Ah, the glories of competition. We have for years been lauding eBay's
Indeed, eBay's biggest threat to its own success is eBay.
But that didn't stop Overstock.com
This past weekend, eBay announced that it was raising prices for listings and other services, such as its online stores, which are popular with power sellers, by as much as 60%. Immediately, the message boards at eBay heated up over the size of the increase. Some sellers fumed that they were taking their business elsewhere. And thanks to Overstock.com, they actually have a viable "elsewhere" to go. Overstock.com's shares screamed higher over the past few days as the company announced that its auction count had risen by more than 50% in the wake of eBay's announcement.
That's a huge loss for eBay, right? Not really. The Overstock.com press release failed to mention a raw number of listings. A quick look at the site tells me that there are currently about 31,000 ongoing auctions, a good number to be sure, but fewer than the number of items available in just the "Asian antiques" category on eBay. So while the gain may have been huge for Overstock.com, the loss is at this point a blip for eBay. Still, the situation creates an unquestionable opportunity for Overstock.com, and it's capitalizing. It's cutting its own listing fees, and it will give a $10 credit to anyone registering or visiting Overstock.com's auction site on the day that the eBay increase goes into effect.
The gain will be short-lived, though, if auctions on Overstock.com don't generate the same, or similar, net revenues to sellers. Reaching that point requires buyers to consider Overstock.com as a viable alternative to eBay in numbers large enough to generate a bid flow similar to eBay's. If Overstock.com's business dries up because of poor selling numbers, many of its hard-won power sellers are likely to swallow their pride and head back over to the biggest game in town.
Bill Mann owns none of the companies mentioned in this story.
Overstock.com is one of the inaugural Motley Fool Rule Breakers recommendations.