Monday, August 25, 2008

An eBay Without Auctions: Is That The Future?

eBay has changed its revenue model to one that favors more of its fixed price "buy it now" sellers versus auctioners, all this in time for the big Christmas push.

What's that you eBay without auctions? Well, no, but eBay is reporting that more than half of its current business is now from fixed price sales -- and that's where the growth is. It appears as if there are a number of forces that are leading their buyers away from the auction concept. My hypotheses:

1. With fixed price, you can be certain you are getting an item.
2. Auctions are favored by small sellers whereas volume retailers like fixed price -- and big retailers are eBay's future.
3. Auctions take too long. We live in a society that values instant gratification.
4. People are becoming bored with the concept of bidding.

I should point out that many long time eBay sellers -- who, as a group tend NOT to be giant retailers, are dissatisfied with eBay's restructuring of its fee scheme. But as the only real auction game in town. eBay can probably safely do this without losing these thousands of vendors.

I cannot help but wonder however what this will do to the eBay equity. eBay has never been Amazon, and while that may be where they are headed -- in particular copying Amazon's Z Seller model, it'll be interesting to see how their loyal buyers deal with this change as well.

What IS clear is that with auctions trending down as a percent of their business, eBay had to do SOMETHING.

Thanks for reading, and don't forget to write.

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