The company's Web site, which allowed consumers to search across multiple auction sites for particular items, was not economically viable, said Kimbo Mundy, Bidder's Edge's chief technology officer. The Burlington, Mass.-based company will close the site next Wednesday.
"Basically, the auction marketplace and e-commerce didn't develop the way we anticipated," Mundy said. "We expected much more players in the auction market. We expected the power of a search engine to be a more important thing."
Despite the Web site shutdown, the company itself will continue to operate and will not lay off any of its 25 employees, Mundy said. The company is exploring other business opportunities, including licensing its technology, Mundy said.
Bidder's Edge used an automated search system to comb eBay and other auction sites for listings. In December 1999 eBay sued Bidder's Edge in U.S. District Court over the search system, accusing Bidder's Edge of illegally trespassing on its site, violating its copyright and trademarks and slowing service for eBay users.
Last spring, the judge in the case issued a preliminary injunction, barring Bidder's Edge from using the automated system to comb eBay's site. Although Bidder's Edge later modified its search system, it appealed the ruling. The company and eBay are in settlement talks, according to Mundy and Bidder's Edge's lawyers.
eBay representatives did not immediately respond to calls seeking comment.
Bidder's Edge notified customers of the shutdown Wednesday in a note on its Web site.
"Due to market and financing conditions, the Bidder's Edge Web site will be closing," the company said in its note. "Thank you for your patronage over the past two years."
Bidder's Edge was one of a number of auction service sites that came online after eBay's success to cater to auction buyers and sellers. But the company has struggled to find a niche against competitors such as GoTo Auctions, AuctionWatch.com and Andale.
Mundy declined to be specific about what the company will do next, but the Bidder's Edge Web site indicates the company will be exploring opportunities in the business-to-business market.
"By leveraging our existing expertise in handling the needs and scale of the consumer auction market, we are now optimizing our technology for dynamic and static e-commerce formats in the B2B markets," the company said on its Web site. "As companies move toward consolidation and globalization, businesses need a better means of tracking and redeploying business assets across divisional and geographic lines. That is what we are here to do."