Andale grows with distribution deals
By Mike Tarsala,
CBS MarketWatch
Last Update: 11:08 PM ET May 29, 2000
MOUNTAIN VIEW, Calif. (CBS.MW) – Privately held auction management software
maker Andale, a company that appears to be on the road to an IPO with $48 million
cash in the bank, plans to announce Tuesday a key distribution agreement and its first
large corporate customer.
Andale executives plan to integrate software technologies with financial software
maker Intuit (INTU:
news,
msgs).
The two companies also signed a marketing agreement.
Andale's auction software and services, aimed at automating the auction selling
process across many Web sites, will be made to work with Intuit's small business
offerings. The pact will give Andale a chance to sell to Intuit's 2 million small
business customers.
"It gives us very easy access to the kind of customers we want to target," said
Munjal Shah, Andale's chief executive. "Customers can sell via auctions with a few
simple clicks. And they have one set of records for their online and off-line businesses."
Through a Quicken service for creating small business Web pages, customers can connect
to Andale's services. Executives from Andale say their software is unique in letting
businesses auction products on their own sites, as well as through EBay
(EBAY:
news,
msgs)
Amazon.com (AMZN:
news,
msgs)
and Yahoo (YHOO:
news,
msgs).
Andale's software offers companies a way to make all their auctions "look and feel"
the same on all auction sites. Andale already has about 200,000 registered users.
The company says it can help its customers sell up to 3 times as many items via
auction. Small businesses pay Andale a 2.95 percent transaction fee on all successful
sales. In exchange for the fee, Andale's software helps to handle inventory management,
financial tracking and the payment-collection process.
The average gross margin for businesses selling on auction sites is about 40 percent,
analysts say. Andale is striving to center itself in one of the most profitable
segments of Internet commerce. Andale expects to get most of its revenue from corporate
customers. According to EBay, 4 percent of its registered users make up 80 percent of
sales, lending support to Andale's business sales tack.
Andale has received $62 million in financing from Bowman Capital Management, Texas
Pacific Group's (TPG) Tarrant Venture Partners, Accel Partners, Mohr Davidow Ventures,
Oak Hill Venture Partners and other angel investors. In its second round, in April, the
company got $41 million from a group led by Bowman. In a separate deal, the announcement
of which also is expected Tuesday, Andale has signed a contract with Avcom, the
Silicon Valley computer reseller that moves the most Sun Microsystems hardware. Andale
is expected to help Avcom auction more than $100 million of used Sun equipment.
Under the terms of the agreement, Avcom will use Andale's flagship software and
services. Avcom is Andale's first large corporate customer, executives said.
"Even with our own national sales force, reseller network, ASP Industry Portal and
e-commerce web site, we are always looking for new ways to sell products and services
to more customers," said Brad Bishop, Avcom's chief executive. "Internet auction sites
represent a significant new channel for us." One of the long-term challenges for Andale
will be in making a name for itself in an era of drowning Internet companies. To help
market the company, Andale on Tuesday will, for the first time, start to display its
logo on auction sites that use its services.
"On every item put up for sale, you'll see our brand," Shah said. "The next service
to add for merchants is to give them something to help them to create confidence and
convenience for buyers. We want to become the Visa of auctions."
Mike Tarsala is an online reporter
for CBS MarketWatch. |
