It's no secret that eBay (Nasdaq: EBAY) has traditionally taken the title as hands-down leader in online auctions, to the extent of which it might have seemed almost embarrassing for other companies -- no matter how formidable in other areas -- that tried to compete in that arena. Regardless, over the weekend, Yahoo! (Nasdaq: YHOO) said it will drop fees associated with its own Internet auction offering here in the U.S.
News coverage surmised that this was Yahoo!'s response to eBay's announced acquisition of Shopping.com (Nasdaq: SHOP) last week. Sure thing, eBay's casting its net wider, as Fool contributor Tom Taulli pointed out when he covered that story on Thursday. And of course, it has to, given competition from big-time rivals such as Google (Nasdaq: GOOG), the favorite for many fans of Internet growth companies.
On the other hand, Yahoo! can hardly be blamed for striking during what seems to be eBay's first obvious protracted phase of real vulnerability. There was a great lot of noise early in the year when eBay raised its auction fees. Indeed, the rival that got the picture the fastest was Overstock.com (Nasdaq: OSTK), which was quick to try to get a piece of the action.
For years, it has been well-known that auctions from the likes of Yahoo! and Amazon.com (Nasdaq: AMZN) just weren't putting a dent in eBay's strong name in auctions, despite the fact that every last one of these companies is an e-commerce bellwether. However, with eBay's revenue growth slowing and signs that maybe eBay's losing some of its charm, the time to launch an offensive seems a bit overdue.
Meanwhile, of course, a quick Google search I ran served up a reminder that Yahoo! instituted listing fees back in 2001, when revenues were drying up as the Internet boom turned to Internet bust. Back then, the spin was that adding listing fees "reduced clutter" on the site and would result in more sales for users and a better-quality experience. Be that as it may, it's obvious that now that Internet advertising is back on track, it makes it easier for Yahoo! to give up this revenue stream in order to lure more business.
And if this is an offensive that's overdue, of course that could mean it's a little late to the effort. For Yahoo!, though, there's probably little to lose. With the wind at its back in terms of recent advertising revenues and subsequent quarterly gains, and the fact that other Internet retailers are taking some revenue hits in order to woo audience in the e-commerce free-for-all, Yahoo! may be onto something.
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Alyce Lomax
does not own shares of any of the companies mentioned.
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