Saturday, September 18, 1999
Internet auction newcomer a giant
Challenge causes eBay stock slide
BY CLIFF EDWARDS
The Associated Press
SAN JOSE, Calif. — Microsoft, Dell Computer and almost 100 other companies are banding together to challenge eBay Inc.'s dominance of the Internet auction industry by pooling their listings and bids.
The new alliance also includes the Internet gateway services Lycos and Excite at Home. Its Web sites will share millions of auction listings so that any item put up for bid on one site will appear on them all.
The combined customer reach of the FairMarketPlace alliance could top 50 million a month, dwarfing the 6 million who use industry pioneer eBay.
EBay, however, would still have greater scale with about 3.5 million individual items for sale, which compares to just 70,000 at the combined FairMarketPlace sites.
Even so, eBay's stock tumbled 7 percent following Friday's announcement, falling $10.75 a share to $141 in active trading on the Nasdaq Stock Market.
FairMarketPlace, which begins doing business Monday, will enable its partners to simultaneously auction all the merchandise listed for sale on their individual Web sites.
For example, a notebook computer put up for bid on Lycos' auction site would immediately appear as a listing on Microsoft's MSN.com auction site and Ticketmaster Online-CitySearch Inc.'s site.
Meanwhile, a computer maker like Dell will have more outlets to sell closeout or surplus machines, although like other merchants who sell only their own products online, the Texas-based company will not sell other items on its site.
But eBay representatives questioned whether competitors will be able to duplicate the following it has gathered. Yahoo! and Amazon.com, which aren't part of the FairMarket Place alliance, both recently launched and are rapidly expanding their auction sites, but have garnered only a fraction of eBay's daily sales transactions.
“That's our hidden weapon: We have a very involved, very energetic user community,” eBay spokesman Kevin Pursglove said. “Those are real positive, very real formidable obstacles for anybody to try to scale.”
Other FairMarketPlace participants include CompUSA, online retailer Cyberian Outpost, Fashionmall.com, CBS Sportsline's sporting goods store, Viacom Inc.'s VH1 music network and ZDNet.
The alliance is the brainchild of FairMarket Inc., a Woburn, Mass., firm that sets up and runs other companies' auction sites for a monthly fee and a share of each sale.
FairMarket chief executive Scott Randall said the new venture could revolutionize the booming electronic auction industry, which is expected to top the $53 billion mark by 2002.
“Rather than make a user go to the auction site, we're bringing the auctions to the users,” said Mr. Randall, who founded FairMarket two years ago. “And the advantage for the company is that they immediately get thousands of listings they might not otherwise have, providing a critical mass of buyers and sellers on their native sites.”
FairMarketPlace's long-term growth potential is enormous because many of the companies in the network are among the most visited Web sites, said Harry Wolhandler, an industry analyst with ActivMedia Research.
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