EBay Opens Express Lane For Fixed-Price Deals

by Gavin O'Malley, Apr 26, 2006, 6:00 AM

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Potentially giving Amazon a run for its money, eBay this week launched a fixed-price shopping Web site as an alternative to its established online auction service. At "eBay Express," the cost of listed items is not up for debate, so site visitors can get what they came for without the hassle of bidding. eBay debuted a "buy it now" feature several years ago, with a similar goal in mind.

"We were seeing that many of our own shoppers were going elsewhere for convenience-oriented buying," said Bob Holden, director of eBay Express.

Another new time-saving feature allows consumers to buy items from many merchants using a single shopping cart. The site also accepts payments through eBay's PayPal payment service, as well as credit cards, with one click.

For the sake of relevancy, eBay Express features a search engine designed to adapt to users' shopping preferences based on other shoppers' activity. The site divides available merchandise into 31 categories, which collectively amount to an estimated 10 million products.

To help keep fraud at a minimum, only sellers with positive feedback scores of 98 percent are allowed to conduct business on eBay Express. Additionally, sellers must have already accumulated 100 feedback points, and eBay is only listing U.S.-based merchants.

It's been a particularly tough week for Amazon thus far. On top of news that eBay will now challenge its core business directly, the online marketplace announced a decrease in quarterly profit of 35 percent due to higher operating expenses and employee stock options. That was despite higher sales of 20 percent for the quarter. eBay has been busy bolstering its core auction service amid slower growth. Late last year, for example, the company purchased VoIP firm Skype for $2.6 billion. (That number could eventually rise to $4.1 billion, however--depending on whether Skype meets performance targets over the next several years.)

Separately on Tuesday, eBay's Skype subsidiary announced a licensing agreement with EMI Music Group Publishing, Sony STV/Music Publishing, Warner/Chappell Music and the MCPS-PRS Alliance to offer customers cell phone ringtones using songs from the Warner Music Group library. Financial terms of the deal were not disclosed.

In January, Piper Jaffray Analyst Safa Rashtchy forecast 34 percent revenue growth for eBay this year, compared to the 52 percent growth for Google.

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