Should eBay Be Nervous?

There is a popular perception that eBay is sitting pretty in the auction world, all but untouchable by its many rivals.

However, fissures are beginning to form. eBay’s empire may not be as solid as it seems.

Of course, the biggest Net auction-related news of late is word that Yahoo! has seen a jaw-dropping plunge in the number of listings on its auction pages since instituting a listing fees schedule last month.

It’s logical to think that because eBay had already charged fees, its own recent increases won’t have a similar impact. eBay has so much going for itself in terms of sheer volume of traffic, that it can probably afford to hike its fees without inflicting too much damage.

In fact, Yahoo! probably suffered so much because its free auctions were an alternative to eBay’s paid listings. Once Yahoo! slapped on a fee, people may have begun to head back to Old Faithful.

At least that’s the conventional thinking. But an increasing band of auction die-hards, many of them professionals, believe that eBay has treated its customers badly.

The problem for the anti-eBay crowd is that while there is no shortage of alternative auction destinations, there is no clear No. 2.

Coming on Strong

Take a look at the January NextCard ratings, which track online transactions by users of that particular credit card. Three auction sites ranked among the top 30, with eBay at No. 4, Ubid.com just behind at No. 6, and FirstAuction.com at No. 15.

Again, this is not a solid measure of what a wide range of online shoppers are up to, but it is evidence that eBay isn’t the only game in Auction Town.

Then there’s BidBay.com, which recently filed for an IPO. That’s right, filed for an IPO.

Certainly there are questions about BidBay’s financial health, and it may be that the idea of the public offering is an effort to raise cash by any means necessary. The company’s filing does not even list an underwriter. But the fact that it could make the filing with an apparent straight face is interesting enough, given the market conditions.

Self-Destructive Tendencies

However, what truly has the potential to undo eBay’s own success is eBay. Every other week, it seems, a new proclamation hits the message board informing users of a new policy or new feature. Some contain good news, such as word of site improvements and the like. But more often than not, the announcements alienate a bulk of the eBay populace.

First there was the fee hikes. Then the trouble with downtime and confusion over how auctions impacted by outages should be handled. Then a decision to suddenly enforce old rules about offline sales that make perfect sense, but still anger a whole bunch of people.

Finally (for the time being), there’s eBay move to establish a monthly fee for using upgraded software that thousands of users had already paid for up front.

Over the Line

The bottom line is that there’s a love-hate relationship between eBay and its very best, most important customers, the professional and semi-professional sellers who list in bulk and are responsible for most of the vast array of auctions that take place on the site.

So far, nothing has pushed them over the edge, but eBay is capable of doing just that. There’s no doubt the company wants to find new sources of revenue and no doubt that it recognizes, much as Amazon.com does, that it has only begun to explore the potential riches that its vast membership base holds.

Still, going slow is essential. It’s like the old adage about boiling live lobsters: If you drop them into a pot of hot water, they’ll scream, but if you turn up the heat slowly over time, they won’t notice.

eBay users are feeling the heat all right. But eBay might cook itself if it’s not careful.

What do you think? Let’s talk about it.