Ina Steiner EcommerceBytes Blog
News and insight focusing on ecommerce.
by Ina Steiner, Editor of EcommerceBytes.com
Wed June 25 2014 15:55:44

Are Online Auctions Really in Decline?

By: Ina Steiner

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We often receive inquiries from analysts, researchers, and even students about industry issues, and this week I received an email from an analyst doing research on the online auction market. She wanted to know more about our reports that auctions were declining in favor of fixed price.

eBay auctions certainly are declining as a percentage of total Gross Merchandise Volume - they made up 70% of eBay's business in 2008, and auctions now account for less than 28% of total GMV for its Marketplaces business. (eBay shares numbers in its quarterly financial filings for those who wish to dig in deeper.) But it's important to note that since 2008, eBay has promoted fixed-price items and used various levers to tip the scales heavily in their favor, so the decline of auctions is not completely an organic development.

But even before that, auctions on eBay were on the decline. As we reported last year, the National Bureau of Economic Research released a working paper from Stanford researchers that showed a steady decline in auctions on eBay from 2003 to 2008, and then a more dramatic shift downward from 2008 to 2011 thanks to eBay's actions to promote fixed-price listings. 

eBay has told Wall Street analysts that it doesn't want auctions to increase as a percentage of its business, but it doesn't want it to decline either. But auctions did decline 9% in the first quarter of 2014.

As a result, eBay changed its fee policy effective May 15th to encourage more listing in auction-heavy categories, as previously discussed on the EcommerceBytes Blog. There are other auction marketplaces as well as live-auction platforms, but growth numbers for those markets are hard to find.

Auctions are ideal for items where it's difficult to place a value, such as unique and rare items. But unlike the early days of online trading, it's much riskier to start the bidding low. This topic came up Monday in a letter from a reader who reported receiving recommendations from eBay that she start the bidding for her auctions for very low starting prices.

Now that eBay is encouraging more auctions through its May 15th fee change, are sellers listing more auctions? And if so, are they listing for retail prices, or are they starting the bidding low, as eBay would like?

What is the fate of online auctions on eBay and elsewhere?




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Perminate Link for Are Online Auctions Really in Decline?   Are Online Auctions Really in Decline?

This user has validated their user name. by: Ric

Wed Jun 25 16:22:37 2014

Blame it on John "Noise" Donahoe, eBay's CEO.

Almost from day one, Donahoe loathed the 'garage sale' image he perceived eBay to have.

As a disconnected one percenter, Donahoe failed to comprehend the value in the auction format that appealed to much of the remaining 99% of the population and dismissed the format.

Like so many other issues the disconnected CEO imagined, he took steps to deemphasize and dismiss the format.

Today, John Donahoe desperately needs to increase sales and he finally seems to be waking up to the fact that he was totally and completely wrong about the format.

The problem for eBay is that Mr Donahoe stuck to his misconception for too long and has his epiphany comes too late in his tenure.

The damage is done.

Buyers who thoroughly enjoyed bidding have found other venues and have avoid eBay as much as possible.

So too, sellers whose merchandise thrived under the auction format have also abandoned eBay, many have sought other venues, others started their own websites.

The result... now that John Donahoe has caught a glimpse of his gross miscalculation he is trying to reengage buyers and sellers who he drove away and who now no longer see any value proposition in the marketplace Donahoe has all but destroyed.

It is not hard to make the case that it was the faulty decisions made and implemented under CEO John Donahoe that caused the problems, and his will to drive an agenda that was based on his elitism has irreparably damaged the business he now finds himself desperately attempting to rebuild.

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This user has validated their user name. by: Basset

Wed Jun 25 18:21:23 2014

I do just a few auctions when they are a free promo - the vast majority of my items are still FP. ALL my June sales have been FP, with my few auctions ending without a bid.

When I do list auctions prices reflect the minimum I am willing to take online and don't stray far from the FP price. So really, I'm better off just doing FP. I am seriously thinking of going back to FP only, even with all the promos.  

To ask a buyer to wait out an auction risks losing the sale unless the item is at a give-away / lose money priced starting bid.  


For me as a buyer, I've picked up some great bargains at low start bids, but I know  seller is sure taking a hit. Even so, my buying preference is fixed price - maybe watching it long enough to see if the seller puts it on sale.

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This user has validated their user name. by: Ming the Merciless

Wed Jun 25 18:50:30 2014

As always, RIC analysis is spot on, and I would add a couple of other points.

As Phil has pointed out hundreds of times, ebay has ignored, cultivated, encouraged, and then covered up for shill bidding rings such as the one operated by She Whose Name Cannot Be Mentioned that has been well documented by ecommercebytes.

There are hundreds more in various permutations.

Buyers who at one time enjoyed the adrenaline rush of bidding caught on that the game was rigged in far too many cases. They figured out winning was impossible or that just when they thought a low ball winning bid was within their grasp, the seller ended the listing because they started the listing too low.

In the main category I sell in, I believe 80% of auctions with multiple bids are shilling. But ebay profits by looking the other way just as they profit from most of the crime they allow to occur on their site when it involves merchandise that can't be VeRoed.

ebay has consistently given novice sellers bad advice about auctions such as the current "start low" campaign which serves ebay at the expense of sellers. Once or twice burned, even a new seller isn't going to continue losing money with auctions using ebay's self serving advice.

John Donahoe doesn't seem to understand a very basic business concept which is that when your customers succeed, you succeed.

Instead Donahoe has operated under the SCOTUS greed principle that ebay will succeed only by lying, cheating, and stealing from its customers using a mile long list of quasi legal and illegal tactics such as using user agreements to compel sellers to surrender legal rights.

Donahoe's own arrogance, corporate sociopathy, tolerance for the illegal, and engaging in the illegal are just a reasons why the ebay marketplace is failing regardless of whatever numbers ebay's creative accountants feed Wall Street.

Moreover, this issue is just the tip of the iceberg. If and when the full extent of Donahoe's perfidy were known and exposed, he'll make Ken Lay and Bernie Madoff look like choir boys.


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This user has validated their user name. by: Philip Cohen
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Wed Jun 25 20:12:54 2014

Well, what can I add to Ric and Ming, other than ...

eBay is an Equal Opportunity Fraudster

eBay merchants may think that eBay is biased in favour of buyers but that is only when it suits eBay’s purpose; it’s nigh impossible to keep a track of all the deviousness and unscrupulousness, or the criminal activity, of eBay Inc.; their unprincipled activities are so pervasive; one can only generalize and describe eBay as an “equal opportunity fraudster”: they themselves will defraud, or will tacitly, and explicitly (McFadden/eDropOff), aid and abet others to defraud, whoever they can, whenever they can—as long as there is a gain in it for eBay. eBay is probably the most unscrupulous commercial entity on the planet; eBay is, demonstrably, the greatest calculated facilitator of the most massive, endemic, auction fraud on consumers that the world is ever likely to know and, doubtless, there will be a trickle down effect of like criminal activity to their other operations. Ultimately, anyone that does any form of business with eBay, or any of its subsidiaries, eg “PreyPal”, does so at their constant peril …

And it also says a lot about the laziness, or corruption, of the regulatory authorities that no action has been taken even to stop, let alone to prosecute eBay for, this demonstrable, ongoing, massive, wire fraud on consumers …

eBay Inc, where the incompetent mingle with the malevolent and the outright criminal, and the just plain stupid ...

Perminate Link for Are Online Auctions Really in Decline?   Are Online Auctions Really in Decline?

This user has validated their user name. by: Rexford

Wed Jun 25 20:25:24 2014

In my opinion, the current CEO is obsessed with big brands and big retailers.  Big brands and big retailers are so far from what made eBay successful in the first place that I honestly don't know why he ever wanted to work for eBay. And as we know, big brands and big retailers aren't likely to list in the auction format.

When JD was promoted to CEO, he tried to turn eBay into what he wanted it to be, ignoring everything that made it a successful ecosystem of buyers and sellers.

Many here have said "if it ain't broke, don't fix it".  He didn't listen.  And he's still obsessed with big brands and big retailers.

And Ric, brilliant and on target as usual.

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by: HappyOne This user has validated their user name.

Thu Jun 26 06:26:42 2014

As a longtime hobby/part-time seller on EBay (1998) I rarely list anything as an auction any more. I primarily sell yard sale finds. In the early days of EBay value of items was hard to find and auctions worked.  Now most items are not that rare or unique that a ''selling'' price cannot be determined. As a flea market seller for over 40 years pricing is second nature now for most items. Buyers have many of the same items offered. If buyers really want the item NOW and an acceptable fixed price is offered they buy it. Few buyers want to play the auction game at an starting price that is more than super cheap.
As a seller auction started at less than acceptable prices often end at that price. When an item does get that rare ''bidding war'' as a seller I find nonpaying bidders are a problem. I wonder if part of the non paying bidder problem comes from EBay showing similar or the same items on the closed auction pages at cheaper prices within minutes of the auction ending? I am content offering all my items at a fixed price with immediate payment required. On those rarer/unique items with limited interest I put a more than acceptable price with the ''Best Offer'' option. This does allow me to ''vet'' the potential buyer.
Lastly auctions in the past had a fvf of 7% vs. 12% on fixed price listings. Now with the same fvf there is less incentive to list an item as an auction.

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This user has validated their user name. by: Rexford

Thu Jun 26 06:28:03 2014

Ming says "using user agreements to compel sellers to surrender legal rights".

I find all of these user agreements that companies are using nothing more than a means of screwing their customers. It completely lets the companies off the hook when they do what would normally be considered to be illegal or unethical.

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by: vintagegoodness This user has validated their user name.
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Thu Jun 26 07:04:55 2014

eBay online auctions are in decline - but local ones are booming, at least in my area. Several traditional auctioneers have started websites where they run online auctions, and there are always a lot of bids. They start things at $1.00, and the auction ends when the bidding ends - no fixed ending time like on eBay, so no frustrating sniping. If this trend is happening all over the country, it makes sense that true auction enthusiasts have left eBay in favor of the local online auctions...

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by: rhawk This user has validated their user name.

Thu Jun 26 07:32:39 2014



Donahoe destroyed ebay.

 Thats about all there is to say......

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This user has validated their user name. by: Basset

Thu Jun 26 07:43:44 2014

Spoke too soon, actually have a couple bids on auctions now. The starting bids are at what my item would be at fixed price on a temporary markdown manager sale.

Still, I wonder if they would just be ''sold'' at this point if FP.

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by: mazelgirl This user has validated their user name.

Thu Jun 26 08:30:47 2014

Ric said it perfectly. I will add that eBay has been tossing out all those freebie auctions--and I have been using them with success.  I'd switched to an almost 100% fixed price format--and was really pleasantly surprised at how well my auctions did.

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by: comet This user has validated their user name.

Thu Jun 26 08:53:10 2014

I have tried both auction and FP on the SAME items for the SAME opening prices--and I still see little sales or growth.  

What I DO see however is items that SIT and then SELL--often to the SAME regions of the country.  I am in NY---why have ALL of my past few sales been to TEXAS?  Way against the "Law of averages"

So to ME this means bid and view manipulation,

IF a brick and mortar auction house tried this there would be hell to pay among the bidders AND the State.  Can you imagine Sothebys having a house full of potential bidders for that Van Gogh and only letting one 50th of the audience SEE the item for sale?

Exactly how long would they be in business and how long would the jail time BE?

I have also recently noticed MANY more items with a RESERVE on them than in any time in the past few years.  Since this (as far as I know) costs MORE when you list you gotta think that the seller is NOT willing to accept the low ball offer.  I have ALSO noticed that on these RESERVED items they either do not MEET the Reserve OR they go poof---presumably because some one got frustrated with the failure to be able to BREAK that Reserve and went to the seller directly.  Since you don't see any FB on these and they just---end---it is a pretty good guess that the sale left ebay.  

o it's once again the clueless and headless turkey at the head of the Board table who is causing the business to FAIL.

Auctions are not evil.  Neither is Fixed Price.  OR Buy It Now.

Donahoe is evil AND a criminal to boot.  

Lets auction HIM off to the highest bidder.

Oh wait----

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by: Toledo Maude This user has validated their user name.

Thu Jun 26 09:11:06 2014

In my 14th year selling on eBay, my auctions are not dying.  I buried them many years ago when the fees for a 30 day fixed price listing dropped to 30 cents per month.

The few of my that auctions sold received but one bid.  Looks like fixed price to me.

A flaw that eBay never thought to address or correct was that in the real world of auctions, the auction does not end until the last bid is in.  Yahoo had auctions early on, that the time limit would be extended if one or more bids came in at the last minutes.   But eBay never wised up.

Who knows how much money has been lost to sellers due to the eBay auctions ending based on the clock rather than holding out for the last bid.  

When eBay’s upper management decide to turn a successful mega business from a small seller driven company to one that would reap millions and billions dollar rewards for CEO’s and hoped for skyrocketing stock prices based on the latest Wall Street and MBA management methods, the fate of small sellers was sealed.  Sell on eBay and qualify for food stamps...

Speaking of Etsy’s policy of extending First Class Service prices to packages weighing over 13 ounces up to 16 ounces reported last week in EcommerceBytes, has anyone successfully tendered packages to the Post Office?

My local Post Office will not accept these packages as First Class.  

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by: CA This user has validated their user name.

Thu Jun 26 09:35:16 2014

I use auctions only to amp up sales and I used to use ALL auctions. I list 95% fixed price because I get the price that I want.  I will also use fixed price/best offer, which also works well.

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by: JohnGermaine This user has validated their user name.

Thu Jun 26 09:38:37 2014

I have a few items now and then that require an auction because I am unsure where ''the top'' is for that item's price. When speaking with others who only buy, they have little patience for an auction, they want to buy and get their instant gratification! And they also say that they feel that many of the auctions they have participated in in the past, were rigged, that shill bidders drove prices where they were unwilling to go. I have never started an auction at 99¢ and never will. Just getting ANY sale any more is tough and the thought of giving my items away is ludicrous! It's a waste of my time as well since eBay wants it cut, PayPal gets theirs and then there is the time involved. My time has value, this is my only job. Competing with others who only have their eBay job these days makes it tough, but we plod on nonetheless. The continuous changes and BS make it nerve wracking though, and always wondering what hair-brained scheme they are going to think up next!

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by: NetWatch This user has validated their user name.
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Thu Jun 26 11:43:38 2014

Perhaps one of the reasons auctions are in delcine is the UNLEVEL playing field eBay has created. From my social media FB group: "I recently purchased some Ghost Pepper and Rose Seeds from eBay for a rather LARGE vendor, over 12,000 feedback but a 99% seller rating...Negative feedbacks received on a daily basis, but if you account is linked to a person in the same apartment complex, or dorm room SIX YEARS PREVIOUS, your account is SUSPENDED???"

RV: Yes, JB, that's the double-standard eBay uses to favor larger sellers and it is AN ILLEGAL FAIR TRADE VIOLATION..."

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This user has validated their user name. by: The End

Thu Jun 26 11:55:10 2014

Are Online Auctions Really in Decline?
ANSWER : No

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This user has validated their user name. by: The End

Thu Jun 26 11:56:08 2014

If people start putting up good stuff auctions will increase.

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This user has validated their user name. by: The End

Thu Jun 26 11:57:04 2014

But as long as Donahoe exists at Ebay, it will remain stagnant.

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This user has validated their user name. by: The End

Thu Jun 26 11:57:58 2014

Berma-Shave  :o)

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