Back in the Golden Age of the Internet (circa 1999-2000), I used to enjoy posting free auctions and classifieds on Yahoo. It was a great way to save money by selling unwanted items. Then the Internet Dark Ages hit in 2001 when many online companies had to struggle for survival. Many .com companies tried to charge for services that used to be free in order to survive and justify their business plans.
Recently, things have started to change. Online advertisement expenditures have been increasing, and it looks like some of those old Golden Age business plans are getting dusted off. Yahoo! Auctions recently announced that it will no longer charge sellers listing fees or closing costs. In addition, I noticed Yahoo! Classifieds, an old favorite of mine before Craig’s List grew, is also providing free listings again. It will be interesting to see if they will be able to revive their markets.
This development will be a direct challenge to Ebay. It currently has a massive competitive advantage with its large network of buyers and sellers, its rating system, and its brand name. Having a large concentrated market of buyers and sellers increases the overall auction experience, since it is most efficient to list items for sale where the most buyers will be looking to bid on items. Sellers with high ratings also face high switching costs, since they have to rebuild their reputation if they move to another auction provider. It will be interesting to see if Yahoo! Auctions will be able to attract enough users to make its auctions worth while.
I don’t think there is an investment opportunity here, but if Yahoo! Auctions gets enough traffic, it might be a money saving opportunity to list your “junk” for free with them. I’ll have to check on how close the closing prices on Yahoo! Auctions compares to those for similar items on Ebay.