Tiny blips on the road to riches

Although costs in Silicon Valley may be higher than expected, e-commerce is likely to continue to burgeon, writes Louise Kehoe
Published: September 12 2000 20:31GMT | Last Updated: September 13 2000 06:11GMT

Until recently, eBay, the online auction behemoth, gave independent businesses built on the back of the growth of its online auctions about as much respect as ivy clinging to a tree trunk.

But now eBay has changed its tune, at least as far as Andale, a pioneer in the field of online auction-management services, is concerned. eBay has struck an exclusive partnership to feature Andale's "counter", which tracks the number of potential buyers who visit an auction on the eBay website.

Already, more than 30 per cent of eBay sellers use this Andale technology, but now each Andale counter on an eBay auction will feature links to additional Andale services such as programs that sellers can use to keep track of payments. Financial terms of the deal were not revealed, but it appears that Andale will pay a small sum for the opportunity to push its services to eBay customers. For its part, eBay gets a ready-made counter service that it might otherwise have had to spend millions of dollars to develop and implement.

This partnership reflects a new trend. As pressures to improve profitability intensify, "focus" is the watchword. Rather than expanding the scope of their operations, companies are reaching agreements with third parties. It is not yet clear whether this trend will limit the scale of internet ventures, or whether such partnerships will lead to acquisitions. But in the meantime, the profit motives of even the biggest internet companies can be expected to create opportunities for specialists.