Andale Picks Up Where eBay Leaves Off
July 19, 2000
By Jennifer Godwin

SILICON VALLEY. 3:45 PM EDT – Ever try to sell your late Aunt Julia's huge collection of Hummel figurines on eBay? It's more work than you'd think.

A successful auction calls for multiple photos of the item, an elaborate description with full disclosure of cracks and chips. You'll want to keep a log of communications with possible sellers, and once the auction closes you'll have to prepare e-mail invoices, sort out payment and haul all that stuff to the shipper.

As the online auction industry grows, auction service providers like Andale, Honesty.com and AuctionWatch have sprung up to plug the gaps in customer service left by major auction sites such as eBay, Yahoo! and Amazon. These venues offer a high-traffic trading site for sellers, but generally leave users to their own devices for advertising, marketing and accounting. So sellers use the services and software of, say, Andale to save time by completing detailed automated listing forms, tweaking HTML-formatted listings and uploading images.

Heralding some consolidation in the industry, which provides such services as visitor tallies, image hosting, bulk item loading, invoicing, standardized listings and other customer service functions, Mountain View, Calif.-based Andale announced plans on July 17 to merge Northbrook, Ill.-based startup Honesty.com's operations with its own. The new company will have a total customer base of nearly 600,000 online auction sellers and will operate under the Andale name.

"Increasingly the average seller is not a consumer who finds something in the attic," says Mike May, an e-commerce analyst at Jupiter Communications in New York. "It's a small-business person who is shifting their small business online. They are professionals doing this for a living. Bulk listers and so on are essential for making the best use of their time. It's a missed opportunity that eBay didn't develop these tools on their own."

Andale Chief Executive Munjal Shah characterizes the company's relationship with auction venues such as eBay as symbiotic rather than parasitic, suggesting that if Andale's tools help "automate selling and if we can help the largest sellers sell more, that only helps eBay."

EBay spokesman Kevin Pursglove diplomatically maintains that "our basic thrust is to help users trade. There are a number of auction services out there that are very helpful to eBay users, and it's up to them to determine which ones to use."

Andale and Honesty.com are best known for providing sellers with templates for attractively formatted listings and with disk space to host images of sale items. EBay does not currently host images on its own site but only accepts links to images hosted offsite.

In other words, since those pictures from 15 different angles of the 1904 bronze figurine up for auction consume a lot of server space, image hosting itself has become something of a cottage industry.

Honesty.com, which hosts a suite of message boards devoted to discussing online auctions, will be the "free sample" for new online sellers. Honesty.com's services will continue to be available and are available for free.

"Honesty.com is focused on the merchants who are just starting out and need simple services like counting, one-step listers, image hosting services and so on," according to Shah. As sellers become more sophisticated and more involved in online commerce, Andale hopes to upgrade them to Andale's more elaborate for-fee tracking and inventory management.

Andale's revenue stream comes from a 3% cut of transactions. Merchants who use their products sell roughly $1.7 billion in merchandise annually.

Shah hopes the company will be profitable by the end of the second quarter of 2001 and would likely attempt an IPO soon thereafter.

Both Andale and Honesty.com were established in March 1999. The combined company will have 150 employees with 120 from Andale and 30 from Honesty. Andale has received $63 million in venture capital from Accel Partners; Mohr, Davidow Ventures and others, closing their most recent round in March. Honesty.com has $2 million in venture capital from angel investors.

"We evolved from the needs of the user community," says Scott Samuel, founder of Honesty.com and now chief community officer at Andale. "Users came to us because they knew we answered e-mail on a personal level and that they were getting to the boss." Answering nearly all of the suggestion e-mails himself, Samuel often responded by putting coders to work on requested services such as image hosting and one-step listing applications.

The combined company will be headquartered in Mountain View, Calif. Both companies' Web sites will be kept up and running. Financial terms of the agreement were not disclosed.