Internet Auctions
Description
Companies in this industry operate auction websites for consumer-to-consumer or business-to-consumer trade of new and used goods. Major US companies include eBay, which dominates the industry, and eBid; major companies based outside the US include Argentina's MercadoLibre and China's Taobao (owned by Alibaba Group).
eBay is the world's leading internet auctions site; business outside the US accounted for about 50% of the company's net revenue in 2024. International expansion is key to the company's growth strategy. In particular, Germany, the UK, Australia, South Korea, and increasingly China are critical to eBay's revenues and profits. Top growth regions for the industry overall include Latin America, led by MercadoLibre, and Asia/Pacific, where Taobao has the largest share of the market. In South Africa, BidorBuy Group runs Africa's largest auction site.
The US internet auction industry includes about 42,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $515 billion. Business-to-business (B2B) auction websites are generally not included in this industry. Internet retailers are covered in a separate profile.
COMPETITIVE LANDSCAPE
Demand is driven by consumers' personal income. Profitability of individual companies depends on effective marketing to build a base of buyers and sellers. Larger firms enjoy economies of scale in technology purchasing, customer service, and telecommunications. Smaller firms compete on outstanding customer service and providing niche products. The US electronic auction industry is concentrated: the top 50 companies account for about 65% of industry revenue.
Companies in the internet auction industry compete against online retailers, especially discount retailers and inventory liquidation sites, as well as physical retail establishments and auctioneers. Online classified listings and social media sites that can facilitate interactions between potential buyers and sellers, such as Facebook Marketplace, may also pose a competitive threat. Online auction sites also compete for consumers and merchants who might sell their goods on alternative platforms, including Amazon, Alibaba, and more specialized sites such as Etsy. The online auction business model has also lost ground to fixed price listings, an option eBay offers sellers as an alternative to listing items for auction.
PRODUCTS, OPERATIONS & TECHNOLOGY
Internet auction companies operate websites that allow sellers to list their merchandise and buyers to bid on the items. The sophisticated auction software monitors bids and determines the winning buyer at the end of the auction period. Unlike traditional auctions, which have set times and locations, internet auctions are generally open 24 hours a day and can reach buyers in remote markets. After an auction closes, companies may rely on third parties to facilitate payment or shipping between parties. Companies may certify or pre-qualify buyers and sellers to minimize fraudulent activity.
Popular consumer categories listed on online auction sites include collectibles, antiques, and consumer electronics. High-end merchandise includes real estate, yachts, and cars. Internet auction sites may specialize in a particular category, such as rare coins or used equipment, and provide appraisal services.
eBay is the world's leading internet auctions site; business outside the US accounted for about 50% of the company's net revenue in 2024. International expansion is key to the company's growth strategy. In particular, Germany, the UK, Australia, South Korea, and increasingly China are critical to eBay's revenues and profits. Top growth regions for the industry overall include Latin America, led by MercadoLibre, and Asia/Pacific, where Taobao has the largest share of the market. In South Africa, BidorBuy Group runs Africa's largest auction site.
The US internet auction industry includes about 42,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $515 billion. Business-to-business (B2B) auction websites are generally not included in this industry. Internet retailers are covered in a separate profile.
COMPETITIVE LANDSCAPE
Demand is driven by consumers' personal income. Profitability of individual companies depends on effective marketing to build a base of buyers and sellers. Larger firms enjoy economies of scale in technology purchasing, customer service, and telecommunications. Smaller firms compete on outstanding customer service and providing niche products. The US electronic auction industry is concentrated: the top 50 companies account for about 65% of industry revenue.
Companies in the internet auction industry compete against online retailers, especially discount retailers and inventory liquidation sites, as well as physical retail establishments and auctioneers. Online classified listings and social media sites that can facilitate interactions between potential buyers and sellers, such as Facebook Marketplace, may also pose a competitive threat. Online auction sites also compete for consumers and merchants who might sell their goods on alternative platforms, including Amazon, Alibaba, and more specialized sites such as Etsy. The online auction business model has also lost ground to fixed price listings, an option eBay offers sellers as an alternative to listing items for auction.
PRODUCTS, OPERATIONS & TECHNOLOGY
Internet auction companies operate websites that allow sellers to list their merchandise and buyers to bid on the items. The sophisticated auction software monitors bids and determines the winning buyer at the end of the auction period. Unlike traditional auctions, which have set times and locations, internet auctions are generally open 24 hours a day and can reach buyers in remote markets. After an auction closes, companies may rely on third parties to facilitate payment or shipping between parties. Companies may certify or pre-qualify buyers and sellers to minimize fraudulent activity.
Popular consumer categories listed on online auction sites include collectibles, antiques, and consumer electronics. High-end merchandise includes real estate, yachts, and cars. Internet auction sites may specialize in a particular category, such as rare coins or used equipment, and provide appraisal services.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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