Lycos, Inc. (NASDAQ: LCOS), which saw the number of shoppers on its network increase 450 percent during the 1999 holiday season, has announced that is taking a 14 percent stake in Internet Commerce Services Corp. (iCOMS) and is forming a strategic partnership to build both companies’ e-commerce businesses.
iCOMS provides electronic commerce applications for companies that are looking to do business online, and already supplies services to more than a hundred firms. The company sets up online commerce systems that allow retail and business-to-business merchants to “pay as they sell,” rather than invest up front in technology and staffing.
iComs has supplied software for or works directly with nearly one thousand companies and organizations, including Hasbro, Stanford University, Doubleclick, Entertainment Boulevard, Biz2Net, First Union Corp. and major league baseball teams.
Through its new partnership with Lycos, those companies will have the opportunity to register as LYCOShop merchants and gain access to nearly 30 million Lycos shoppers. iCOMS is no stranger to Lycos, having provided operational support, merchant support and development services for the company as a leading support provider for Open Market’s Transact and ShopSite software packages, which Lycos employs on its site.
Potential to Expand
iCOMS says it will use the Lycos investment to fund general operations, expand its infrastructure and pursue potential acquisitions. In addition, Lycos Senior Vice President of Corporate Development Jeff Bennett will join the iCOMS board of directors. iCOMS executives say they are looking to Bennett and big brother Lycos for much-needed experience in the Internet business, as well as relationships with other established Net companies.
Lycos, meanwhile, will enjoy the ability to benefit financially from a company that is competing in the up-and-coming Internet technical services business, while being able to outsource Lycos technical needs to a partner instead of a third party.
“We are very impressed with their capabilities and the overall strength of the company and management. We believe that they have tremendous potential for rapid growth as the need for e-commerce technical services grows,” Lycos CEO Bob Davis said.
Lycos joins Technology Link Capital, AsiaTech Ventures, Primus Capital, Corning Capital, Venture Investment Management Company and FINECO as strategic investors in iCOMS.
The other six companies combined to contribute $10 million (US$) in May to keep iCOMS growing after its 1997 launch with a $2.3 million boost from other private investors. Lycos is the only investor in this third round of funding.
Building on Success
Lycos will also look to iCOMS and other relationships to maintain the momentum it built during the holidays. Like many other online merchants benefiting from the Internet’s continually improving familiarity to consumers, Lycos doubled its shopping traffic the day after Thanksgiving.
The company is taking that improvement, and the 450 percent overall growth during that season, as a sign it is doing something right, Vice President of E-Commerce Kim Boucher said. She attributed the company’s strong shopping season at least partly to its decision to integrate the LYCOShop service into the many different content, community and search sites Lycos operates.