ChannelAdvisor Announces Auction Fraud Prevention Initiative; ChannelAdvisor's BidAssure Initiative Addresses Large and Growing Online Auction Fraud Problem for Sellers.

Business Editors & Technology Writers

RESEARCH TRIANGLE PARK, N.C.--(BUSINESS WIRE)--Sept. 24, 2002

ChannelAdvisor Corporation, the leading provider of enterprise marketplace management solutions, today announced BidAssure(TM), a three-tier solution that dramatically reduces online auction fraud for sellers. The BidAssure solution protects against fraud on these marketplaces: eBay (NASDAQ:EBAY), Amazon (NASDAQ:AMZN) and Yahoo! (NASDAQ:YHOO).

Non-paying bidders, also known as "deadbeat bidders," are online marketplace bidders who win an item but do not complete the transaction, thus defrauding the seller. ChannelAdvisor's independent study has shown that the problem impacts between 7-25% of all auction transactions and is increasing at an alarming rate. This study was based on a sampling of ChannelAdvisor clients that include over 85% of enterprises selling via online marketplaces. Additionally, ChannelAdvisor has discovered that 3-5% of deadbeats are "repeat deadbeats" meaning they consistently buy items from the same seller and fail to pay. Finally, 5-10% of the deadbeats are "multi-seller deadbeats," meaning they defraud multiple sellers over a short amount of time.

Deadbeats negatively impact sellers by substantially increasing the seller's time to sell product and costing them the auction placement fees. While these fees can be recovered, it is time consuming and tedious. ChannelAdvisor's studies have indicated that only a small portion of sellers actually file for the fee recovery, thus increasing the problem as marketplaces do not detect and block deadbeats.

Not only does this problem negatively impact sellers, but online auction buyers are also affected. Honest bidders who are outbid by a deadbeat bidder lose the opportunity to buy the item and are typically not aware they have been outbid by someone who does not intend to pay for the item.

"Deadbeat bidder fraud is the largest and most rapidly growing problem facing online auction sellers today," says Scot Wingo, CEO of ChannelAdvisor. "Since the bulk of these transactions flow through our systems, ChannelAdvisor is uniquely positioned to solve this problem. Our BidAssure initiative will significantly reduce the deadbeat bidder problem for sellers of all sizes from the Fortune 500 to mid-market and small businesses."

The three tiers of the BidAssure initiative are:

-- BidAssure CheckOut - Available now, BidAssure CheckOut implements a superior checkout system with enhanced features such as aggressive end-of-auction notices, increased checkout usability, and a prominent "checkout here" widget in the auction ad template. BidAssure CheckOut is designed to streamline the checkout process for honest bidders while detecting, monitoring and tracking deadbeats. Once a deadbeat has been detected, BidAssure CheckOut automatically replenishes inventory for resale and files the appropriate fee recoveries with the marketplace.

-- BidAssure Block - Available in October, ChannelAdvisor Enterprise clients will have the ability to automatically protect themselves from repeat deadbeats. The BidAssure Block system automatically detects when a bidder has not paid and prevents that bidder from placing future bids on items offered by the BidAssure Block client. BidAssure Block leverages the detection and fee recovery mechanisms in BidAssure CheckOut. BidAssure Block will significantly reduce the incidence of "repeat deadbeats."

-- BidAssure Network - In early 2003, ChannelAdvisor Enterprise clients such as IBM, Motorola, Sotheby's, The Sharper Image, Kodak, Harman Audio, Ritz Interactive, Toro, and Peg Perego will be able to "opt-in" to the BidAssure Network. The BidAssure Network will allow the network participants to detect and block deadbeats identified by other participants in the network, thus protecting against "multi-seller deadbeats" as well as "repeat deadbeats."

Based on data collected over the last three months via BidAssure CheckOut, ChannelAdvisor estimates that the BidAssure initiative will drop the deadbeat problem to below 2% for companies that participate in the highest level of protection--the BidAssure Network--and significantly improve the online auction selling and buying experience.

Note: BidAssure graphics that illustrate the three tiers of the initiative are available upon request.

About ChannelAdvisor Corporation

ChannelAdvisor provides technology and services that enable industry-leading companies to use online marketplaces to acquire customers and maximize inventory yield. Our solutions combine best practices, innovative software applications and integration technology to dramatically accelerate marketplace performance. ChannelAdvisor's customers and strategic alliances include IBM, Handspring, Ingram Micro, West Marine, Omaha Steaks, eBay, Yahoo! and Amazon Auctions. ChannelAdvisor recently completed a round of funding from several prominent investors including Genesis Venture Partners (GVP), Southern Capitol Ventures, Tri-state Investment Group, The Atlantis Group and eBay. ChannelAdvisor Corporation is headquartered in Research Triangle Park, NC. For more information visit http://channeladvisor.com/.