Is eBay an e-commerce site or a media property. In the latest example that it can be both, the online auction company and Washington Mutual have teamed up to offer six-month certificates of deposit in an online auction format, starting this week.
Rather than bidding up the price of the CD, users bid down the interest rate on 600 six-month CDs offered on a special auction Web site powered by eBay technology. The bidding starts at 20 percent and goes down. The winner is the person willing to accept the lowest interest rate — although there is a floor at which the lowest bidder gets the CD at or above the local market interest rate. So far, there are 44 bids on the first CD listed and up to 69 bids on others.
The companies are promoting the co-branded site via banners and links on the main eBay site.
“Our intent is to look at possible ways to deliver financial products to customers,” said Mary Kelley, spokeswoman for Washington Mutual. “We realized the popularity of online auctions and wanted to test the waters.”
According to Kelley, customers in “the broad middle market,” are the bank’s target. “These are very much the segment eBay is serving as well. Everyday people who are looking for a good deal.”
Known for offbeat promotions, Washington Mutual is no stranger to the Internet, having launched its Web site in 2001. It also uses the front page of its site to promote streaming videos of its television commercials.
Though Kelley said the auction’s purpose did not include branding, it is certainly congruent with the bank’s innovative brand of online banking, with its familiar personal approach, eschewing, for example, the customary ATM fees for non-account-holders in most states.
“The promotion introduces the fun of bidding on eBay to the purchase of a financial instrument,” said Don Albert, senior director of strategic partnerships for eBay. “It’s an innovative approach.”
Albert said banner ads for the auction appeared on the eBay site at 9 a.m. Thursday and there has already been a “frenzy” of bidding activity. Bids started at a 20 percent interest rate and went down an eighth of a percent at a time and are now down to one or two percent in some cases.
With the partnership, both companies aimed to form a relationship with another strong, innovative brand, Albert said. “The arrangement is a way for Washington Mutual to test out the possibility of offering its financial products to the eBay community, which now claims more than 85 million people,” according to Albert.
“Customers like having different ways in which to conduct their banking, such as the Internet, the telephone and the branch office,” Kelley said. “If this experiment is successful, we will continue to explore online auctions as a way to reach a wider audience.”