SAN FRANCISCO (CBS.MW) -- Overstock, a leading online discount retailer attempting to rival eBay, is trying to build its traffic by employing a low-cost, viral-marketing strategy popularized by Friendster.
The Salt Lake City-based discount retailer, which announced plans to get into the auction business last Friday, has incorporated a Friendster-styled social network marketing gimmick. Friendster is an online dating service of sorts that grew like weeds last year because of its viral-marketing strategy.
Just like Friendster, Overstock
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wants auction members to get their network of friends to sign on to the site, and their friends' friends to sign on, and so on, and so on, and so on.
The social network phenomena came about last year when the word-of-mouth viral nature of social networks sent Friendster's traffic sharply higher in a short period of time.
In order to jump-start the traffic, Overstock is offering $50,000 for anyone who grows the biggest network by the end of October.
If you get them, will they stay?
Viral marketing may get customers in the door, but it doesn't keep them in the store. The cachet of the social-networking idea wore off and Friendster's traffic dropped this year.
Nonetheless Overstock CEO Patrick Byrne thinks it will work on his site. He's gone so far as to apply for a patent "on the intersection of a Friendster social-networking model and e-commerce."
Anything helps, skeptics say. After all, Yahoo and Amazon.com, two of the more popular shopping sites, have tried auctions in the U.S. and have had little luck making a dent in eBay's
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business
In August, eBay had 58.9 million unique visitors in August while Overstock had almost 11 million, according to comScore Media Metrix. Amazon.com
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ranked No. 2 in the retail category, with 33 million visitors. Yahoo's
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shopping site, Yahoo Shopping, was in fifth position, with 16.6 million visitors.
But Byrne believes Overstock's bargain-sensitive customers serve as a ready pool for auction sellers. His customers would more likely be interested in auctions, he said.
"There is tremendous amount of traffic going to our sites from eBay," Byrne said. "Seventy percent of [our] shoppers also shop at eBay, which mean they also know how to do auctions," he added.
Overstock, which is trying to be another auction channel for merchants to liquidate their items, is also offering big-volume sellers a 30 percent discount off the fees eBay charges its largest sellers.
In its first week of business, Overstock appears to be getting some attention from eBay power sellers seeking another channel to distribute their wares.
Scot Wingo, who founded Channel Advisor, a company that helps liquidate large volumes of items on eBay
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, Yahoo, Amazon.com
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and Google
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, said he's receiving a lot of inquiries from his clients about selling their wares on Overstock's new service.
One power seller says that she's not easily found on eBay and hopes that will change at Overstock. This power seller asked not to be identified since she's still a power seller on eBay. She began listing products on Overstock this week to test it. So far, Overstock's customer service is far better than eBay's and she's getting some traffic, she said.
Market moves
Shares of InterActiveCorp
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lost 1 percent to $21.77. American Technology Research analyst Mark Mahaney lowered his third-quarter estimates on IAC due to the recent hurricanes. Mahaney estimates the Hurricanes Charley, Frances and Ivan could potentially hurt IAC's travel bookings by up to 2 percent in the third quarter. Meanwhile, Mahaney says that Cendant's
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$1.25 billion cash purchase of Orbitz
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was neutral for IAC.
The price highlights IAC's low valuation, he wrote. But on the downside, Cendant now becomes a stronger player in the travel ticketing business. The Cendant-Orbitz deal was announced Wednesday.
Editor's note: Bambi Francisco will be among the featured speakers on the first CBS MarketWatch investment cruise, Oct. 24-31, in the Caribbean. Get information on the cruise here. You can also subscribe to Bambi Francisco's Net Sense, a weekly commentary. 
Bambi Francisco is Internet editor of CBS.MarketWatch.com, based in San Francisco.