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Minicase 1
FreeMarkets ( is a leader in creating B2B
online auctions for buyers of industrial parts, raw materials,
commodities, and services around the globe. The company
has created auctions for goods and services in hundreds of
industrial product categories. FreeMarkets auctions more
than $5 billion worth of purchase orders a year and saves
buyers an estimated 2 to 25 percent of total expenses
(administrative and items).
FreeMarkets operates two types of marketplaces. First,
the company helps customers purchase goods and services
through its B2B global marketplace where reverse auctions
usually take place. Second, FreeMarkets helps companies
improve their asset-recovery results by getting timely market prices for surplus assets through the FreeMarkets AssetExchange, employing a forward auction process, as well as
other selling models.
FreeMarkets Onsite Auctions include (1) asset disposal
recovery and (2) sourcing (e-procurement) functions.
These functions provide the following:
● Asset disposal analysis. Market makers work with

sellers to determine the best strategy to meet assetrecovery goals.
● Detailed sales offering. The company collects and consolidates asset information into a printed or online
sales offering for buyers.

● Targeted market outreach. FreeMarkets conducts tar-

geted advertising to a global database of 500,000 buyers and suppliers.
● Event coordination. The company prepares the site,
provides qualified personnel, and enforces auction
● Sales implementation. FreeMarkets summarizes auction results and assists in closing sales.

Asset-Recovery Success Stories
FreeMarkets helped the following companies make asset
New Line Cinema ( had unique memorabilia
that they had stored for years. In 2001 they decided to auction these via Freemarket’s auction marketplace (AssetExchange). The release of a movie sequel titled Austin Powers:
The Spy Who Shagged Me provided an opportunity for New
Line to experiment with the asset-recovery auction Items
from the original production were put off for auction; these
items included a 1965 Corvette driven by Felicity Shagwell
(sold in the auction for $121,000) and one of Austin’s suits
(sold for $7,500). In addition to freeing storage space and
generating income, the auction provided publicity for the
sequel through the newspaper and television coverage is
received. An additional benefit was that the auction was

How can such a site help a person who is making a purchasing ? 5. What data they collect? Why? Explore the site. Then prepare a list of advantages derived by the users and advantages to and find their services. Why is the site so successful? Could you start a competing one? Why or why not? 7. Access and configure a pair of shoes.) Describe your experience with such a site. Enter alibaba. view the payment diagram. 10. Enter authorizenet. Summarize your experiences. go to “desktops” and configure a system. Identify the site capabilities. (You might try f. Enter checkfree. for example. Several sites help you do it. Comment on the relationships. 3. Enter nike.d. and finally go to Lands’ End and configure some clothing for yourself. Prepare a list of services available on this Enter Find out about local and find echeck. 6. Enter dell. Enter bizrate. Prepare a report. Write a report. and convert $ and complete one of the questionnaires that entitles you to participate in their rewards and receive information. 11. Register to “my cart” (no obligation). Compare this process to the one described in Figure 5. e. What calculators are used there? What are the advantages of this process as compared to buying a computer in a physical store? What are the disadvantages? 8. Look at the site’s private trading room. com and and configure a car. Are there any disadvantages? To whom? 4. then go to jaguar. . Try to find a unique gift on the Internet for a Compile travel tips. Prepare a report.000 to that currency with an online currency converter.

tion created a dedicated community of users.linked to the company’s online store. but customizing the applications). . Before using auc.ment process. If you were unable to afford the 1965 Corvette. These are typical goals of business purchasers. which were not very successful. electronics. It also helped the company determine the auction strategies (such as starting-bid price and auc. FreeMarkets has also helped companies conduct reverse auctions either from their own sites (with necessary expertise provided by FreeMarkets) or from FreeMarkets’ site. 3. STE saved 35 percent on the cost of printed circuit board assemblies. and since then New Line Cinema has conducted similar auctions on a regular basis.tion running length). The site became an immediate success. What does the company mean by that? Sources: Compiled from freemarkets. and toconsolidate existing suppliers. quality suppliers for reliability and support. to identify a new global supply base for their multi-sourcing strategy.bished power-protection products. The auction was a great it took a test item and prepared a RFQ. see success stories (site accessed December 15. such as board parts. The company is considering selling regular products there. you instead could have purchased a new T-shirt or a poster of the new movie. which were facilitated by DSS mod. These were difficult to sell in the regular distribution channels. Questions for Minicase 1 1. What makes FreeMarket different from eBay? Why do you think FreeMarkets concentrates on asset recovery and on e-procurement? Why is the RFQ mechanism popular? In 2003 the company shifted attention to global supply management. land systems and marine. Another success story for FreeMarkets’ auctions was American Power Conversion 2003). Freemarkets deployed the auc.tegrated global engineering group specializing in the fields of aerospace. to find new. Then it designed an improved process that replicated the traditional negotiations with suppliers. a large in.nally. Fi. (apcc.step tendering process that starts with the RFQ and ends with supplier management (which includes suppliers veri.tion site (using its standard technology.fication and training). FreeMarkets uses a five. 4. FreeMarkets started by training STE’s corporate buyers and other staff. had the following goals when it decided to use eprocurement (sourcing) with the help of FreeMarkets: to minimize the cost of products they need to buy. 2. Singapore Technologies Engineering (STE). but only mer. E-Procurement (Sourcing) Success Story Besides providing companies with successful efforts in asset recovery. to ensure maximized efficiency in the procure.chandise for which there would be no conflict with the company regular distributors. which needed a channel for end-of-life (old models) and refur. Finally. the company used special liquidation sales. 2002 and March 28. the auc. placing it for bid in the FreeMarkets Web site.tions.