All three sites offer proxy bidding, but they differ in their treatment of the end of the auction: Amazon has a 10-minute extension period when there is bidding activity at the end of the auction, Yahoo! gives the seller the option of a 5-minute extension period or a hard close time, and eBay continues to use a hard close time. Another difference is that eBay generally gives the user more options for searching through the auction data, such as the option of browsing through any auction, which closed in the past 30 days. A third difference is in fee structure. Amazon and eBay both charge sellers a listing fee and a percentage commission, while Yahoo! charges no fees at all. The difference in fees has an important effect on sellers" incentives and behavior. At eBay and Amazon, sellers know that they will incur a fee whether the item sells or not, so they have an incentive to set reasonably low reserve prices to create a higher probability of resulting in a transaction. eBay has 54% of all auctions result in a sale, Amazon's fraction is 38%, while Yahoo!'s fraction is only 16%.
Entry of New Competitors.
There is a lot of room for new auction sites on the web. The rapid growth of the Internet and the amount of potential customers make this industry very attractive. With the introduction of software like WebVision (which makes an e-commerce application for auctions, catalog sales, and legacy database integration), new companies are hot on the trail of the top ten auction sites. The industry anticipates that once software providers like WebVision spring up and put more products out on the market, the online auction industry could really heat up.
Competitive Pressures from Substitute Products.
Online auction technology provides several benefits relative to traditional auctions. Internet auctions give bidders increased convenience. Instead of having to come to an auction house to participate fully in the bidding, the bidder can stay at his home or office.
