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Yahoo, GeoCites seek e-commerce boost

The results of their merger will prove greater than the sum of its parts, the firms bet.

With both companies looking to boost their e-commerce revenues, Yahoo and GeoCities face a variety of adjustments as they mesh their online retail strategies.

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 Surplus Direct relationships, said Bruce Zanca, GeoCities' vice president of communications.

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 retooling.

"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 GeocCities' 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 affiliate networks.

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.