Some of the Internet's biggest guns took aim at eBay Inc. today by forming an alliance that unites the online auctions at Microsoft, Excite, Lycos, and other top Web sites.
Fair Market Inc., which provides private-label auction services to corporations, will operate a central database that contains bids and offers from buyers and sellers at all the participating Web sites. That means, for example, that a seller who posts an item on Lycos will also be able to entertain bids from people using the auction sites of Excite and Microsoft's MSN as well as Dell Computer and Ticketmaster CitySearch Online Inc., which are also participating in the alliance.
By weaving auctions into several types of Web sites, the companies are trying to draw consumers away from dedicated auction sites such as eBay. "You can put an auction wherever the eyeballs are," says Susan Zaney, VP of marketing at Fair Market.
Auction services have proliferated rapidly on the Web as consumers find them an attractive means for trading all kinds of items and companies realize that profits can be had by taking a slice of each transaction. Facilitating auctions between consumers is also attractive to companies because they don't have to warehouse or take possession of the goods that are exchanged. Further, auctions keep users coming back regularly to Web sites to check on the action.
EBay, which claims to have more than 3 million items for sale, is the clear leader in online auctions and has been profitable for more than two years. But eBay stock was hammered Friday by news of the alliance, tumbling 11-1/8 to close at 140-5/8.