Amazon, Sotheby’s Shutter Joint Auction Site

After less than a year in business as partners, Sotheby’s auction house and e-tail giant Amazon.com (Nasdaq: AMZN) announced Tuesday that they are shutting down their co-branded site, Sothebys.amazon.com, and consolidating the listings into Sotheby’s primary online auction site, Sothebys.com. The companies said they expect the consolidation to be complete in about 30 days.

The companies say that the parting of ways is friendly. Amazon will provide its customers with a link to Sothebys.com, and will be paid an annual cash payment by the auction house.

“It has become clearer than ever before that what matters in this business is scale,” said Sothebys.com president Craig Moffett. “By combining our two sites, we can now offer our customers a much deeper selection in a single venue, and our network of 5,000 associates will now have a clearer and simpler way to conduct business online.”

Opening an Arcade

As part of the consolidation, Sotheby’s said that it will expand its site to include categories that were currently offered only by Sothebys.amazon.com, including sports and entertainment memorabilia, stamps and coins, and antique toys.

Sotheby’s also plans to begin offering “Arcade” property, such as more affordable fine art, furniture and jewelry, in selected categories on its Web site. The company says that “Arcade” auctions have a devoted live auction following.

Residents from additional countries will be able to place bids as part of the restructuring. Sotheby’s said that it will expand bidding to Australia, Belgium, Denmark, Finland, the Netherlands, Norway, Sweden, Switzerland and New Zealand.

“Sotheby’s has a significant live auction clientele in each of these locations, and we will continue to provide our customers and associates with the same high level of security protection and customer service in these countries,” Moffett said.

Best-Laid Plans

Amazon and Sotheby’s launched their joint venture in November 1999, after Amazon invested almost $45 million (US$) in the London-based auction house.

Under the terms of the original agreement, the companies shared revenue from the jointly operated site. Although the companies did not release details of the new deal, they did say that under the revised agreement, Amazon will receive yearly cash payments from Sotheby’s for promoting Sothebys.com.

Amazon currently links to Sothebys.amazon.com through its “Art and Collectibles” store tab. When the joint site is shut down, Amazon plans to remove that tab and link to Sothebys.com from its auctions area.

According to published reports, Amazon employees that were working on the Sothebys.amazon.com site will be reassigned to other projects. Amazon said it does not anticipate any layoffs as a result of the restructuring.

Amazon’s Other Restructurings

In August, the Seattle, Washington-based e-tail powerhouse announced that it was restructuring deals with several partners in its Amazon Commerce Network (ACN).

The company said it restructured the deals because of the uncertain nature of e-commerce and the poor financial condition of some of its partners. As a result of adjustments made to reflect the restructuring, Amazon reduced its recognized revenue from ACN partners by $2.9 million.

One of Amazon’s ACN partners, Living.com, had such dire financial problems that it was forced to close its doors and file for bankruptcy. The company filed for Chapter 7 protection and laid off all 275 of its employees in mid-August.