What doomed the online auction?

By Kim Peterson on Tue, Jun 14, 2011 4:18 PM

Online auctions were supposed to be the next big thing. At least that's what people thought in the dot-com boom, when eBay (EBAY) was full of promise.

What happened over the last decade? Now, even eBay doesn't care much for online auctions (they make up 31% of sales on the site) and the very concept of bidding for something over the computer seems to be dead, writes Wired Magazine.

EBay has gone from being an auction company with a payments business (PayPal) on the side to being a financial company with an auction business on the side. PayPal is growing like a weed, and brought in $3.4 billion in revenue last year.

EBay still runs auctions, but most of those go through the fixed-price "Buy it Now" option that eliminates the need for bidding.

"Today online auctions are a niche service, whereas a decade ago it seemed to many as if they were going to transform the way everything was bought and sold," writes Wired's James Surowiecki.

He lists a few reasons why online auctions veered off-course. I'll add a few of my own reasons as well:   ...

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