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white paper
August 30th, 2004
As businesses have expanded into Internet auction services, a need has
developed for a software that provides posting and fulfillment functionality.
The zdrop™ software not only provides this basic logistical support; generating
contracts, capturing product images, posting auctions, and completing backend
fulfillment, but it also provides a robust valuation estimator based on decades
of historical data for hundreds-of-thousands of products with a combined value
of over $600 million. ztradingindustries™ provides a total system solution for
Internet auction businesses with network and database administration, customer
service, and hardware maintenance. Through its zdrop™ software, the Company
delivers robust management of Internet auctions from initial data entry through
final disposition while the support services of ztradingpost™ provide complete
customer assistance throughout processing of the transaction.
overview
The zdrop™ application provides a user-friendly interface and robust
functionality for the management of Internet auctions. The design methodology
enables organizations to appraise the value of items, post a professional
Internet auction, print contracts between the business and its customers, track
the auction’s progress, generate payments, and ship the auction. zdrop™ provides
a four-phase process for administering Internet auctions. The process can be
implemented in conjunction with an existing Point-Of-Sale (POS) system or can
run as a standalone application. The location of data is transparent to the
user and does not alter the drop process.
the zdrop™ process
Phase I: Capture product information
The initial phase in the process provides a user-friendly method of capturing
information specific to the item to be auctioned. zdrop™ requests specifically
tailored information that allows the system to most accurately evaluate each
item. For example, a manufactured item can be further categorized as
electronics, firearm, musical instrument, sporting good, tool, or recording,
whereas jewelry items are broken down into their constituent components:
stones, diamonds, and metals. zdrop™ supports hundreds of categories and allows
for new categories as needed. Once an item is entered into a category, the user
is guided through a series of questions pertaining to the specific item. The
responses to the questions are then stored as metadata in the zdrop™ database,
which become the basis for the appraisal and the auction template to be posted
on the Internet. The value of manufactured goods is determined entirely by the
manufacturer and model. Once the model of an item is determined, an aged
depreciation discount and a quality discount adjusts the item’s value. The aged
depreciation discount calculates a valuation ‘deduction’ based on the age of
the item; determined by the original manufacture date, versus the current date.
The quality discount is applied to reduce the value, based on quality, as
determined by the zdrop™ software based on answers to the system-generated
questions mentioned above. To allow for flexible descriptions, a jewelry item
can have zero, one, or more of each different component (stone, diamond,
metal). For example, if the item is a diamond ring, the required components are
diamonds and metal, but not stones. Jewelry is valued as the sum of its parts:
the values for each diamond, colored stone and metal included in the piece.
Stones can be classified as Diamonds, Cubic Zirconium, Pearl, Colored Stones,
or Pearl Length. Diamonds are valued using the industry “Rapaport” sheet
values. Other stones are valued based on a database table lookup. Metal value
is determined based on the configuration of the list prices of gold, silver and
platinum. The “value per gram”, when multiplied by the metal weight, determines
the metal value. Finally, all of the parts of the jewelry item are summed
together and decremented by any quality discounts to determine a final value.
Along with the product information, this process also links customer
information with the product and initiates the drop process. The customer
information can be imported from a host system or an optional zdrop™ module can
be loaded which allows the user to capture customer information within zdrop™.
The customer information can be owned solely by a single store, or shared
across stores within the same enterprise (i.e. a collection of stores owned by
a single entity).
Phase II: Estimate value of product
Using the metadata generated during the first phase, based on the system
generated questions specifically to the item, zdrop™ generates an estimated
value for each item. The results of the estimator are directly related to the
amount of product detail that is provided by the customer. Although zdrop™ is
delivered with a robust set of rules and parameters that drive the appraisal
process, it also provides administrative functions to allow each organization
to customize the set of valuation parameters. This customization feature
provides the capability for each organization to customize the set of
parameters as well as allow each organization to tailor the results estimator
to fit its individual business needs. Once the metadata is collected, it is
input into a patent-pending algorithm that determines the item’s value. For
example, based on historical data, zdrop™ knows which item’s values are affected
by additional or missing parts. The estimate can then be broken into value
ranges by quality, such as “new” versus “good” condition. The more metadata
that is provided, the more the algorithm is utilized. At any point, when there
is no more data, the estimator produces the estimate based on the data that was
provided.
Phase III: Generate contract and post auction
Once the customer agrees to drop the item for posting, zdrop™ generates the
contract, provides the capability to scan in the signed contract, calculates
the shipping costs, supports the capture of an image of the product, and posts
the auction to the user-specified on-line auction house (default is eBay). The
user is provided with two service level plans – "Basic" and "Premium", which vary
in price. The Basic Plan requires a deposit of $4.99, allows for a 7-day auction and
starts the bidding at $1. The deposit is refunded back to the customer as a credit against the
sales commission if the item sells. The Premium Plan requires a deposit of $9.99,
allows for a 10-day auction and allows you to set an "auction reserve value" (the minimum amount you’ll accept
to sell your item). As in the Basic Plan, this deposit is refunded back to the
customer as a credit against the sales commission if the item sells. Sales
commissions vary based on the sales price of your item but are approximately
33% before eBay’s commission. zdrop™ is a certified
eBay application that utilizes web services to interact directly with eBay.
Auctions are automatically posted on eBay, with no human intervention, via
eBay’s web services Application Program Interface (API). After the auction item
number and posting time are returned through the API, zdrop™ automatically
generates and sends an email to the customer with an electronic link to the
auction. This link allows the customer to monitor the status of the auction.
Phase IV: Fulfill auction
This final phase allows the user to monitor the status of active auctions and
provides support for auctions that are closed. When the auction expires, an API
call is made by the software to eBay to determine the results, including the
winner’s information. zdrop™ automatically posts feedback to eBay if and when
the auction is paid. Additionally, zdrop™ posts an instant message to the seller
to inform them of the final result of the auction. If the item is sold, zdrop™
provides functionality to seamlessly accept the payment, calculate fees and
commissions, automatically generates a check for the customer, prints a
shipping label for the item sold and generates auction reports. An automated
interface between zdrop™ and a funds distribution system owned and maintained by
Wells Fargo was established so that all payment related tasks are performed by
Wells Fargo. This partnership with Wells Fargo provides a secure methodology to
insure that funds are accurately tabulated, all accounts are balanced, and
checks are distributed in a timely manner. If the item doesn’t sell, zdrop™
provides functionality to support the return of the item to the user or to
donate it to charity. Additionally, the fulfillment phase provides a variety of
reports and provides a series of functions to resolve unpaid winner items.
zdrop™ approach
Operations
The mark that sets zdrop™ apart from other similar systems is the emphasis that
is placed on providing the best possible value appraisal to the customer
combined with a completely integrated and fully automated solution covering all
operational aspects of a ‘drop’ transaction including listing the auction, fee
collection, fee disbursement to the numerous parties to be paid, and shipment
of the item to the buyer. To be able to provide the appraisal, a knowledgeable
customer service department provides backup to the software technology. Daily
revisions are made to the product information that drives the automated
estimator. Additionally, when products are brought in for auction that are not
in the estimator database, the customer service department researches and
analyzes the item and then adds the results of their work to the zdrop™ database
so that an estimate can be provided, not only for the current item, but also
for future estimation calculations.
Technology
The zdrop™ system models a client/server methodology. To reduce the hardware
requirements for the customer, a thin-client approach was implemented. In
client/server applications, a thin client is designed to be especially small so
that the bulk of the data processing occurs on the server and thus does not
place large memory and/or storage requirements on the client. Additionally, the
zdrop™ system minimizes the impact to the merchant of posting and fulfilling
auctions by automating many of the time intensive eBay posting and fulfilling
functions. The software is delivered on an installation CD that allows the
customer to easily install zdrop™ using a web-based terminal service
methodology. The following diagram depicts a common network scheme for the
zdrop™ system.
The zdrop™ product was developed using Borland’s Delphi environment. The
database was developed and is maintained using SQL Server 2000. The zdrop™
environment utilizes Microsoft’s Commerce Server to provide a powerful
web-based system.
The servers are owned and operated by ztradingindustries. These servers are
responsible for housing and executing the zdrop™ estimator and database
applications. The main database is maintained on the server and is replicated
based on a preset schedule. The data replication schedule is defined based on
the hardware and network capability of each enterprise. This methodology allows
clients to be utilized in a local mode with data being replicated when a
connection to the server is established. It also provides the ability to
maintain a constant connection with a higher data replication rate.
Other zdrop™ services are also offered. An interface can be created to allow
data to be seamlessly transferred between zdrop™ and a customer’s existing POS
system. The requirements for this interface will be defined and the interface
designed, developed, and tested prior to zdrop™ being placed into production at
the customer’s locations. A second option provided by ztradingindustries is a
hardware/network analysis and setup. This option is offered to businesses that
do not currently have the hardware/network capability to fully support the
zdrop™ system.
The following are the minimum and optimum hardware requirements for the zdrop™
system:
• Due to the thin-client methodology, the client workstations have only two
requirements. The workstation must be running at least Microsoft Windows 2000
with Windows XP preferred with a connection to an Internet Service Provider
(ISP) of at least 572Kbps with 1Mb preferred.
• zdrop™ users must provide a report printer as well as a digital camera for
taking images of dropped items.
zdrop™ deliverables
Client software
The client software is delivered on CD-ROM or can be downloaded from the
ztradingindustries web site. The software is installed utilizing a terminal
services methodology. Customers can install the standard version of zdrop™ or
can work with the ztradingindustries™ development team to generate interfaces
with existing POS systems, including additional customer entry and edit models,
and/or hardware setup and installation. On a periodic basis, new versions of
zdrop™ are provided to the customer. These versions contain updates to the
software for enhancements and anomaly corrections. The upgrades result from
suggestions from the user community. Customers are advised of upcoming versions
on the ztradingindustries web site or via an email announcement.
Server/Network
Each enterprise (i.e., collection of stores owned by a single entity) is
provided with a dedicated server. The server and the client workstations are on
a protected network. The network contains security and virus protection
software to provide the maximum protection possible for the customer.
Additionally, disaster protection procedures are followed on a predefined time
schedule to allow for recovery in the event of a catastrophic event. The
network allows the customer to access information pertaining to thousands of
products that are stored in the enterprise database. Data is replicated to the
local server and/or workstations on a periodic basis. The replication schedule
is dependant upon the type of Wide Area Network (WAN) access at the enterprise
as well as business needs. The use of dedicated servers provides information
integrity and insures that information “owned” by the enterprise (e.g.,
customer data) is protected from access by entities outside of the enterprise.
The ztradingindustries™ systems engineers monitor the network to insure that the
zdrop™ intranet maintains very low downtime rates.
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