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Making a New Bid

Online Auctions

When it comes to online auction sites, eBay is still the biggest name in the game, and the giant has made changes aimed at helping buyers. But other auction services and specialized Web sites that offer a bonanza of products are drawing consumer traffic. New ways of doing business—adios, auctions? —also are creating a buzz.

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In his 7 years buying and selling on eBay, Rich Siok gave exactly one negative feedback rating to a seller. He bought two memory sticks, and one of them didn’t work. But after he entered the negative comment, the seller responded with the dreaded “retaliatory negative.”

Suddenly Siok’s near-perfect record—a key statistic on eBay, because shopping the site requires buyer and seller to believe in one another’s honesty as they ship goods and cash back and forth—was tarnished just because the Elk Grove., Ill., man tried to be honest about a seller.

That was happening too often for eBay’s taste. So, in January the online giant eliminated a seller’s power to give negative feedback about buyers. This is one of the many changes the dominant online marketplace made in recent months, with most designed to help buyers. In response, thousands of the site’s sellers threatened to take their digital storefronts elsewhere. eBay fee increases drove some smaller sellers off the site, too.

That opened the door for other online auction sites to attract eBay customers, although it remains to be seen whether that door was flung wide or opened just a crack. Buyers and sellers say that so-called “seller’s revolt,” along with natural evolution in the world of online shopping, has resulted in perhaps the most dynamic change since eBay—the ninth-most visited U.S. Web brand according to Nielsen Online—established its dominance.

The rival auction sites so far have only a fraction of eBay’s buyers or sellers. In the revolt, it was mostly the little guys who left eBay, says Lissa McGrath, co-author of “The Complete Idiot’s Guide to eBay,” and statistics back her up.

Whereas eBay had 14.1 million listings one day last summer (not including several times that many more listings in eBay Stores), according to a chart maintained by PowerSellersUnite, its closest auction rival, eBid, had 1.1 million. The next two biggest sites operating primarily in the United States were OnlineAuction (600,000 listings) and ePier (200,000). Bidville had been at 460,000, but it was purchased by uBid, an auction site that helps manufacturers liquidate unsold merchandise, and then closed in June.

THE FORCE IS WITH THEM. To be sure, although eBay traffic declined 9 percent in the 12 months ending June 2008, according to Nielsen Online, no significant threats to eBay’s overall influence have emerged: It still has the most sellers, the most buyers and the most items for sale, and it handles more money than many nations. It still owns PayPal, the most widely used and fully developed method for transferring money between private parties online.

eBay: Still the Big Fish

eBay: Still the Big Fish

More than 9 out of 10 U.S. visits to auction sites in June were to eBay sites, including eBay itself (78 percent) and eBay’s vehicle outlet, eBay Motors (15 percent). For buyers, that means a well-evolved organization and a feeling of familiarity and security.

But around the edges, new sites and new business models are cropping up, older ones are gaining traction, and the potential for buyers to find bargains is strong. iOffer, a San Francisco-based site, matches buyers and sellers and helps them to negotiate. The new Swaptree site seeks to recapture the “flea-market” feel that once permeated eBay. It will help you trade, say, your “Sopranos” Season 1 DVDs for someone else’s Rolling Stones CD box set.

Specific product categories are seeing players emerge. For example, the new Worthpoint site targets higher end antiques and collectibles, posting auctions on behalf of dozens of auction sites and offering links to them. TIAS offers a wide range of antiques and collectibles, some for a set price, others with a “make an offer” option. For crafts, it’s Etsy, which offers art lovers the opportunity to buy handmade jewelry, paintings and vintage items through straight sales, not auctions.

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