Andale, Honesty.com announce merger
Arthur Peter Schram
Monday, July 17, 2000

Online auction management services providers Andale and Honesty.com today announced a merger. The merged company will enable roughly 30% of all online auction transactions, or an estimated 1.7 billion annually (equivalent to the number of transactions on Amazon), Andale executives said.

Both companies are less than a year old. Honesty.com is based in Chicago and Andale, co-founded by Munjal Shah, is based in Mountain View, CA.

The merger will provide, in the words of Andale CEO Munjal Shah, "a seamless path for merchants." According to Shah, the two partner companies now offer a package of auction services that will permit merchants to purchase services "a la carte" as their businesses grow.

Honesty.com provides auction counters, image hosting services, as well as a forum for online auction users called "Online Traders Web Alliance (OTWA)." Andale also saw in Honesty.com the ability to scale. Says Shah, with the excitement of a CEO who knows he's onto a good thing, "11,000 people a week sign up on Honesty." The two companies will now boast 600,000 sellers. The merger will clearly "accelerate profitability and revenue."

The merger is good news for auction giant E-Bay, whose stock has gone up sharply in recent days as a result of excellent analyst ratings. The combined Andale/Honesty machine will, according to Shah, accelerate the number of items that go on sale on E-Bay. The services provided by Andale/Honesty will also allow customers to get products faster, and pay more easily.

Yet E-Bay has long had a reputation as a strictly consumer-to-consumer company-a concept that seems to limit the value of an auction services provider directed principally towards professional vendors. "On E-Bay, 4% of users do 80% of the sales. It's really a business-to-consumer channel," explained Shah.

E-Bay has spawned an entire set of "power sellers" who make online auctioning their primary business. In the not-too-distant future, when business-to-business markets become liquid and join the online auctioning game, this will provide tremendous growth for the merged company, Shah said.

There is already evidence that big business has discovered the merits of online auctioning. Avcom, the biggest reseller of Sun Microsystems products, has already used Andale to sell $100 million in Sun hardware over E-Bay. The mission of the company remains, in Shah's words, "providing all services to all merchants, in all channels."