Sat, Dec 27, 2003 page10

• Yahoo-Kimo plans shift to fee-based business model

  • By Jessie Ho / STAFF REPORTER
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  As online auctions have become increasingly popular among domestic Internet users, Yahoo-Kimo Inc (雅虎奇摩), the nation's largest online auctioneer, is planning to charge fees -- like auctioneers in other countries -- in the near future, an official said yesterday.

  "Although we don't have a set timetable for the plan, we will definitely be moving in the direction of charging fees to maintain long-term operations," said Charlene Hung (洪小玲), a marketing director at Yahoo-Kimo.

  Yahoo-Kimo started its free online auction service two years ago. Currently, there are over 3.4 million products posted on the Web site.

  The company expects to have NT$10 billion of transactions being made via its auction site by the end of this year, a five-fold surge from last year, Hung said.

  Concerns

  Although Yahoo-Kimo is considering the possibility of launching a fee-based service, the company needs to provide advanced services and strengthen online security before it can convince users to dip into their pockets, Hung said.

  Yahoo-Kimo is also concerned over a potential backlash from consumers if the company starts to collect fees.

  In the US, Yahoo charges listing fees, ranging from US$0.20 to US$2.25 depending on the value of the item being sold. Yahoo Japan charges a monthly fee of ?280 for each user since March 2001, along with a listing fee of ?10 for each item, as well as a selling fee of ?500, instituted March last year.

  Within a month after the two sites started to charge, both reported drastic drops of up to 82 percent on posted items.

  "We expect the same phenomenon will occur in Taiwan if we start to collect fees," Hung said. "Although the number of products bought and sold on both sites slumped, their revenues are still growing annually, proving the business model does work."

  One market watcher said it will take a while for consumers to pay for online auction services.

  "For example, there are still lots of guidelines provided on the front page of Yahoo-Kimo's auction site, meaning a considerable number of consumers still have yet to figure out how to use the site, and that's without asking them to pay for it," said Simon Weng (翁堉珊), a manager at the E-commerce Resource Center at the Institute for Information Industries (資策會).

  All about timing

  Smaller rival eBay Taiwan said the company is not considering following in Yahoo-Kimo's footsteps at this point.

  "I think to turn a free service into a fee-based one requires a mature environment and consumers ? it's not the right time to do it," said Angel Cheng (成葆齡), a public relations manager at eBay Taiwan.

  The company outpaced online auctioneers in other countries, but far lagged behind Yahoo-Kimo in Taiwan, with merely 200,000 goods posted on the site, Cheng said.

  Unlike Yahoo-Kimo, whose core-business is its portal business that largely increases its auction visibility and accessibility among net users, eBay promotes its site with intensive TV commercials in an attempt to boost membership, Cheng said.

  For now, eBay focuses on establishing a trustworthy image among Internet users with its online anti-fraud measures, which allow bid winners to receive full compensation for goods under NT$7,000.

  In the coming year, the company will strengthen its international transaction platform, which enables users to conduct purchases and sales with 85 million eBay members around the world, Cheng said.

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