Auction, which was took over by Ebay in 2001, is creating a new business model on the basis of Web 2.0 in the cooperation with Daum Communication, the second largest portal in Korea.

On Friday 16, it concluded a business contract with Daum that specifies the utilization of Open API. As a result, a function to list auction items will be added in the Cafe Board, Daum's community service.

Through this cooperation, both Auction and Daum aim to maximize platform synergy effects based on the notion of 'share'. Due to the Open API technology, when Daum Cafes operators list items to sell in their Cafes, they are simultaneously listed in the Auction. Customers can purchase them in the both Daum Cafes and Auction sites.

This is the first time that the function to list auction items of the large electronic commerce site is applied to the large domestic portal site online community. Through this contract, Auction expects to expand listing items and sales, while Daum anticipates the increase of traffics by strengthening and diversifying its services for users.

Auction expects sales, while Daum looks forward to the increase of user
Auction expects 100 billion won of sale's increase in the first one year (the estimation is only for C2C market in which genuine users directly transact). In addition to existing users, as new users/listing items from Daum increase, it expects over 25% augment of sales.

According to Choi Sang-Ki, the head of Auction marketing team, "the current scale of Auction's C2C market is as much as 300 billion won. We expect to increase our next year's scale of sales from the Daum Cafe Auction is prepared to work on a commission basis of 2% on GMV in the Daum Cafe Owners of Cafes receive 1.5% benefit of GMV."

Daum does not take any direct benefit from the cooperation. However, it expects to increase the number of users by securing eleven million Auction members. It also anticipates the enhancement of its value by providing broad services to Daum members.

Through this cooperation, Daum introduces Auction's Escrow system to make sure of security problem. By bringing the Escrow system in, it is expected to get rid of damages that would happen in the process of direct transaction, to strengthen 'direct compensation for users,' and to stand as a user-centered platform.

Min Yoon-Jung, the head of Daum Communication headquarters, said, "thanks to the cooperation with the biggest online marketplace, we can secure safe transactions between users in the Cafe Herewith, the Cafe will be a user-centered platform that completes its openness."

Meanwhile, Auction has begun to develop Open API since 2005 by opening source codes to external developers, and applied it to two sites, Encar and Allblog.

Mr. Choi of Auction said, "to create benefits through API is a worldwide trend in the field of electronic commerce. Auction will secure its future competitiveness by using Open API. This case will create a new business cooperation model that combines commerce with community."