Going, Going, Gone – Online Auction Sites Catching Fire Worldwide

eBay has long been the leader in online auctions, but the venerable giant is facing rising competition in emerging economies from indigenous companies on a mission.

eBay has long been the
leader in online auctions, but the venerable giant is facing rising competition
in emerging economies from indigenous companies on a mission.

Mercado Libre

In Latin America, Argentina’s Mercado Libre (NAS: MELI) is not only
the regional e-commerce leader and a rising player in the online payments
arena. It is also one of the most visible examples of an entrepreneurial
business from an emerging economy rising to global leadership and making scads
of money for its founders and early investors. Since the company’s August, 2007
IPO at $22, the company touched a high of $70 before plummeting during the dark
days of 2009. Today it’s retesting its highs, trading in the mid-70s again as
its markets have rebounded from recession much more quickly than the U.S. or

For investors, the ship may have sailed on Mercado Libre,
but similar opportunities are popping up all around the world. South Africa’s
BidorBuy Group not only runs Africa’s largest auction site, but also,, and (employment, classified ads, e-payment
and retail e-commerce respectively). Picture Craigslist,, PayPal
and Amazon all under one roof and you get the idea of their modest ambitions.

Recently the group announced
to spread from its base in South Africa to the fast-growing markets
of Kenya, Nigeria, Seychelles, and Mauritius. In Kenya, the group’s payment
platform Payfast will likely encounter stiff competition from a host of local
upstarts including the highly-regarded M-Pesa system from Safaricom.

Black Star Line

Another player to watch is Ghana’s Black Star Line, a transaction platform for
small and medium-sized African businesses to help them reach more lucrative
global markets. BSL is the new project of one of Africa’s most successful IT
entrepreneurs, Herman
, founder of The Soft Tribe,
Africa’s largest commercial software developer and regarded
in some quarters
as the “Bill Gates of Africa.”

Chinery-Hesse sees Black Star Line as more than just a
trading platform. It’s a vehicle to increase the prosperity of Africa’s small
businesses, who will then drive larger social, political and economic changes
on the Continent.

“I’m using technology to connect [African small businesses]
to the global marketplace, by setting up an African eBay, and African PayPal,”
Chinery-Hesse told me in an interview conducted last summer. “We can take local
mom and pop shops and evolve them into global providers. That opportunity has
never existed.”


Chinery-Hesse sees the success of those small providers as
critical to the fortunes of the African IT industry, whose potential promises
much to the Continent. “Those merchants will expand with our economy. They are
not government, and they are not influenced [by the politics of foreign aid]. They
will need software. And they will behave rationally, and they will buy local.
Not because of tribalism or nationalism. They will buy local because it is
cheaper and better and better supported.”

If the big ambitions of Africa’s largest players sound too
grandiose, India’s Saffronart has a
more focused goal of dominating a niche market: the highly-lucrative and
fast-growing online art auction business. The entrepreneurial company was
founded in 2000 by Dinesh and Minal Vazirani, and grew from $126,000 in online
sales in its first year to over $30 million year-to-date in 2010.

The Vazirnis–art enthusiasts from an early age–started the
site as a way to help young Indian artists gain access to collectors and find
the right prices for their works. The company has been wildly successful in its
mission and was recently the subject of a flattering
profile in the New York Times


Auction sites were one of the first killer-apps for the
Internet in the 1990s and remain a huge factor in the growth of e-commerce as
Web access becomes ubiquitous even in the frontier regions of Africa, Latin
America and South Asia. Increasingly, big players are rising up from these
emerging markets with innovative platforms and big ideas.

As the world takes notice of their success, the bidding is
bound to become more intense–not just for the items on auction, but for the
companies themselves.


About the author

Rob Salkowitz is author of Comic-Con and the Business of Pop Culture (McGraw-Hill, 2012), Young World Rising (2010), and two other books on youth and digital media as agents of change. He is Director of Strategy at MediaPlant, LLC, a Seattle-based communications firm he co-founded in 1999