Egghead.com will pay FairMarket a fee to host the site and transaction fees on closed auctions; the companies declined to give more details about the deal.
The move is part of a big shift for Menlo Park, Calif.-based Egghead.com. Formerly known as Onsale, the company launched its auction site in 1995, and the site comprised the bulk of its early business. But the company has gradually moved away from the online auction format, especially since its merger with former offline retailer Egghead.
According to Nielsen/NetRatings, Egghead.com was the third-largest auction site in May in terms of gross consumer sales, trailing eBay and uBid. However, only 4 percent of consumers' online auction spending went to Egghead.com, compared with 64 percent for eBay and about 15 percent for uBid.
But auctions continue to be important for Egghead.com, providing the company with about 30 percent to 40 percent of its revenue, said Merle McIntosh, the company's senior vice president of merchandising. Despite the auctions' importance, Egghead.com doesn't want to be in the business of developing auction software, McIntosh said.
"This is absolutely not a defeat," he said. "We can't be a great technology company while being great direct marketers and merchandisers."
The deal provides some good news for FairMarket, which has seen the defection of several high-profile clients in recent months. The company expects to sign similar deals with other large merchants, said Mark Sutton, FairMarket's director of marketing.
"This is a great kind of seal of approval by taking on what was once the crown jewel of Egghead," he said.
Earlier this month, Woburn, Mass.-based FairMarket announced that it no longer had an exclusive relationship with Microsoft to provide auction technology to the software giant. Microsoft had previously announced that it would use eBay's software to power auctions on CarPoint, bCentral and some of its other Web properties.
Meanwhile, Terra Lycosits FairMarket-run auction site with an eBay co-branded site last month.
Although it is best known for putting together a network of auction sites in an attempt to compete with eBay, FairMarket has scaled back that effort and even signed its own deal with the auction giant in February. As part of that deal, FairMarket is helping some of its clients list items on eBay's auction site.
In a note on its auction site, Egghead.com touted its move to FairMarket's software, saying customers would be able to find auctions more easily. As part of the move, Egghead.com added links to auctions that were recently opened and to those that are about to close. The company's auctions now feature a countdown clock that tells customers how much time they have left before the auction ends.
Although Egghead.com's auctions are now running on FairMarket software, the company did not join FairMarket's auction network. But Egghead.com has the option to join at a later date, FairMarket and Egghead representatives said.