Salvage to me always brings images from the Jim Croce hit "Leroy Brown ...meaner than a junkyard dog". So, when I sat next to Jim Reilly on a flight recently and he said he was in the salvage business the conversation almost ended. Then he told me he ran a B2B site. And I figured it was near death like most marketplaces. But when he told me they held the record for the largest single biggest auctioned on-line item (over $ 25 m for 4 turbines) - bigger then anything ebay has ever sold, I started to show some more interest.
Jim is COO of a Houston based company called SalvageSale. They work with insurance companies, risk and asset managers. He has been spending considerable time in Florida recently with hurricane affected asset business owners.
2 stories he told were fascinating. One was about frozen shrimp which was rejected by a large retail chain because the batch had gone over its stringent temperature specifications. But only marginally so. In the past, the supplier would have sold it to a local salvage shop for may be 5% of sale price. But with the reach of an electronic marketplace - both in thousands of potential buyers around the world and "re-furbish" service providers - the merchandise was checked and certified free of e coli and other flaws, re-packaged and sold for almost 40c on the dollar.
The other was around an expensive server damaged in transit. Instead of going through the reverse logistics of sending it back to manufacturer, local "re-furbishers" re-certified the box and re-packaged it. While the original warranty was void, the asset sold for a lot more than it would have - not to mention the reverse shipping and insurance costs were avoided. Again recovery was many times what it would have been a few years ago.
His site is filled with other case studies similar to this. What he was describing was the emergence of a "good enough" marketplace - where bargain hunters, but not real bottom fishers, can now get access to less than perfect assets. His site has stringent rules on deposits in to escrow accounts and dispute resolution - controls to satisfy wiring $ 25 million to someone you only know from the Internet.
The quality of the assets and the trust factor are bringing more professional buyers and sellers in to the salvage market. Leroy Brown would not begin to understand the word "dis-intermediation" - but he has to behave and pay a fairer price to win in this marketplace.
Of firemen and enterprise bloggers
In my 2006 predictions I wrote:
"Much as I love Google, it cannot process BOMs for the average manufacturing company. Much as my daughter loves her iPod, it will not process insurance claims. Whoever does whatever with AOL will not improve supply chain logistics at UPS.
As we did in the last Internet Bubble, we risk making the Web and consumer technologies the center of the technology world. It’s the Gates/Plattner scenario again I wrote about earlier."
I communicated this premise today in an email exchange with Gabe Rivera of memeorandum as I saw a few other bloggers complain that certain topics like web 2.0 and certain vendors like Google dominate the listings there. I asked him how he could expand coverage since "enterprise spend is 10x the consumer tech spend and the CIO is interested in telemetry, biometrics, predictive analytics as much as web 2.0"
Gabe responded:
"Thanks, and I like where you're going, but show me the links! I'll explain...Can you pick three headlines from today about the topics you mentioned that have been linked by 5 or more people? (Use technorati or whatever as need.) Or how about linked by just 3 bloggers?"
I have emailed a bunch of bloggers who write about enterprise stuff - to write more about enterprise stuff and to link to each other so Gabe can get the results he needs to meet his filters. This post is meant to encourage others I did not email to blog about enterprise topics and vendors - could be SaaS, BPO, SOA, VoIP - whatever the CIO would be interested in.
About the title of this post: One of the people I emailed was Dennis Howlett. He does his best work at 5 am in France. He promptly wrote this post The self-selecting sausage game.
Funny, I thought only firemen practiced that. It was part of their back up plan in case the water ran dry.
January 26, 2006 in Industry Commentary | Permalink | Comments (5) | TrackBack (1)