New eBay joint venture gains on Yahoo in Taiwan

A new eBay auction joint venture in Taiwan is gaining on market leader Yahoo Taiwan by offering no-fee trading, but the company faces a long fight to topple the island's largest Web auction site.

Since opening the beta version of the joint venture between eBay and PCHome Online in late September, the site has attracted hundreds of new auctioneers who aren't happy with higher fees Yahoo is charging.

As of Oct. 12, the number of items listed on Ruten had reached 1.2 million. That figure is only about a third as many as Yahoo Taiwan, but it's rising fast. In the four days from Oct. 8 to Oct. 12 alone, Ruten added over 100,000 items.

"Everyone's moving to [Ruten] all at once," said Yora Yang, who auctions women's clothing at her Yahoo store.

She's been trying to set up another store at Ruten, but "every time I use the site, I get a pop up saying 'network busy.' It makes me mad."

The early success of the new site in attracting local auctioneers is an example of how quickly users can adjust to issues such as unwanted fees, and use the Internet to create new opportunities. Yahoo Taiwan had initially backed down from a new 3% fee on all sales, delaying implementation until September. Now that auctioneers are paying, many are looking to Ruten as an alternative since the site isn't charging any fees.

Yang said the new Yahoo charge adds to the NT$4 (US12 cents) per item she already paid, in addition to money for advertising, making it more expensive to sell clothes on the site.

Yahoo reckons the auctioneers will stay onboard because of its huge audience of buyers, their familiarity with its auction process, and the high level of service it provides, according to Charlene Hung, vice-president of e-commerce at Yahoo Taiwan.

Yahoo Taiwan holds over a 57% share of the local Internet auction market, according to researcher ACNielsen, and buyers don't have to pay any fees on the items they purchase.

Ruten argues that any additional charge to auctioneers will usually be passed down to buyers through higher prices anyway, and has vowed not to charge any fees for the next three years. The site intends to make money through advertising alone.

The joint venture also hopes that by winning over the auctioneers and building a huge online shopping arena, it will win over more buyers. "Our goal is to have 2 million item listings by the end of this year," said Jan Hung-Tze, chairman of Ruten, at a recent news conference in Taipei.

Auctioneers say the real issue now for Ruten is to win over buyers and build an audience the size of Yahoo's, which is viewed as the easiest place to sell items on the Internet in Taiwan since so many people use the site.

But that won't help them in the near term. Months from now, Ruten may succeed in winning over more buyers, and its technical glitches will likely get sorted out. But for now, auctioneers are stuck with higher fees on Yahoo.

"It's a real headache," Yang said.

The IDG News Service is a Network World affiliate.