New auction trends may leave eBay behind
By Troy Wolverton
Staff Writer, CNET NEWS.COM
April 14, 1999, 3:00 p.m. PT
Person-to-person auctions will soon be dwarfed by business-to-consumer auctions that Amazon
has embraced, analysts say, in marked contrast to eBay, which could be letting a golden
opportunity slip away.
In a report released last month, Forrester Research estimated that the total value of online auctions would
grow from $1.4 billion in 1998 to $19 billion in 2003.
Although the person-to-person auctions like eBay's currently dominate the market, by 2003,
business-to-consumer sales will comprise some 66 percent of total Internet auction sales, about $13 billion.
Although eBay has been the online auction leader to date, analyst Evie Black Dykema, who co-authored
Forrester's report, said eBay seems to be ignoring the potential of the business-to-consumer area. While
some retailers such as Lands' End are listing items on eBay, Dykema said eBay isn't courting retailers and
isn't separating retail items from the goods offered in person-to-person auctions.
"eBay is missing that opportunity and the consumer auction market is theirs to lose," Dykema said.
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eBay spokesman Kevin Pursglove said the company would not ignore the business-to-consumer area.
However, he said the company believes that there will continue to be strong growth in person-to-person
auctions.
"Our core is person-to-person and this is where we will stay," Pursglove said. "That will be our focus for the
foreseeable future."
Although the company has no plans to separate out business-to-consumer
auctions, Pursglove said eBay might consider pursuing the merchant auction
area if its customers demanded it.
"We'll keep our eyes on the business-to-consumer area and keep our options
open," Pursglove said.
Dykema said that eBay's failure to actively pursue the business-to-consumer area
could open up opportunities for other auction sites, particularly Amazon.
"This could be a goldmine for Amazon," Dykema said.
Amazon recently announced its acquisition of auction site LiveBid, a further
indication of its focus on the business area. According to Dykema, LiveBid will
help Amazon host auctions for off-line retailers.
"Retailers will be more likely to trust them than anybody else," Dykema said.
"They've won respect from business and consumers."
While Jupiter analyst Fiona Swerdlow concurs with Dykema that Amazon is honing in on the
business-to-consumer area, she doesn't predict smooth sailing for the online retail giant. She said Amazon
hasn't done a good job of distinguishing merchant auctions from person-to-person listings.
"I think it's easy for the consumer to be confused," Swerdlow said. "It's not clear whether you are dealing with
an individual or a company."
Another major competitor, Yahoo's auction site faces an uphill battle in both auction areas. Noting that
Yahoo had conducted live auctions with LiveBid and Butterfield & Butterfield, which is reportedly in
negotiations with eBay, Dykema said that the portal seems to be getting "picked to pieces" in the auction
area.
"They really have been floundering since they started last fall," Dykema said. "The name of the game in the
auction market is traffic, and if you have floundered for a while, it's really difficult to build up from there."
Tim Brady, vice president of production at Yahoo, acknowledges that the portal was late to the auction area,
but said Yahoo is "pleased" with the performance of its auction area to date. Brady said Yahoo Auctions will
continue to try to gain market share in the auction business.
"We'll absolutely play a key role in auctions going forward," Brady said.
Brady said Yahoo has no plans to separate business-to-consumer auctions from person-to-person ones.
However, he said, Yahoo is talking with tenants of its Yahoo stores area about offering goods on Yahoo
Auctions, and the portal will continue to integrate its auctions area with its classified ads and stores.
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