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To: Jing Qian who wrote (2576)	4/12/1999 5:41:00 AM
From: Doug Fowler	Read Replies (4) \| Respond to of 7772

Amazon Auctions Already Showing Signs of Faltering. Copyright, Doug Fowler, 1999. All rights reserved. Amazon, the leading online book and CD seller, entered the online auction business two weeks ago with great fanfare. Mysteriously, Amazon started its first day with tens of thousands of auctions. Many investors fretted that with 8 million plus members, Amazon would quickly become a major threat to eBay, and eBay saw its stock drop dramatically. Amazon has proven that it can enter new fields quickly at great success. In its first full quarter of offering music CDs for sale online, Amazon bypassed CD-Now and The Music Boulevard, forcing those two companies to merge in a bid for survival. Don't count on Amazon bypassing eBay anytime soon. While Amazon does not publish its auction count totals, Amazon does provide powerful search functions that allow for one to get very close to the actual auction totals. For example, search for the word "good" on Amazon, and it tells you there are 14,218 auctions with the word "good" in the title or description. Search for the same word on eBay, and you get 574,998 auctions using that keyword. Type in the word "buyer" and you get a count of 16,584 for Amazon. For eBay, you get 792,514. It becomes pretty clear that for every Amazon auction, there are 40 for eBay. With eBay currently running 1.9 million auctions, you get about 48,000 for Amazon. Which is less than it was just a week ago. More disturbing, Amazon seems to be losing out on the big ticket items. For example, one week ago, a search for the word "Rolex" showed up in 101 auctions on Amazon. Now, that number is 34. Amazon is pulling out all the stops in its attempt to gain quickly against eBay. It is promoting the auctions from its high traffic home page, placing a flyer in every book, CD and video it ships, offering first time auction buyers $10 off a future Amazon purchase, and even guaranteeing that buyers are covered for up to $250 if a seller doesn't deliver the goods. Amazon even went so far as to sign up hundreds of merchants who listed tens of thousands of items for sale for Amazon's opening day in auctions. So why is Amazon already losing steam? Because sellers go where they have the best chance to get the best prices for their goods, and buyers go where they have the widest selection at the best prices. Many eBay sellers took a chance on Amazon and found that their items either went unsold or didn't reach the price they were hoping for. Sellers like to stick with what works, and many found themselves returning to eBay after just one week. Buyers who checked out Amazon found that the selection on Amazon was tiny compared to what they were used to at eBay. Example: There are less than 25 items listed on Amazon for Roseville pottery. On eBay, there are more than 1500 items listed in the same category. But, what about people who have never used eBay or any other online auctions service? Clearly, Amazon has an opportunity to bring many new people into online auctions. But one has to wonder how long it will take these newbies to discover eBay and abandon Amazon. To give Amazon credit, its auction business is already 3 times the size of Auction Universe, an eBay competitor for the past year. And Amazon is likely to bypass Yahoo, which has been trying online auctions for about six months, through a venture with OnSale. Unlike eBay or Amazon, Yahoo charges nothing to sellers to list auctions. Yahoo currently has about 150,000 auctions running. The problem with Yahoo is that it attracts very few buyers. So, even though the auctions are free for the sellers, the sellers view Yahoo Auctions as a waste of time. In fact, other than practically hiding their auction entry on the Yahoo home page, Yahoo appears to have given up on the hope of becoming the leader in online auctions. Amazon will have to do something dramatic to attract many more sellers to its site. They may even have to consider "paying" quality sellers to list their wares, or at a minimum, provide quality sellers with significant discounts from their standard auction fees. Barring any major incentives for sellers, Amazon will have to be satisfied with being a very distant also-ran in the online auction business. Something Amazon investors are not likely to react to kindly.