eBay riding Net auction industry's wave

New research shows that the online auction giant is increasing its dominant position as spending in the overall industry continues to surge.

3 min read
eBay increased its dominant position in the online auction market as consumer spending at sites skyrocketed in May, according to a new report.

Consumers spent $556 million at online auction sites in May, up 149 percent from the preceding year and up 65 percent from the preceding month, according to the study by Nielsen/NetRatings. eBay's share of that spending grew from 57.8 percent last year to 64.3 percent.

With the slowdown in the economy, more consumers are turning to online auction sites to look for bargains and more Internet users are offering items for auction to make extra money, said Sean Kaldor, vice president of e-commerce at NetRatings. "This type of pricing model is very popular," he said.

eBay representatives did not return calls seeking comment.

Despite the economic slowdown, consumers continue to spend more online, according to the report. Consumers' online spending in the United States jumped 104 percent in the last year, from $2.6 billion in May 2000 to $5.4 billion this May.

eBay has been gaining market share from rivals such as Amazon.com, Egghead and Yahoo during the last year, according to the report. The market share for each of those auction sites has fallen by more than a third during this last year, and none receives more than 4 percent of U.S. consumers' online auction spending.

Yahoo saw its auction listings plunge after introducing fees in January. Amazon closed its live auction subsidiary LiveBid in February and has battled numerous technical problems with its auction site in recent months.

Perhaps the biggest surprise of the report was the growing presence of uBid in the online auction market. A business-to-consumer auction site that primarily focuses on selling computers and technology products, uBid saw its market share jump from 9.1 percent last year to 14.7 percent this May.

uBid's success comes despite the troubles of its parent company, CMGI. The Internet incubator's financial troubles have led to layoffs at several of the companies it has investments in, including AltaVista, and have resulted in closures of several companies, most recently, AdForce.

Spending at online auction sites made up 10 percent of U.S. consumers' overall online spending in May, according to the report. For the same time last year, auctions made up just 8 percent of online spending.

The growth in online auctions is coming at the expense of categories such as pet supplies that have performed poorly during the last year, Kaldor said.

Nielsen/NetRatings' report is based on an e-mail survey of 35,000 randomly selected Web users, who were asked how much they spent on different Web sites in the previous month. Nielsen/NetRatings performs the survey each month.

According to the survey, U.S. consumers spent $1.2 billion at online auction sites in the first quarter of this year. That is a far cry from the $1.98 billion in gross merchandise sales that eBay alone reported in the first quarter.

However, eBay's numbers include global sales, and the survey does not account for business purchases, which could explain some of the difference between the two figures, Kaldor said. It also is based on the recollections of consumers, which are inherently less reliable than actual tabulated sales, he said.