Auction Format Dead on eBay – Long Live The Auction

Today a landmark change in listing fees for fixed price format "Buy it Now" items on the original auction Internet site eBay was announced. 

Starting September 17th eBay will charge 35 cents to list any number of the same types of fixed-price items each fixed price item listing will now run for 30 days just as store listings and continue to be included in core search. 

UPDATE: eBay special web page explaining changes here: eBay

Is this move an indicator of the death of auctions on eBay?

Lorrie Norrington, eBay's president of global marketplaces says no, but ....

The fixed price listing fee reduction was not the only announcement worth mentioning from eBay today... 

"A revamped search engine, which is now being tested and will be introduced in September, will give buyers looking for a specific item options to buy at a fixed price or via auction" (Source: Reuters).

With this additional announcement, eBay is ringing the bell that tolls a change in the way consumers will search the site. This new or revamped search engine (can you say Best Match on steroids?) will offer fixed price listings side by side with auction listings (tests leaked on this system last February).   Will this new search "disadvantage" auctions so much that they become irrelevant and eventually through market pressure simply cease to exist?

This seems to indicate a fatal blow for auctions on eBay.

This change may not be a bad thing for new inventory sellers. 

What about eBay Auction Consignment?

For our eBay consignment store readers, these announcements signal a serious change on the horizon. 

Actually if your business model still offers consignment services, selling on eBay, you are already aware of the serious problems with the auction format.  This recent eBay announcement is just the final nail in the coffin for eBay drop off stores offering consignment. 

The time has come for trading assistant or drop off stores to abandon the consignment model. If selling on eBay is part of your business model I would suggest looking at offering outright purchase of goods that come through your retail door.  Only investing in merchandise you know will sell at a fixed price you can make a profit on.  In essence drop store operations need to look at the pawn shop model and scavenge bits and pieces to suit Internet sales of used merchandise. 

Auctions may be suitable for items with little or no cost for acquisition but fixed price is where merchandise will move on eBay now and in the future.  Until the numbers at other auction venues come up to a decent sell through rate, fixed price on eBay will be the best game in town.

eBay has become the venue for mass inventory and fixed price listings.  The previous management tried to stick with the roots of eBay and hold on to the auction format but it seems the new regime holds no such nostalgia for Pierre Omidiyar's vision of a selling and buying venue using the auction format.  eBay will never be what it was, the future has come to eBay.  Time to join in the new fixed price revolution or go elsewhere.

Personally, I saw this coming some time ago and have abandoned all consignment "Trading Assistant" operations in my business (except for long time customers) late last year.  The margins were just too small and the work load too high for me to justify the offering of consignment to new customers.  Listing bulk inventory that moves is the future of ecommerce.

Change is not always a bad thing, eBay must make changes because what they are doing now is not working.  They know it and we know it... I commend eBay for being bold enough to try and stimulate sales by lowering fixed price listing fees by what some say is nearly 70%  (Of course we have yet to hear how much the final value fee will be raised to accommodate this new strategy).  Auctions simply do not hold the mass consumer attention as they once did. 

Eventually eBay may look at spinning off the auction marketplace to a new site or even selling it outright, which may have been a good move about a year ago when the value seemed limitless.  Now that they have damaged the reputation of the auction format beyond repair and it might be difficult to find a buyer. It seems the plan is to slowly let auctions die on eBay and morph into a new Amazon like persona.

I guess we now know what "it" is....

"it" was Amazon, all along

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0 Responses to Auction Format Dead on eBay – Long Live The Auction

  1. Henrietta August 20, 2008 at 6:03 pm #

    I need to find time to create a spreadsheet and run actual numbers before I pontificate on this latest eBay offering, although it will not entice me back because pricing was not what made me quit.

    First impression, for media sellers a transition to Amazon would now add so little overhead and so much better quality of life that it is a no brainer.

    For clothing sellers especially the cut throat world of quality used clothing, I hope you are working hard on your exit strategy, you may need it sooner than you think. 15% good grief!

    Your points on the viability of Trading Assistance as a business are absolutely spot on. Lot less hassle doing it the way you advise too.

  2. nadine August 20, 2008 at 10:39 pm #

    It’s not clear that auctions are dead. On the contrary, the immediate effect of the new pricing changes will be to make auction listings much cheaper than fixed price listings for most categories, for anything that will sell in less than 2 or 3 weeks. Doubly so if the item can be started cheap and run up in price, but true even if it goes at one bid. So the percentage of auction listings should rise, unless ebay decides to disadvantage them in search so much that they never sell.

    What this change will kill is eBay Stores. Ebay just announced the end of SIF format in ebay.co.uk. It is probably only a matter of time before they do so in ebay.com as well.

  3. Scott Pooler August 20, 2008 at 11:31 pm #

    @nadine

    Placing Auctions on the same page as fixed price listings will disadvantage them enough to make a difference. eBay has stated clearly they are moving to a fixed price format venue and if the auction people want to keep listing auctions as they have, they may do so.
    But if your placing merchandise at auction in a category with any fixed price competition at all, I think the disadvantage will be clear. If the item is listed in a category with little or no competition from fixed price listings, an auction still may be viable.
    Auctions have seen their day on eBay. Returning the default sort to time ending soonest will certainly help a great deal, but I think the writing is on the wall…
    Gear up for fixed price….
    Keep in mind the fact that 30 day fixed price listings will now be indexed by search engines outside of eBay and will also appear in eBay’s own search. This combination was very powerful when SIS was allowed to happen for a short time in the past.
    What we will have now is SIS (Stores in Search) only with a new name, Fixed Price in Search.
    Great news for repeatable inventory sellers, not so fantastic for one of a kind and collectible merchants. (Unless they take advantage of fixed price 30 day listings).
    All the advantages have been soundly stacked in favor of Fixed Price… Why bother with auctions?

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