With both companies looking to increase their e-commerce
revenues, Yahoo and GeoCities face a variety of adjustments as they mesh their
Each company brings a set of high-profile Internet merchants as
paying partners, both have programs targeted at smaller merchants, and both
rely heavily on advertising revenues that they want to diversify. In
addition, Yahoo has a high-profile e-commerce partnership with Visa International.
"At the most basic level, this deal is buying an audience to bring
customers for Yahoo," said Mark Johnson, analyst at Jupiter Communications. Given that
advertisers and retailers covet heavy traffic, sheer size could give the
combined companies' e-commerce activities a boost.
Both companies have major merchant sponsorships with Amazon.com, software store Egghead.com, and CDNow. GeoCities renewed its Amazon
partnership last week and is in the process of renegotiating its CDNow and
relationships, said Bruce Zanca, GeoCities' vice president of
But in online mortgages, for example, Yahoo has a deal with eLoan while GeoCities is tied to Lending Tree.
"It seems relatively clear that they will have distinct brands, and that
allows you to play competitors against each other," said Jupiter's Johnson.
"As long as the brands are distinct, there will be less of a need to
reconcile the differences. But they also can do sweet deals for new portal
tenancies, similar to what Lycos has
done for its network."
For smaller merchants, Yahoo has Yahoo Stores, based on software it
acquired last June with Viaweb, while GeoCities' GeoShops offering scatters
storefronts among relevant topical neighborhoods within GeoCities.
"It's been a little of a tough sell for GeoShops," said Jupiter's Johnson,
calling the small-merchant market "an untapped revenue opportunity."
GeoCities Zanca declined to say how many merchants are enrolled in GeoShops.
GeoCities recently decided that GeoShops, launched in March 1998 with an
ambitious goal of signing up 100,000 merchants in 12 months, needed
"We came to determine that we wanted to restructure both the way it was
marketed to consumers and how the back end was built. We asked, 'Would it scale
and ramp up well into the future?'" said GeoCities' Zanca.
To that end, GeoCities, which initially had outsourced its back end to Internet Commerce Services, recently
announced deals to buy e-commerce software from Interworld and to use Be Free's software for setting up
Zanca said the company also planned to adapt its popular GeoBuilder tools
to create storefronts too.
A Yahoo executive could not be reached for comment this morning.