Yahoo! Plans 'Group Buy' Service

Navigation hub Yahoo! is preparing to launch an aggregated selling service in the second half of the year, a move signaling that the idea of "group buying" may be on the verge of becoming a mainstream part of Web commerce.

Navigation hub Yahoo! is preparing to launch an aggregated selling service in the second half of the year, a move signaling that the idea of "group buying" may be on the verge of becoming a mainstream part of Web commerce.

The service, likely to be marketed under the Yahoo! (www.yahoo.com) brand name, would allow consumers to buy goods at lower prices by pooling their purchasing power.

"We're looking closely at the area of demand aggregation," said Yahoo! President Jeff Mallett. "And we do see the opportunity to extend into the demand aggregation business by the end of the year."

Yahoo!'s move into the group buying market — along with the early announcement of its intentions — may be designed in part to ensure that the navigation hub has a significant role in what could emerge as a major online sales channel.

Start-ups already in the group-buying field, such as Accompany.com and Vulcan Ventures-backed Mercata.com, may be most affected by Yahoo!'s en try. With 120 million unique users monthly, the navigation hub can tap into significant traffic that can help boost its share of an emerging Web market.

What Yahoo! wants most is to avoid a replay of the way the Web auction market developed. Yahoo!'s early stumbles gave start-up eBay enough time and room to build critical mass and eventually become a public company.

Yahoo! has since launched its own auction service but still significantly trails eBay in the bid-to-buy sector of online commerce. Now valued at $17 billion by Wall Street, eBay would make a pricey acquisition for a company seeking to expand services with exactly the type of transaction-oriented infrastructure that eBay provides.

Mallett said Yahoo! might consider an acquisition to expand into the "group buy ing" market, but historically the company has been more inclined to build such applications in-house be cause of the need to integrate them with its established user registration services.

"We are keeping our eye on the folks that build online affinity databases and customer relationships," Mallett said. "We are looking at companies that are building relationships in the transaction mode."

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