In an attempt to broaden its audience and increase revenues, business-to-consumer auction site UBid, a CMGI (CMGI) company, will announce next week that it is branching into consumer-to-consumer auctions - the same type of trades that eBay (EBAY), Yahoo (YHOO) and a host of other auction companies facilitate.
Underscoring eBay's dominance in the consumer auction market, UBid CEO Greg Jones hastened to point out that his company isn't taking aim at the online giant. The c-to-c auctions, which began quietly on the site two weeks ago, were prompted by demands from existing customers.
UBid, a private company that has quietly established itself in the auction space, estimates it will enable $500 million worth of auctions this year, at the rate of roughly 10,000 auctions a day.
Still, the new venture poses risks. Despite Jones's assurances, there's little doubt that c-to-c auctions are eBay's domain. "We've seen others try to do it," says Jeetil Patel, an analyst at Deutsche Banc Alex. Brown (dossier), referring to Amazon and Yahoo's auction ventures, which have failed to overtake eBay's. "It's an uphill battle."
In addition to entering an area with an established leader, UBid's c-to-c auctions will be run differently than its existing ones. Currently, the company works with major vendors, from Sony (SNE) to Hewlett-Packard (HWP), often holding the vendors' inventory and shipping it to consumers. Fraud is virtually nonexistent, and Jones hopes to keep it that way. "We're going to be very careful that we don't damage our reputation."
UBid asks all buyers and sellers to provide credit card information, and will make clear which auctions are c-to-c and which ones are not. In addition, the company's executives say they want higher quality auctions, hoping to avoid the fine line eBay has walked between poor taste and free-speech rights.
"From our standpoint we'll be very proactive" at monitoring the auctions, says Alan Cohen, UBid's VP of marketing. Still, Cohen declined to specify whether UBid would allow the same kinds of listings that have prompted criticism of eBay, such as Nazi memorabilia. The listings, he says, will be evaluated "on a case-by-case basis."
