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eBay To Evolve With Storefronts

Online auction giant eBay (Nasdaq: EBAY) is close to launching a way for small businesses to tap into its e-commerce services, according to published reports.

The project, tentatively called eBay Storefronts, would set up small-business storefront sites that can then tap into eBay services under an umbrella Web site.

We've been listneing to our sellers and they say this would be a logical extension of the eBay platform," says company spokesperson Kevin Pursglove. "We've gotten a lot of positive feedback on our 'Buy It Now' concept and our sellers say it could work as its own model."

It's not a done deal. Pursglove could only confirm that the company is evaluating the prospects with no firm launch date or timetable. But, published reports say eBay CEO Meg Whitman calls the project a "top priority" for the company and sources claim the service could be up and running as soon as July.

"It's not like they need to do something like this today to survive, but it won't hurt them either," says Derek Brown, an analyst with WR Hambrecht & Co. that covers eBay's business model. "It would certainly be an extension of their current services."

The plan is to let small businesses acquire customers through eBay auctions and direct them to their own branded eBay-hosted storefronts instead of other mega-online shopping sites like Amazon (Nasdaq: AMZN) and Yahoo! (Nasdaq: YHOO).

Brown suggests that, unlike Yahoo, which is looking for other revenue outside of its advertising streams, eBay is doing tremendous business.

"For any company to be successful now it has to evolve their services and constantly invent ways to make money," says Brown. "Something like this could make eBay more valuable to their customer base."

Which is huge. The San Jose-based company recently announced it posted its half-billionth posting with a sweepstakes.

The infrastructure for the project is certainly there. eBay has already registered two domain names: "ebaystorefront.com" and "ebaystorefronts.com." Neither site was live at press time.

Another clear indication that Whitman and company are serious about this is a recent deal between Microsoft and eBay to jointly expand their global online presence while streamlining the online buying process.

Pricing has yet to be determined. Some possible pricing models could include charging merchants a fixed fee for each transaction, charging a percentage of merchants' gross merchandise sales or a charging just a flat-rate monthly fee.

The only risk to eBay in launching its storefront model, say analysts, is that the company might be over extending itself a bit.

In addition to other changes, eBay expanded its international presence and launched three new local sites for users in Ireland, Switzerland and New Zealand.

"They are attempting to grow on several levels," says Brown. "For any company to launch the international sites would be a challenge. But to do that and expand into storefronts means the company has a lot of balls in the air. If there are too many, eBay could drop one or several of the projects, but its not likely."