I found an interesting article in Business Week (linked below) which talks about the future of the auction format on eBay. Interestingly for the first time in eBay’s history, fixed pricing sales (Buy it Now and Store Sales) are poised to generate more revenue for eBay than sales from the auction format.
It gives many supposed reasons for this decline, but the most likely change is in the marketplace itself. Buyers are better equipped to find pricing information on a wide variety of products now. Perhaps the fun is gone from bidding on auctions and maybe the format has seen better days.
This is good news in many ways. It’s often difficult to build steady profit margins on auction listings. In auction listings, the seller has little control over what the final price will be (other than using Reserve Price or starting the bidding out high). With fixed pricing, the seller can control what he/she brings in from each sale and can judge profit performance on a consistent level.
Fixed pricing also plays well into the increasing use of Map Pricing by many suppliers. MAP Pricing is a way that suppliers protect their pricing structure by setting pricing minimums. These rules don’t generally bode well with auction formats, but fixed price formats can be set to honor a supplier’s MAP pricing policy and keep you out of trouble with them.
What about you? Do you think the Auction format at eBay has run its course?