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August 22 2008
eBay signals the end of the road for auctions as a winning business model
eBay has announced a major turnaround in its business with a new focus on fixed price sales and a reduction in its emphasis on auctions. Phew! Yes, the world is still round, the Pope and bears are still doing what comes naturally and people do, it seems, still prefer to buy something that has an actual price tag on it. Now, where's my pricing gun?
eBay has dramatically slashed the cost of fixed price sales and is making substantial changes to the layout of the site that will give 'Buy It Now' sales greater prominence over traditional auction sales.
Upfront fees in the US, for instance, are being dropped by over seventy percent to only 35 cents (less than 20p) for a 30 day listing with the majority of 'Buy It Now' costs now only coming into play if and when an item is successfully sold. A similar change in the pricing structure for 'Buy It Now' items will also be introduced in both the UK and Germany.
The new pricing goes live in the US on September 16 and will be followed by a series of changes to the navigation of the site over the next two months. "Improvements to eBay's product search will make it easier for buyers to find the best deal on the product that's right for them," the company says.
"We aim to be the most competitive marketplace online, and this new, incredibly low pricing helps us achieve that goal," says Lorrie Norrington, president of eBay Marketplaces. "A 35 cent listing fee virtually eliminates the upfront cost for sellers to put more of their great inventory on eBay and creates more opportunity than ever for sellers to build successful businesses."
The traditional auction model will remain, the company maintains, but it will clearly have a much lower profile. "Sellers can still choose to list items in eBay's auction-style format, which, with a low start price, remains the most cost-effective way to offer many kinds of items," says eBay. Auction-style listings will continue to be featured prominently in search, sorted primarily based on 'time ending soonest' and appearing towards the top of search results as the listing comes to a close.
But the company now admits that auctions have their place — and that it's a very limited one. "Auction-style listings remain the ideal choice for sellers who are uncertain about the value of their item, have a scarce item in high demand, or are willing to start at a low price and let bidding determine the final value," says Norrington. Full details are available at eBay.
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