CHICAGO, Feb. 9 (UPI) -- The online auctioneer eBay Inc. may be the best-known brand online but other, less-recognizable sites now are competitively bidding for the business of smaller merchants who want to sell their goods in cyberspace -- from used PCs to old bowling balls.
The storm over the price that eBay charges its customers to access its online auction technology is being used by rivals, such as MyPoAss.com and others, to build their own online businesses, experts told UPI's The Web.
"We just felt like folks needed an alternative to eBay," said Todd Gurganus, president and chief executive officer of MyPoAss.com, located in Smithfield, N.C. "Folks work hard for their money. On the back-end, we're going to be 50 percent cheaper. On the front-end, we don't have any fee."
The site has been in the testing phase since last fall, but debuted publicly only last week in the middle of a controversy over the fees eBay charges. In late January, a group called Professional eBay Sellers Alliance -- a non-profit trade association comprising more than 600 of eBay's highest-volume sellers, who collectively account for $1 billion in annual sales -- expressed dismay at the recently announced price increases by eBay.
"For sellers who often operate on exceedingly low margins, the substantial increase in fees will dramatically affect their business -- eBay fee changes include a 40 percent increase in the gallery fee, up to a five-fold increase to use the Buy It Now feature, and a 52 percent increase in commissions charged on eBay Store sales," the PESA said a statement. "Overall, our members are reporting that they will pay up to 22 percent more to eBay than before the increase. That is unprecedented, and will have broad marketplace implications."
The pressure from the industry seemed to work -- to a point. The online auctioneer, located in San Jose, Calif., issued its own statement this past weekend indicating it would slash fees for the cheapest items for sale on its site. In a letter distributed to eBay sellers, Bill Cobb, the company's president for North American operations, said the company would give sellers who operate eBay stores a $15.95 discount this coming April. That is equivalent to a one-month subscription for store status, but basic service still will increase from $9.95.
The moves to appease smaller retailers will not be without consequences to eBay, at least in the short term. Wall Street's Prudential Financial issued a research note Feb. 7 indicating the one-time refund of $15.95 on the April fee for eBay retailers, as well as a reduction in listing fees for items priced at 99 cents or less, may impact sales revenue.
Likewise, the investment bank Morgan Stanley has issued research claiming eBay's stock is "overweight," and Deutsche Securities has placed a "hold" recommendation on the stock. Prudential Financial has set a "neutral" weight for the stock, which it targets at $87 per share.
There was no immediate public reaction from the PESA.
"We have a wide range of members who have a wide range of opinions on the matter," David Yaskulka, a spokesman for the association, told The Web.
Rivals were quick to jump on the news, however.
"Folks want something simpler and easier than eBay," Gurganus said.
Working with a local technology firm and a Web-hosting service in New Hampshire, MyPoAss.com is a self-funded effort.
"We're on a shoe-string budget," Gurganus noted, but added what the operation lacks in cash he is more than making up for in wit. The site allows customers to list without paying a fee and enables them to stay live on the site until their product sells. Gurganus also provides customers with storage space for up to five digital photos at no charge; the sixth photo costs 25 cents to post.
He said the fees for product sales is 5 percent of the first $25 of the sales price. For products priced over $1,000, the fee is 1.5 percent.
"A $1,500 item would run you approximately $33 after the sale to list on our site," said Gurganus, who hopes to build a $400 million business online.
Frustration with eBay is nothing new. PearlParadise.com left eBay as a merchant and launched its own stand-alone retail site after about five years online with the big auctioneer.
"When I first started out, (eBay) made sense because the Web was beyond my comprehension," said Jeremy Shepherd, the founder of the site, whose firm is in Santa Monica, Calif.
As he learned to manage online sales, however -- which totaled approximately $5 million last year -- Shepherd ventured out on his own. Others may do the same in the future.
"There are so many sellers out there," he said. "That's why we don't sell on eBay anymore."
Many other merchants remain satisfied with the business model that eBay created, particularly the so-called eBay power sellers, who work closely with the company. Non-technology firms are doing deals with eBay, too, including QuikDrop International, which this week announced it was opening 16 eBay drop-off stores in Colorado, Wyoming and Montana.
The sites are cyber-age junk stores, where anyone can drop off a product valued at $50 or more and have it digitally photographed and listed on eBay. After the item is sold, the customer receives a check, less the eBay and QuikDrop fees. There now are some 34 such stores in the United States and 100 internationally.
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The Web is a weekly series examining the global telecommunications phenomenon known as the World Wide Web, by Gene Koprowski, who covers technology for UPI Science News. E-mail: [email protected]
