eBay Buys Into Business Marketplace Company

Online auction site eBay is reportedly taking part in a $22 million (US$) backing of business surplus trader TradeOut.com.

The San Jose, California-based online auctioneer is one of three companies to take a stake in the privately-held TradeOut.com. The other two investors are Benchmark Capital and Morgan Stanley Dean Witter.

Founded in August of last year, the Ardsley, New York-based TradeOut is an online marketplace for business surplus. It has over 100 product categories and currently lists items with a value of $500 million.

“TradeOut.com is on a fast track and offers an elegant solution to a big business problem,” said eBay CEO Meg Whitman. “The company is effectively executing its model for buying and selling surplus online, and our investment reflects our view that this is a sound business strategy with the potential for growth.”

Dual Play For eBay

Additionally, eBay announced that it has launched fourco-branded sites on America Online properties, indicating that the sites are an extension of joint marketing initiatives between the two Internet titans that stretch back to December, 1997.

The two firms announced a four-year strategic alliance in March and launched a co-branded site that gives AOL’s 19 million members access to eBay’s auction site. Today’s launch gives AOL users access to eBay via AOL.com, CompuServe, Digital City and ICQ sites.

With an estimated 90 percent share of the online person-to-person auction market, eBay can afford to try out new avenues of potential revenue. Meanwhile, competitors such as Yahoo! continue to try to chip away at its firm hold.

Accordingly, Yahoo! announced today that it has launched auction services in Brazil, Denmark, Hong Kong and Korea, giving it 14 international launches in seven months. The company also said that it reached the milestone of one million simultaneous daily auctions.

That figure is a drop in the bucket for eBay, which saw its membership soar from 5.5 million to 7.7 million in the last quarter. The company booked revenues of $58.5 million and reported a net income of $1.35 million.

Wall Street reacted negatively to the income result last week, and eBay’s stock fell in trading. However, the company said that it had forecasted the income result, saying that investments in computers and staff to deal with power outages and its expansion into new markets and products were the cause.