Amazon.com is quietly scaling back its once high-profile online auction business.
In recent months, the Seattle-based company has cut staff in its online auction department, reduced customer service dedicated to it and closed its live-auction affiliate, company and outside sources say. In addition, Amazon no longer has a manager assigned solely to auctions and has turned its focus to other e-tail businesses.
"I don't think they're putting a lot of effort into (auctions) right now, and I don't expect them to," said Jeetil Patel, a financial analyst who covers Amazon for Deutsche Bank Alex Brown. "If they're looking at areas to trim the fat, obviously this seems to be one of them," since revenue from auction sales is an "insignificant" piece of Amazon's business.
Amazon's withdrawal from the auction market is a testament to the amazingly rapid ascent and decline of the industry bellwether. Its auction site was launched to much fanfare two years ago, at the height of the Internet's commercial boom and the peak of the company's grand plans to expand its empire. Many analysts and industry observers predicted that with Amazon's marketing muscle and reputation behind it, the auction site would pose formidable competition for industry leader eBay.
Initially, Amazon's site seemed to have a lot of momentum. Unlike eBay, which at the time largely focused on small sellers, Amazon courted merchants such as Cameraworld.com and Gear.com to help jump-start its auctions. Industry analysts praised the move, projecting that revenue from business-to-consumer auctions would soon outstrip that from person-to-person auctions, eBay's bread and butter.
Less than a month after its auctions launched, Amazon bought LiveBid, which had allowed the broadcast of auctions live on the Internet, to supplement its auctions effort. And soon afterward, Amazon signed a ballyhooed 10-year deal with old-line auction house Sotheby's to create a joint site for the high-end of the market.
Amazon even caught a break from eBay. Soon after Amazon launched its auction site, eBay suffered through several multihour outages that left members fuming and threatening to take their listings to other auction sites.
But despite these advantages and positive reviews from buyers, sellers and industry analysts, Amazon's auction site never took off. Although the company says its auctions carry some 800,000 listings--which would place it second behind eBay--others estimate the total to be about half that number.
eBay's share of consumers' online auction spending rose from 57.8 percent in May 2000 to 64.3 percent in May 2001, according to Nielsen NetRatings. In contrast, Amazon's share fell from 3.2 percent to just 2 percent, placing it fifth behind eBay, uBid, Egghead and Yahoo.
Since redesigning its site last summer, sellers say the company has rarely promoted auctions as one of its featured stores. The importance of this is "extreme", said Rosalinda Baldwin, who heads up The Auction Guild, an organization that publishes a newsletter on the online auction industry.
"Unless someone knows Amazon has auctions, they won't go look for them," Baldwin said. "Amazon has totally marginalized their auctions."
Play video
There are currently no comments for this post.