processes that carry a product from its offering
as a new piece of equipment in a marketplace through its lifetime in a
company and finally straight into a used equipment marketplace. This suggests
that at least some marketplaces and e-procurement or asset management
vendors will attempt to create their own markets for used equipment. We'd
also expect that such companies would create markets that were wholly
digital, unlike eSprocket's. If eSprocket's market analysis is on target
those folk will all be fighting for 5 percent of the pie.
we think that preserving the role of intermediaries in Web-based systems
is a concept that will spread. eSprocket is not the only company to do
this but the number is very small (unless customer service organizations
are counted). Of course many businesses can be conveniently disintermediated,
but we suspect that humans aren't extinct yet and that e-commerce will
grow faster once there are viable models for intermediated commerce on
Since eSprocket has no plans to demand exclusive listings there's nothing
to keep companies that intend to buy or sell used capital equipment from
giving eSprocket a try.