Online auctions are hot right now. The Internet AuctionList, a directory of auction-related Web sites, currently lists 128 online auctions selling everything from collectibles to computer hardware. The list is growing every day, said AuctionList developer John Jackley.

These days among consumers Jackley is seeing a trend toward real estate and auto auctions. For businesses, procurement looks like the next frontier for auctions on the 'net, particularly for sales of overstocked goods.

Take a look at the momentum. Leading the pack of auction sites is OnSale, a Silicon Valley company that grossed $30 million in 1996 auctioning refurbished and close-out computer equipment and consumer electronics.

A new competitor to OnSale is the Internet Shopping Network (ISN). ISNs First Auction, launched in June, moved more than $100,000 of merchandise off the block in its first three days online.

Will the Internet's global reach, multiparty capability, distributed processing and computational speed inspire businesses to auction their surplus online instead of contracting with intermediaries?

If American Airlines is any indication, the answer is "no." Last year, the airline tried auctioning 11 round-trip U.S. tickets and other travel products online, but quit after a few rounds. "We found auctions are somewhat cumbersome to administer . . . and that they don't lend themselves to selling a lot of our product," American spokesman Tim Smith said.

Lufthansa Airlines recently had a very different experience with an auction of fares outbound from Germany. More than 100,000 people tried to access the company's server in Frankfurt as soon as its first ticket auction opened. "It was one of the greatest Internet fevers ever seen in Germany," said Susana Clementin, Lufthansa's manager of new media technologies. Lufthansa's bidders downloaded Java applets, which shifted the information load off-site while allowing users to interact with the auction 20 seconds behind real time.

Despite Lufthansa's "feverish" success, analysts doubt many businesses will rush to conduct their own auctions, even on overstocked products, given auctions' intrinsic demand for unique products that are hard to price and large flows of merchandise and bidders.

Jeffrey Mann, an analyst at Meta Group, Inc. in Stamford, Conn., dismissed the airline auctions as "something interesting to do on the Internet for a few months. I imagine that's what American learned and what Lufthansa will find out."

"To the extent that an auction is well-defined and has a consistent flow, it can get built into a market," said Stan Dolberg, an analyst at Forrester Research, Inc. "If it's one company occasionally clearing out its store-room, that could not possibly have much of an impact on the market. That's more like the 'help wanteds.' An intermediary site that is defined around an industry, or a segment of an industry, is much more likely to have the ability to supply the buyers."

Two examples of this are FairMarket, Inc. and FastParts, Inc. Both have set their sights on excess semiconductors and computer products. In both cases, buyers benefit because they get standard information on lot descriptions, asking prices and current offers, hopefully resulting in fairer prices. Sellers are able to get their stock online more quickly, thus ensuring that products don't go out of date.

FastParts claims its members are seeing an average recovery of five to 10 times more than through conventional liquidation channels.

Online auctions on the business-to-business procurement side are another significant trend to watch, Mann said. "I think you're going to see communities of shared interest going to electronic procurement systems," he said. "As procurement systems get better, [they will] move into auction kinds of setups."

Dolberg pointed to industries such as gas and electricity, where imperfections exist in the supply and demand pattern. "The auction will be a vital part of how the goods actually flow through the pipeline and the grids."

An example is FERC/Oasis. As part of the federal governments deregulation of the power industry, private utilities are now required to make excess transmission capability available through a so-called Open Access Same Time Information System (Oasis), available online to qualified wholesale buyers.

"There's no auction in the sense of auctioning something to the highest bidder," said Bill Booth, chief of market oversight and information in the Federal Energy Regulatory Commission's Office of Electrical Power. "It's really a process whereby utilities may want to more fully utilize their capacity, and they discount off of that." When the number of people interested in using the capacity outnumbers the available capacity, the utility will charge its maximum rate, "so it's kind of a strange auction," he said. "Basically what the system does allow is price negotiation."