IF BUSINESS-TO-BUSINESS commerce over the Internet is the wave of the future - and analysts project such transactions will increase a thousandfold by 2001 - then Scott Randall and his company, FairMarket (www.fairmarket.com), are riding the crest of that wave. Incorporated in February 1997, FairMarket is an online auction house that allows companies with surplus computers and computer components to sell to the highest bidder. "We make the distribution chain more efficient by acting as a centralized market for such trans-actions," explains Randall.

Given that computers and their components often become obsolete in as little as six months, a firm can seldom predict accurately how much of its inventory will actually sell. A company like Compaq, for example, may suddenly find itself with three thousand extra modems on hand. "That's where we come in," says Randall. "They call up our sales department and we agree to move them." In an arrangement with Federal Express, the modems are shipped to a warehouse in Memphis, Tennessee, and inspected. FairMarket then posts a description of the merchandise online for the next scheduled auction.

Most buyers, says Randall, are resellers who usually purchase goods from distributors. "A retail chain store with several outlets might bid on these items, for example," he says.

Auctions are held daily and are done in real time. "You go to the site, see what other people are offering, and put in your bid," explains Randall. "We're doing with computer components what the New York Stock Exchange does with stocks." Winning bidders forward payment to FairMarket. The firm then ships the merchandise to the buyer and sends payment to the seller, retaining a 9 percent commission.

Randall is not new to the world of high tech. After business school and a stint at Procter & Gamble, he became president of Yahoo! Marketplace, a joint venture between Yahoo! and Visa. As head of that Santa Clara, California, firm, he conceived its strategy for an Internet guide to consumer shopping. His success inspired him to return to Boston and strike out on his own. He launched FairMarket from his Beacon Hill apartment in 1997.

"When we set up our server, I had an engineer in my kitchen doing the programming, and we had a network cable running all over the floor. It was a total bootstrap operation," Randall recalls with a laugh. He and his current staff of ten are now housed inside a renovated leather factory in Boston's North End.

Now boasting two thousand subscribers, FairMarket held its first auction last December, selling $100,000 worth of computer merchandise. Eventually, Randall hopes to auction other products, such as electronics and pharmaceuticals. "There are lots of industries with imbalances between supply and demand, and FairMarket can help them turn that liability into a financial asset," he says.

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