Auction Aggregators Get eBay Boost
By Kevin Murphy

Section: Internet
Issue: 3997
Date: September 13, 2000

eBay Inc is to allow auction management ASP start-up Andale Inc access to its army of users, the companies will announce today, in a landmark move in the development of the online auctions secondary market.

The auction giant's official acceptance of one of the many sites that have a parasitic/symbiotic relationship with it, comes in the midst of decisive times for the nascent market. Many Andale competitors look ripe for acquisition, while one, Bidder's Edge Inc, is feeling the full force of an eBay lawsuit.

Under the terms of today's deal, eBay will offer a hit-counter service exclusively from Andale to its sellers. Users will be able to incorporate the counter HTML in their listings, so that Andale can track how many people have looked at a particular auction. The firm will then provide the seller with online reports on each listing's performance.

The counter service is barely revolutionary – a million and one other sites, both auction-related and otherwise offer such services – but Andale would have us believe that the deal is merely a portent of things to come.

"eBay has finally endorsed third party auction management software," said Andale CEO Munjal Shah, adding that a deeper integration with eBay would be possible. Whether eBay would ditch its own fairly basic management system in favor of Andale's premium service is debatable, but the role Andale and its rivals play in boosting eBay's number of listings and ergo revenue is not, so further deals would seem reasonable.

For now, the deal is barely a ringing endorsement of Andale's core auction management system, but Shah insists the free counter service (which was actually bought in with the acquisition of Honesty.com two months ago) is a great way to up-sell its paid-for services. In fact, Shah expects its penetration of eBay users to double as a result of the deal.

According to Andale's internal metrics, about 31% of all eBay listings originate from Andale's 600,000 users, and Shah expects this to shortly be more like 50%. This is a bold statement, given that Shah's counterpart at AuctionWatch.com Inc, Rodrigo Sales, puts Andale's penetration at more like 2% compared to its own 12%. As usual in these situations, metrics based on rival companies' own research should perhaps be taken with a pinch of salt. AuctionWatch's statistics are based on its spidering of ebay.com, while Andale's are extrapolated from how many listings users of at least one of its services put on ebay.com and eBay's reported total listings.

So while Andale seems to be eBay's partner of choice, at least at the moment, what of its competitors? AuctionWatch's Sales does not rule out future partnerships with eBay, but also acknowledges that the company could end up as a target of eBay's legal wrath should the online giant win its electronic trespassing case against Bidder's Edge. Like BE, AuctionWatch offers listings search and aggregation services, which work by frequently spidering dozens of auction sites, on top of its sell-side management tools. While BE is definitely persona non grata as far as eBay is concerned, AuctionWatch is tolerated to an extent because of the traffic and revenue its sell-side systems drive to the site. Should BE's appeal against a ruling that its spiders "trespass" on ebay.com fail, "they may come after us," Sales admitted.

Despite that, AuctionWatch could make an attractive acquisition target for a portal or search engine firm looking to diversify. Earlier this year, BE was almost bought by auction-in-a-box developer OpenSite Technologies Inc, before OpenSite's acquisition by Siebel Systems Inc scuppered the deal. Likewise, AuctionRover.com Inc was snapped up by search firm GoTo.com Inc as the company added product and auction search to its portfolio of branded and white-label web search systems.

Portal software firms like AltaVista Co and Inktomi Corp have in the last year or so added product search to their white-label web search engines, and it is conceivable that either of these companies would like to follow GoTo's lead and add auctions to complete the triple whammy.

AltaVista would be the most likely buyer of the two as, unlike Inktomi, it operates a popular portal as well as selling unbranded search services, and AuctionWatch has a thriving portal community. AuctionWatch also provides the auctions section of altavista.com.

Sales admits that the firm has attracted interest from potential buyers. "We've heard from various sources that a number or parties are looking for this kind of functionality," Sales told ComputerWire. At the same time, he's playing his cards close to his chest. "At this stage of the game, we're focusing on remaining an independent player," he added.

Perhaps the outcome of the BE/eBay case will be the turning point for the industry. The last hearing in the trial at the California District Court saw eBay's motion to dismiss BE's antitrust countersuit thrown out. The company is now waiting for a date for the hearing of its appeal against the ban on its spidering of eBay. Rumor has it the trial is being held up by the amount of court time being thrown at the Napster Inc case.