In a report released last month, Forrester Research estimated that the total value of online auctions would grow from $1.4 billion in 1998 to $19 billion in 2003.
Although the person-to-person auctions like eBay's currently dominate the market, by 2003, business-to-consumer sales will comprise some 66 percent of total Internet auction sales, about $13 billion.
Although eBay has been the online auction leader to date, analyst Evie Black Dykema, who co-authored Forrester's report, said eBay seems to be ignoring the potential of the business-to-consumer area. While some retailers such as Lands' End are listing items on eBay, Dykema said eBay isn't courting retailers and isn't separating retail items from the goods offered in person-to-person auctions.
"eBay is missing that opportunity and the consumer auction market is theirs to lose," Dykema said.
eBay spokesman Kevin Pursglove said the company would not ignore the business-to-consumer area. However, he said the company believes that there will continue to be strong growth in person-to-person auctions.
"Our core is person-to-person and this is where we will stay," Pursglove said. "That will be our focus for the foreseeable future."
Although the company has no plans to separate out business-to-consumer auctions, Pursglove said eBay might consider pursuing the merchant auction area if its customers demanded it.
"We'll keep our eyes on the business-to-consumer area and keep our options open," Pursglove said.
Dykema said that eBay's failure to actively pursue the business-to-consumer area could open up opportunities for other auction sites, particularly Amazon.
"This could be a goldmine for Amazon," Dykema said.
Amazon recently announced its acquisition of auction site LiveBid, a further indication of its focus on the business area. According to Dykema, LiveBid will help Amazon host auctions for off-line retailers.
"Retailers will be more likely to trust them than anybody else," Dykema said. "They've won respect from business and consumers."
While Jupiter analyst Fiona Swerdlow concurs with Dykema that Amazon is honing in on the business-to-consumer area, she doesn't predict smooth sailing for the online retail giant. She said Amazon hasn't done a good job of distinguishing merchant auctions from person-to-person listings.
"I think it's easy for the consumer to be confused," Swerdlow said. "It's not clear whether you are dealing with an individual or a company."
Another major competitor, Yahoo's auction site faces an uphill battle in both auction areas. Noting that Yahoo had conducted live auctions with LiveBid and Butterfield & Butterfield, which is reportedly in negotiations with eBay, Dykema said that the portal seems to be getting "picked to pieces" in the auction area.
"They really have been floundering since they started last fall," Dykema said. "The name of the game in the auction market is traffic, and if you have floundered for a while, it's really difficult to build up from there."
Tim Brady, vice president of production at Yahoo, acknowledges that the portal was late to the auction area, but said Yahoo is "pleased" with the performance of its auction area to date. Brady said Yahoo Auctions will continue to try to gain market share in the auction business.
"We'll absolutely play a key role in auctions going forward," Brady said.
Brady said Yahoo has no plans to separate business-to-consumer auctions from person-to-person ones. However, he said, Yahoo is talking with tenants of its Yahoo stores area about offering goods on Yahoo Auctions, and the portal will continue to integrate its auctions area with its classified ads and stores.