Australian online auction customers continue to abandon eBay

Melbourne-based auction site OZtion announced a 50% increase in sales for May compared with March, as dissatisfaction grows among eBay users angry with the online giant’s decision to force customers to use its wholly-owned subsidiary PayPal.

OZtion co-founder Philip Druce says 28,000 new members have joined in the last six weeks, taking total member numbers to 275,000. Over the same period, the value of merchandise traded increased 65% and the number of items up for auction hit a record 670,000. That’s about half of the number of items on eBay Australia and three times as many as on Trading Post, which entered the online auction market last week.

Druce has little doubt the rapid growth can be attributed to eBay’s PayPal move. “You can see it in our forums. We’ve got a pretty active community and they are not happy.”

His next challenge is to keep up with the growth, particularly in the area of customer service. “We’re looking for somebody else right now, and we’ll need another one in the not to distant future,” he says.

Druce and co-founder Kelvin Yip have also bolstered the technology side of the business. They’ve been caught out before by rapid growth – back in 2006, when eBay increased fees for its stores, an influx of members slowed OZtion’s site to a crawl – and Druce is determined not to let it happen again. “We learnt from that and we’re constantly monitoring it to keep ahead of demand.”

Druce is unconcerned with the threat of competition from Trading Post. “It’s a pretty basic site and most eBay users are used to a feature-rich platform. You have to deliver at least that or more,” Druce says. “I don’t think they’re a huge threat.”

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