Overstock gains from eBay fee increase, but can it reach critical mass?

Overstock.com issued a press release announcing that the number of auction listings on Overstock.com has risen by 50% since eBay announced a fee increase. Overstock also said it would cut fees on its own auctions to widen the gap with eBay. But investors need to be careful here:

• Overstock did not disclose the actual number of auction listings it now has. In fact, it's starting from a tiny base relative to eBay, so tiny percentage of defections from eBay would lead to a large percentage increase in Overstock auction listings.
• You can track the number of auction listings on Overstock by going to its auctions home page and simply counting the listings. The numbers aren't always impressive: Cars, Parts & Accessories, for example, have only 334 listings at the time of writing.
• Sellers will only stay with Overstock if they get good prices from buyers on its site, and that's a function of how many buyers there are on Overstock. So initial defections to Overstock are important, but its too early to know whether Overstock is gaining real traction.

Quick thought: Overstock needs to reach enough volume in auction listings that the networking effect kicks in: enough sellers to attract buyers, enough buyers to attract sellers. Overstock's fee reduction is a smart move to maximize the possibility that this occurs, but there's no evidence that Overstock is anywhere near that point yet.

And how's this for good marketing: "In addition, each person who visits or registers with Overstock.com Auctions on the day eBay's new fee structure takes effect will receive a $10 credit toward Overstock.com Auctions listing fees."

Comments

[pressure wa...:]

We really need a good competitor. Is this a really good one ( www.oltiby.com ), or just another attempt !?

2007 Feb 04 09:26 PM