In the latest addition to the great portal build-up race, Classifieds2000 Inc., a division of Excite (XCIT), on Wednesday unveiled its new "Auctions" service, which appears on its parent company's portal site, among others. Analysts say the combo of classifieds ads, online auctions, and Classifieds2000's partnerships with about 100 Web sites makes the service a new model for other e-auctioneers to follow.
Excite acquired Classifieds2000 in April in a stock swap valued at about US$48 million, and the classifieds service has formed partnerships with a lot of the Web�s biggies, like Netcenter, WebTV, Webcrawler, and Hotmail.
Although Excite is still linking to auction-hosting sites like Onsale and FirstAuction under its "shopping" channel, the Classifieds2000 offering uses all in-house tech, and -- attention shoppers -- its search pages turn up other people's junk listed in both the classified ad and auction databases.
"We are much more powerful as a network than as a standalone [classifieds service]," said Melissa Cesped, product manager for auctions at Classifieds2000.
Buyers can receive email notification to let them know when the bidding starts, when they've been outbid, and when the bidding has closed on that perfectly olive-green lounge chair.
The logical question is whether other portals like Yahoo (YHOO) and America Online (AOL), already overeager to "differentiate" themselves by any means possible, will get auction envy and buy or develop their own auction-classifieds service to integrate with their sites.
Perhaps not. "Auction services are in the 'nice-to-have' category for portal services," said Allen Weiner, analyst at Dataquest. He added that it will instead be the auction sites who feel obligated to partner with classified sites.
"The barriers to entry are quite low," said Weiner. "All the places like newspapers and magazines are likely to follow suit and offer both." Such services are likely to become very focused and content-specific, he added, giving the example of an auction and classifieds site on an online sports magazine that would sell only sports memorabilia.
But other analysts think that the "I want one too" syndrome of portal competition will prevail. "This is an interesting spin since Yahoo just bought Viaweb. This space is getting very competitive," said Melissa Bane, an analyst at the Yankee Group. "Certainly classifieds are a very lucrative space, and auctions have proven to be a popular application on the Web."
And sales mean money -- something often harder to come by on the Net. "[Auctions] can actually provide a revenue stream, which has not been the case with many of the features that the portals have bought [or] adopted thus far," said Ken Cassar, analyst at Jupiter Communications. "Microsoft paid a reported $400 million for Hotmail, which generates no revenue. Online auctions are basically the Internet version of classified advertising, which generates about 40 percent of traditional newspaper revenue."
The Classifieds2000 business model for this new service still has kinks, but the idea is that sellers will pay a fee for a listing, and give up an additional commission to the company.
The model is also perfect for that holy grail of portals everywhere -- repeat users. "It's interactive, it's much more involving than what people are typically used to," said Cesped.
And it feeds shopping addictions pretty well, too. "I've heard some anecdotal stuff [about auctions] -- people checking every 15 minutes to see how their bid is doing. It's for the same people who like flea markets and outlet stores," said Weiner.
