Auction site eBay expected to continue growth trend

Kevin Ferguson

Friday, Nov. 16, 2001 | 9:40 a.m.

Internet auction site eBay has become one of the fastest-growing online companies partly because it makes "tremendous efficiencies out of inefficient markets," eBay Chief Executive Meg Whitman told a Las Vegas audience at Comdex.

"Auctions allow sellers to get the maximum selling price... (while) buyers can get access to mass suppliers," she said Wednesday.

EBay burst onto the national scene in 1995 and remains one of the few Internet success stories.

In just five years, it has accumulated a customer base of 37 million web surfers in 18 countries.

Whitman said she expects sales to climb about 50 percent to as much as $1.1 billion in 2002, compared to more than $700 million in 2001.

The company, which generates most of its revenue from transaction fees when items sell on its website, benefited when many dot-com companies shut down over the past few years.

"Some of the Las Vegas dot-coms that went out of business tried to take advantage of the (Internet) auctions to get rid of their equipment," said Verner Dixon, a vice president of Las Vegas consulting firm IT Strategies International.

San Jose, Calif.-based eBay has grown faster than any other tech company in the United States over the past five years, said a report released Wednesday by consulting firm Deloitte & Touche.

EBay had revenues of $372,000 in 1996 and more than $431 million in 2000. Those numbers far outpaced sales for InfoSpace Inc., the runner-up in the Deloitte & Touche Fast 500 list.

EBay, nevertheless, was not immune to the business slump following the Sept. 11 terrorist attacks.

"For the two weeks after Sept. 11, our business declined dramatically... about 40 percent," Whitman said in an interview. "I think people were too busy watching TV rather than placing items on our auctions."

Gold & Silver Pawn Shop on Las Vegas Boulevard, which relies on eBay for selling about 75 percent of its items, was hurt by the slowing local economy in September.

"We've got people pawning stuff... but our sales are not up where they should be," said Mitch Halsall, the store manager. "Our (Internet) sales were around $55,000 (per month) a few months ago, and it went below $20,000 just recently."

Halsall said he believes most of those who are pawning items are not recently laid off workers, but rather people who move to town and need cash to make ends meet until they find employment.

Gold & Silver Pawn Shop has been selling items through eBay for more than three years.

Angie Ford, who manages the shop's eBay sales, said the most popular items are power tools, ranging in price from $100 to $150, and its most frequent Internet customers are from the East Coast and California.

"There's not much in between," she said.

After a tough September for business, Whitman said eBay's transaction volume began inching upward in early October and has already reached pre-holiday expectations that were set before Sept. 11.

What's been driving the latest auction boom?

"Anything patriotic. Items and collectibles that are red, white and blue," Whitman said. "We've had many sellers who are new to eBay."

Whitman said she believes rare wines will soon be a popular auction category, a division that will be launched in about a week.