eBay to take auctions local
The auction giant will test a regional version of its service, a move that could imperil local newspapers' classified-ad business.
Speaking at the National Press Club in Washington, D.C., Whitman said eBay's first regional site will serve the Los Angeles metropolitan area and other cities will be added in the coming months. The company plans to introduce new categories of items as a result, and is studying the possibility of allowing auctions of live animals on the regional sites, she added.
The regional auction sites will be accessible from the eBay home page and will have the same features, including message boards, said eBay spokesman Kevin Pursglove.
Rivals already await in the regional auction market, including CityAuction, which is owned by Ticketmaster Online-CitySearch, and regional versions of AuctionUniverse, which is owned by a consortium of U.S. newspaper publishers. Neither of those sites provide usage figures, but eBay's 2.2 million registered users could make it the category killer.
eBay is also mulling the possibility of offering fixed-price sales--essentially, classified ads--on its site. "Stay tuned; we're looking at [fixed-price sales] pretty aggressively," Whitman said.
About 20 percent of the site's sellers, many of whom are dealers or have made eBay trading a full-time occupation, account for 80 percent of gross merchandise sales, she added. Many of those sellers want to offer items for a fixed price.
Fixed-price sales, coupled with regional auction sites, could imperil a major source of revenues for newspapers: classified ads. That market was worth $17.9 billion last year, according to the Newspaper Association of America.
But because newspapers have not participated in the auctions market before the Internet, eBay represents a threat to potential rather than actual classified revenues, said Karl Choi, an analyst with Merrill Lynch. A more immediate threat to classifieds revenues, which comprised 41 percent of newspapers' total revenues in 1998, are online job, auto, and real estate sites, he added.
The growth of eBay's online trading community has quickly surpassed that of any other e-commerce Web site, Whitman said. The site counted just 80,000 users one year ago; by the end of 1998, that number had seen a 2,750 percent increase. The site has conducted 46 million auctions since its inception, and 250,000 new items are added every day. "Our users are laying the foundation for the new economy," Whitman declared.
To accommodate projected growth, eBay plans to have a work force of 800 by the end of this year, according to Whitman, up from 350 now. When she joined the company in February 1998, the company had just 20 employees.