Good morning, Gary, looking into CVST now. Trouble for EBAY today: Big Internet Sites Joining Auction Network
By SAUL HANSELL
early 100 Internet sites, including three of the
biggest -- Microsoft's MSN, Excite@Home and
Lycos -- have agreed to share their auction listings so
that an item put up for sale on one site will be available
for bidding on all other sites.
The move, which will be announced
Friday, is an attempt to catch up
with the huge popularity of Ebay, the
dominant online auction site, which
has more than three million items for
sale at any one time, ranging from
stuffed bears to minivans.
The new auction network was
established by Fairmarket, a small
company in Woburn, Mass.
Fairmarket initially created a
service that let companies set up
their own auctions, mainly as a way to sell
discontinued items and products that have been
returned. Its customers include CompUSA, Newline
Cinema and CBS Sportsline's sporting goods shop.
These companies had used the site to sell their own
merchandise, but they have now agreed to have all of
their products listed on general-purpose auction sites as
well.
America Online, the largest Internet service, does not
run its own auctions. Ebay agreed to pay $75 million
over four years to promote its auctions to America
Online users.
Yahoo, the second-biggest Internet service, has
competed aggressively with Ebay by offering free
auctions. Ebay charges a fee to list an item and then
collecets a percentage of the purchase price. Since
Ebay experienced a series of computer blackouts in
recent months, Yahoo's popularity has surged. It now
lists 700,000 items for sale.
But the other popular Internet services have found it
very difficult to make headway into Ebay's turf.
Excite@Home, for example, has fewer than 20,000
items for sale on its free auction site -- a major
incentive in its decision to merge those listings into the
new broader network.
"In auctions, scale is really valuable," said David Tse,
a senior vice president at Excite. "If you put an item up
for sale, you want the most potential bidders. If you are
a buyer, you want to see the most products in the
category you are interested in."
The move represents the first entry into auctions by
Microsoft, which has been rushing to make sure that its
MSN Internet service matches all the features offered
by competitors.
In recent weeks, Microsoft has introduced an instant
message software to match one of the most popular
features of America Online, and a
name-your-own-price travel service, modeled after the
well-known offering of Priceline.com.
While it is unclear how successful Microsoft will be in
any of these areas, its entry into any market inevitably
causes investors to raise concerns about the leaders of
that market. In the first two days after Microsoft's travel
service was announced, for example. Priceline's stock
dropped nearly 20 percent. Ebay, which has a stock
market value of $19 billion, did not respond to requests
for comment on the new auction network.
The third-biggest auction site is Amazon.com, the
biggest online retailer.
Although the company declines to say how many items
it has for sale, Auctionwatch, a site that tracks auctions,
estimates that Amazon lists between 100,000 and
200,000 items.
In July, Lycos was the first big site to use the
Fairmarket auction system, letting its users post items
for sale and bid on items from all participating
auctions. While Lycos had considered starting its own
auctions or selling links to Ebay, as America Online
has done, it decided that it "would take a long time to
build, and going with a joint venture would give us
more traction," said Jeffrey S. Bennett, the director of
business development at Lycos.
Fairmarket has also signed
up Ticketmaster-Citysearch,
which runs local auctions;
Boston.com, a unit of The
New York Times Company,
and Earthlink, the big
Internet service provider. In
all, these sites will
contribute about 70,000
listings from the start to the
Fairmarket network.
Each of the member sites will present the auctions in its
own format and graphic design, so that shoppers will
not know that the listings come from multiple sites. And
each site will integrate the auctions with its other
services. For example, Lycos users can have the
auctions they are bidding on presented on their My
Lycos start page alongside their chosen stock quotes
and sports scores.
At first, Lycos and Excite plan to offer auctions without
any fees. Microsoft will not charge a listing fee but will
impose a transaction fee of between 1.5 and to 5
percent, depending on the purchase price.
Deanna Sanford, the lead product manager for MSN,
said that Microsoft would be charging a transaction fee,
even though others were not, because it expected such
fees would become standard.
Indeed, for Fairmarket to profit from the system, sellers
must eventually charge such fees. Fairmarket is
charging the sites about 1 percent of completed
auctions. In addition, the site whose user buys an item
also receives 1 percent of the purchase price from the
site that posted the auction. But Fairmarket said it was
waiving these fees for sites that offer free auctions.
Bennett of Lycos said that even if competition
prevented the company from imposing transaction fees,
it could still profit by selling advertising on the auction
pages.
"We are in the business of aggregating an audience," he
said.
Analysts said it was not clear how much the Fairmarket
venture could dent Ebay's market dominance.
"For MSN and the others, it's a better starting point than
if they did this on their own," said Fiona Swerdlow, an
analyst with Jupiter Communications. "But Ebay is
clearly out in front."
But Bennett said that Lycos could still build a big
business as newcomers come onto the Web with no
loyalty to Ebay.
"Hats off to Ebay, which has really benefited from its
first-mover advantage," he said. "But the game is early,
and there are a lot more folks to come in and be
attracted to the auction space." |
