eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

The site has fought off competition from Amazon and a host of other online auction sites

David Crookes
Thursday 21 August 2014 17:13 BST

What is eBay? The answer to this question depends, to a great extent, on your experience of it. To Peter Clatworthy who unwittingly paid £450 for a photo of an Xbox One console last October, it is most likely a murky world of spivs and chancers. To those who splashed out $1,350 (£810) on a single cornflake or $1,025 on Justin Timberlake's half-eaten toast, it's a hot bed of potential buyer remorse.

Over the years, there have been fully functioning kidneys for sale (illegally, of course, but at a starting price of $2.5m). A bobsleigh team put itself up for auction ahead of a Winter Olympics. People have flogged anything from eggs to a pinch of fairy dust (yours for a couple of quid). One wag tried to sell the town of Bridgeville in California in 2002. Three others have put it up for sale since.

But, without donning some rose-tinted Versace glasses (£45), eBay, which celebrated it 15th birthday yesterday, is not what it used to be. Although it still has quirky items and goods which cannot be bought in the shops, just 25 per cent of items are now sold at auctions. The first item that sold on eBay.co.uk may well have been a second-hand CD by The Scorpions, fetching £2.89 worth of bids, but today – more than three billion items and £65bn of sales later – 70 per cent of items are sold as new.

For eBay, this has been a marked yet deliberate shift. Each change made on eBay, no matter how small, has been carefully trialled in its labs and this has allowed eBay to "evolve", according to Valerie Nygaard, eBay's senior director of EU buyer experience. "We see ourselves as less auction site and more trusted retail partner," she says. The upshot is that eBay's major rival is now Amazon, which itself competes with eBay via its Marketplace. Indications are that eBay may well be winning.

Earlier this month, Ofcom's Communications Market report said eBay, with a reach of 34 per cent, beat Amazon (with 28 per cent) to be named the most popular retailer in the UK on mobile. Its smartphone and tablet apps have been downloaded more than 240 million times and, in the UK, an item is bought every second on eBay using a mobile device. There are 200,000 independent traders in the UK alone. "It's almost like Debenhams online, only with tens of millions of stores inside," says Robert Pugh, author of The eBay Business Handbook.

Mr Pugh, a former BT sales executive, is one of tens of thousands of UK eBay sellers who have abandoned careers to work on the site full time. He began by buying quality brand toys from car boot sales, building up a successful eBay toy company. As his daughters grew older, he took a keen interest in cosmetics and drifted into selling mascara and lipstick in an eBay business turning over £250,000-a-year.

"The good thing about eBay is that if you want to sell one thing a week, and have a curry, you can, but if you want to sell a thousand items and change your life, you can do that too. The flexibility and start-up costs are zero really and you can do what you like," he says.

For buyers, eBay has become a near-perfect marketplace, with a money back guarantee and protection against inaccurate listings. It delivers, says Matthew Ogborne, co-founder of UnderstandingE.com, choice, convenience, safety and fast delivery. The emphasis on Buy It Now addresses also a crucial shopping need: "The thing is when you and I buy something, we basically want it now," he says. "Anything past next day is now deemed to be late."

But, in meeting Amazon head-on and making eBay as friendly as possible for buyers, sellers say its changes have put them under pressure, leaving them unable to leave negative feedback for buyers and encouraged to offer free postage and packing, click-and-collect and speedy delivery.

"You work yourself to the bone and you're hanging on a knife edge when they make these changes," says Alison Abruneiras, a former nail technician who progressed from earning £70-a-week in employment to turning over close to £1m-a-year. "There were no rules when I started but now you're a part of eBay and that is how you have to look at it. If they say you jump, you say how high.

Fees are always the main bone of contention. In 2006, around 450 professional eBay traders ceased trading for 24 hours, angry at the scrapping of a 3p listing charge in favour of a sliding scale of fees. Last week, there was a backlash when eBay announced Buy It Now items would attract a flat fee of 50p (previously, items below £25 were cheaper). The Gallery Plus feature has risen from 95p to £2.50 and subtitles on listings would go up from 35p to £1. Reserve price fees have risen from 3.5 per cent to 4 per cent.

Yet, sellers, by and large, stick with eBay. Its mammoth buying base (eBay claims 19 million Brits visit each month) opens up a path of potential riches and there have been more documented cases of eBayers becoming millionaires than are reported for Amazon Marketplace. Ms Abruneiras earned enough money to open a tapas restaurant in Lincoln, and others, including former Tesco employee Mark Radcliffe and City lawyer Anthony Ponsford, show the diversity of those turning to the site to earn a lucrative living.

This, in turn, has made eBay even more powerful. For eBay also owns PayPal and Gumtree. And the money it generates helps boost its brand awareness. People talk about eBaying products in the same way as they discuss Hoovering their carpet, putting rivals such as eBid – a $6bn marketplace in 100 countries – at a distinct disadvantage.

"Due to our commitment to remain cost effective for our customers, our advertising budget is not at the scale of our major competitor," says Mark Wilkinson, who co-founded eBid in 1999 and has stuck to zero insertion fees and a three per cent final value fee. "In an ideal world we would have a few more large sellers on board to ever improve the selection of items available for sale on eBid and obtain a more regular buying community, who we would hope to also entice into selling."

Attempts to encourage other companies to compete against eBay have failed. One petition calling for an alternative on change.org attracted just five supporters and Google has shied away, despite a once-fevered clamour for it to set up a rival. In seeing off competitors such as Yahoo! Auctions and QXL, eBay has wrapped up the greatest number of individual sellers and independent traders. And while Amazon Marketplace poses a threat, the greatest competition exists within eBay itself as individuals and traders vie to offer the most attractive deals for buyers, thus driving down prices. It's a perfect circle from which eBay profits.

"It's just such a massive undertaking for anyone to seriously take on," says Dom Brookman, former editor of eBuyer and Online Seller magazine and author of Brilliant eBay. "Another site would need a phenomenal USP or be really niche like Wightbay, the Isle of Wight's own eBay site. People stick with what they know and the market was all about getting there first."

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