The online auction space became significantly more crowded on Thursday when direct e-commerce company Xoom.com (Nasdaq:XMCM) launched a person-to-person auction service.
This launch could pose a big threat to leading auction site eBay (Nasdaq: EBAY) for two reasons. First of all, Xoom.com already reaches more than 8.8 million members. Second and perhaps more important, Xoom.com is about to become part of NBC’s new Internet division.
However, the success of the new service is no sure thing. Yahoo!’s and Amazon.com’s auction services are also competing with — and lagging behind — eBay.
Xoom.com’s auction service already features more than 15,000 products in 14 categories, including collectibles, computers, toys, jewelry and sports. The service is similar to eBay with real-time bidding and automatic proxy bidding among the features. Sellers are offered free listings, with Xoom.com earning commissions on each sale.
“Xoom.com auctions not only provide online buyers with another purchasing option from our site, but it also supports our direct e-commerce strategy by allowing us to establish a closer relationship with more online buyers so that we go back to them with product and service offers based on their interests,” said Chris Kitze, chairman of Xoom.com.
Kitze says Xoom.com will continue expanding its e-commerce offerings. The company already offers Web-site building, message board services, Web page counters and downloadable software for its users.
NBC Internet Merger Looms
Xoom.com is slated to merge with portal site Snap.com and several NBC Internet properties, including NBC.com, later this year to form a new company known as NBC Internet. The new venture is billed as the first publicly traded Internet company integrated with a major broadcaster. Snap.com will be the anchor site of the new venture, which will weave together broadcasting, Internet content and commerce.
The merger is expected to close in October. The new company should benefit greatly from television promotion on NBC, which could make Xoom.com’s auction service a bigger challenge to eBay.
Last month, NBC increased its stake in Xoom.com by $25 million, raising its investment to $55 million at an average share of $57.30 per share. Shares of Xoom.com closed down 2-5/8 to 44 on Thursday.
On Tuesday, Xoom.com reported a second-quarter net loss of $2.7 million, or 16 cents per share. The consensus estimate of analysts surveyed by First Call was 26 cents. The company’s second-quarter revenues totaled $6.5 million, a 48 percent increase over first-quarter revenues. “To date Xoom.com has generated $10.9 million in revenue in 1999,” said John Harbottle, chief financial officer at Xoom.com. “To put our revenue growth in perspective, by May 31st of this year, we generated more revenue than we had for all of 1998.”
Charity Auction Promotes New Service
Xoom.com is promoting the launch of its auction service with a charity auction to benefit The Breast Cancer Fund. Xoom.com has teamed up with the Lilith Fair to auction off a package that includes airfare, accomodations and two front-row seats to the August 19 Lilith Fair concert in Tinley Park, Illinois. Also included in the package are an autograph from Lilith Fair matriarch Sarah McLachlan, an opportunity to meet the Indigo girls and a digital camera.