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.com, Leslie Walker
EBay Gathering Puts Highs, Lows On Full Display


A New Orleans choir waved flags and marched out of the exhibit hall at the end of EBay chief executive Meg Whitman's keynote speech in New Orleans. (Leslie Walker - The Washington Post)

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But Whitman rejected that idea, vowing that eBay would continue charging every dealer the same rates, no matter how much they sell. She conceded it runs counter to traditional business, where high-volume buyers often get price breaks, but she made clear the online marketplace is wedded to providing "a level playing field for pricing."

Whitman said eBay will stick to that strategy even though one of its greatest challenges has been balancing the needs of small and large businesses as they auction goods side by side. She and others acknowledged, though, that eBay's roots lie more with the mom-and-pop entrepreneurs who helped create the Internet auction juggernaut. (The site has grown so massive, Whitman said, that it handles more daily trading traffic than the Nasdaq Stock Market.)

Conspicuously absent from the convention this year were the big-name manufacturers and retailers that eBay courted so aggressively in the past. EBay staffers said many dropped out after having trouble handling auctions in high volumes.

"A few years ago we tried to get big manufacturers and retailers to sell on the site," staff member Melinda Byerley told a roundtable of sellers on Friday. "We have backed away from that. Frankly, it didn't work."

Many trying to unload large quantities of identical goods on eBay, several dealers explained, discovered that online prices tend to fall as supply rises -- a well-known law of economics in the offline world. And as eBay continues attracting new dealers, competition grows fiercer.

"The margins are getting smaller on a lot of items," lamented Sheldon Wright, a pawnshop owner from Washington state.

James McHugo of Luxury Brands LLC, an exhibitor who supplies many eBay dealers with bulk lots, said he would not sell directly to consumers on eBay because of the logistical and price challenges. "One of the great fallacies of eBay is that it's easy," he said.

But eBay spokesman Hani Durzy noted that many big outfits still sell on eBay, including Sears, Roebuck and Co., which has three different eBay electronic storefronts. "It can be a great channel for a large company if they recognize how eBay works," he said.

EBay is drafting a new plan to court manufacturers and retailers by creating private marketplaces where they could hold auctions and invite select groups to come in and bid, such as their top 25 distributors, or the high-volume dealers eBay calls power sellers.

The "Camp eBay" bus that plans to tour the country this year, touting the online auction site. (Leslie Walker - The Washington Post)
Randy Ching, a vice president who runs software development for eBay, said the company is testing auction software it bought from FairMarket Inc. last fall to explore new ways big businesses might liquidate their excess goods to eBay dealers.

"We'd like to invite power sellers in and give them an opportunity to purchase this inventory, often in large lots," Ching said. "EBay sellers could break it down into smaller lots and sell it. But manufacturers and retailers would determine who they would let into their private auctions, not eBay."

Many small entrepreneurs, who dominated the conference, said they're doing fine on their own.

Jerry Watterson, who runs a battery store and wholesale business in Jacksonville, Fla., said he has grown adept at finding new kinds of batteries to stay ahead of the "newbies" who often sell the same items at -- and sometimes below -- wholesale costs.

"EBay has been a terrific deal for us," Watterson said. "It will account for about half our business this year."

Leslie Walker's e-mail address is

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