January 19, 2001, 12:00 AM

Why The Online Auction Market Is Coming Down To A War Between eBay and Amazon

Don Davis

Editor in Chief

The test of a community is how well it stands up in the face of adversity. And for the denizens of eBay-whose members spend an average of 130 minutes a month browsing through its listings, poring over the more than 2 million items that are typically up for bid-adversity struck on June 10, when the site suffered an outage that lasted nearly 24 hours. It was the second major outage in as many days. It was, as one disgruntled seller put it, "The Day eBay Stood Still."
     The timing was unfortunate, coming as it did mere days after the debut of a new, improved and widely disliked eBay. While the company attributed the outage to a bug in the Sun Microsystems software being used to power the site, many of the eBay faithful were less than satisfied with the explanation. "We are all trying to hang in there," wrote another disenchanted regular, "but how many days of no My eBay, stupidly slow response times, and 'unscheduled down times' can one take?"
     While eBay struggled to make peace with its sellers-promising a day of free listings and a renewed commitment to uninterrupted service-many first-time visitors may have clicked over to Amazon.com Auctions, Yahoo! Auctions or one of the scores of other smaller auction sites looking for a piece of the action. But for all the would-be players in the hottest segment of the e-commerce market, the real thrills can be found in the war shaping up between San Jose, Calif.-based eBay, the pioneer of the online auction format, and Seattle-based Amazon.com, the closest thing to a household name in the world of e-commerce. It's Goliath vs. Goliath, a culture clash of the titans-with eBay pushing community and Amazon touting customer service.
     In the end, however, it may be a third factor-technology-that determines who will rule the category. "If you look at the Amazon and eBay auction model, there's very little handling of merchandise," says Kenneth J. Orton, chief strategist at Cognitiative Inc., a San Francisco-based consulting firm. "It's a technology play-they're person-to-person auctions."
     EBay's strategy to be profitable in the short term may put handcuffs on its ability to build the necessary infrastructure, Orton suggests, noting that most of Amazon's losses in 1998-$128 million-"went into building a platform to being all things e-commerce." He adds: "At the end of the day it's really strong management teams who are going to make these companies work."
     Founded by Internet programmer Pierre Omidyar in September 1995, the origin of eBay has quickly taken its place in e-commerce lore. Omidyar created the site to fulfill his wife's desire to trade Pez dispensers with other enthusiasts outside the Bay area, and "Slowly but surely other people saw it was a way to engage their passions or their hobbies," says Kevin Pursglove, senior director for communications for eBay. "Before [Omidyar] knew it, he had a real live business on his hands."
     While eBay doesn't keep exact records, the company estimates that close to 50 million items have changed hands through its site. From the Civil War to Star Wars, from baby clothes to Beanie Babies, chances are that you'll find it on eBay. If you're looking for a video store, a tow truck or a pair of radio stations in DeSoto, Mo., you'll find them, too, among eBay's 1,627 categories. "If you can't sell it on eBay, you might as well open up the window and throw it out in the backyard because it ain't worth a damn," says Bob Watts, an antique dealer in Fairfield, Va.

In the black


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