After two years of covering high-flying Internet entrepreneurs, Financial Times columnist Tim Jackson decided he wanted to be one. So in 1997, the 33-year-old London native drained his life savings of several hundred thousand dollars and took the plunge. His bet: that he would have a hit in Quixell, a pan-European online-auction company where users bid in their own currency on everything from TVs to island vacations.
It looks like his gamble could pay off. Not that Quixell, now known as QXL Ltd., is a revenue monster. Its sales for the quarter ending June 30 were just $1.9 million. And profits remain more a wish than a reality: It reported an operating loss of $3.2 million in the June quarter alone. Instead, QXL is expected to make a splash when the startup goes public this fall, amassing a market valuation of up to $580 million, say analysts. That compares with Freeserve PLC, one of the only other Internet pure plays in Britain, which now has a market cap of $2.9 billion.
What's so special about QXL? Unlike many consumer online-auction sites, QXL has tapped into the power of different types of auctions. Consumers can buy and sell online from one another, but they also have the option of bidding on products and services being sold by businesses, such as Icelandair flights. QXL also holds auctions for consumers of new and refurbished inventory from such major manufacturers as Sony Corp. And QXL is the first Net auctioneer to provide multi-language sites and automatic currency and tax conversions. When someone in France makes a bid on something being sold in Germany, the price is converted into French francs or Euros on the spot.
QXL's service has certainly snagged Netizens. When 29-year-old Londoner Mark S. Blackmore wanted to buy a TV, he tried QXL. "It was quite exciting," says Blackmore, who estimates he got his 25-inch TV with manufacturer's warranty for about 50% off the retail price.
QXL is banking on such testimonials, now that rivals are invading Europe. U.S. leader eBay has sites in Britain and Germany and plans to offer French and Scandinavian versions by yearend. And U.S.-based Yahoo! Inc. is expanding beyond the auctions on its British, German, and French portals to the rest of its European portals this year. "We already have a base of users to draw into our auction sites--a big competitive advantage," says Fabiola Arredondo, European managing director of Yahoo.
QXL is betting big brand names won't be enough to ensure European success for the American entrants. Satisfying European customers requires local knowledge, something QXL has in abundance, says QXL Chief Executive Jim Rose. And he's getting more of it every day: In August, QXL bought two British online-auction sites. And it plans to add new features such as shipping and escrow, where a middleman helps ensure that the exchange of money and goods goes smoothly.
Like never before, QXL has its work cut out for it. Indeed, the days of growing without competition are going, going, gone.