Is eBay fed up with the auction business?

Davey Winder
Wednesday, 20 August 2008 18:36

Business IT - Technology

eBay is cutting the costs of fixed-price sales and giving buyers additional financial protection. Does this signal the end of the online auction site and a drive to become the shop window of the web instead?

eBay can be accused of many things, but being unsuccessful is hardly likely to be on the list. With some UKP £30 billion worth of goods sold around the globe every year it is doing really rather nicely thank you.

So why, you may ask, is it seemingly moving away from the online auction concept that has served it so well? Today eBay announces a raft of changes to the way things are sold and the protection given to those who buy them.

The strategy would appear to be quite simply to drive more sellers towards the fixed-price eBay as a shop model, and away from the auction side of things. Expect to pay less for listing items on a fixed-price basis, although more in fees when it actually sells.

Why do this? Well it acts as a carrot to encourage sellers to list their entire inventory in one go, moving the financial burden into the sales part of the equation. Which kind of sounds like a shop, doesn't it?

Indeed, some are going as far as to suggest that eBay is actively encouraging larger retailers to move to the eBay shop window model with discounts based upon sales volumes and even better search listings for those with better customer service records.

Buyers get some additional incentive to purchase items using PayPal, also owned by eBay of course, with the financial protection for such sales increased from UKP £500 to UKP £30,000.

Don't be fooled into thinking that this is all new territory as far as eBay is concerned though. The truth is that for the longest time it has been moving away from the auction model and towards the web shop one.

Indeed, some 43 percent of sales worldwide are now made at a fixed-price rather than in auction, that's an increase of 60 percent during the last six years. Perhaps more importantly, the revenues generated by fixed-price sales are now fast approaching the auction totals.

Whether it will be enough to keep the real giants of web-based retailing, such as Amazon in the global market and supermarket supremo Tesco in the UK, at bay remains to be seen...