eBay Backs Away from Live Auctions

Online auction giant eBay, Inc. is reportedly scaling back its live auction business and will instead concentrate on Web auctions of the high price art and antiques that were central to that operation.

After shelling out $260 million (US$) just 15 months ago for the Butterfield & Butterfield live auction house, eBay is now going to lay off about five percent of the Butterfield staff and convert its Chicago, Illinois brick-and-mortar auction house into an online auction.

Butterfield & Butterfield had been holding live auctions in Chicago since acquiring local auctioneer Dunning’s in 1998. However, all the furniture, jewelry and other collectibles from the Chicago house will now be sold online.

Butterfield & Butterfield was established in 1865 in San Francisco, where it currently has two auction houses.

Fourth Largest Auction House

eBay’s acquisition of Butterfield & Butterfield, the fourth-largest auction house in the U.S., surprised many observers last April because the companies had announced a partnership to add a new premium category to eBay just a few days before the merger was announced. eBay touted the purchase as a means to branch out into more expensive auctions.

The online auctioneer said its customers would gain access to the expertise offered by a team of more than 50 specialists, as well as access to fine art and collectibles.

At the time of the purchase, Butterfield & Butterfield president John Gallo said, “We believe this [deal] will enable a whole new generation of users to safely trade unique, high end items on eBay.”

More Brick-and-Mortar Auctioneers Online

Some observers believe that more brick-and-mortar auctioneers moved online as a result of eBay’s foray into high-end auctioning.

Two months after the eBay purchase, Sotheby’s Holdings, Inc. forged a $45 million alliance with Amazon.com to hold online auctions. Also, last fall, LVMH Louis Vuitton Moet Hennesy SA acquired auctioneer Phillips for a rumored $100 million. LVMH Chairman Bernard Arnault said the play was tailored to take advantage of Phillips’ potential for online auctions.

Still, despite first mover status, eBay has been struggling with its high-end strategy for more than a year. In fact, some analysts believe that eBay paid too high a price for a firm that was expected to fetch only $75 million in a planned initial public offering and generated only $20.7 million in revenues in 1998.

No Foul

In related news, eBay has asked a federal judge in Chicago to remove a user from its Web site for harassing users and staff.

eBay said that it took the drastic step of asking a judge to permanently bar Chicago resident Braxton Anderson after he circumvented the company’s own attempts to ban him. Although the online auction house has removed members before, it says that this instance is the first time it has had to turn to the courts for help with that process.

eBay spokesman Kevin Pursglove said in published reports that it was “unusual and unfortunate” that the company had to go to court, but that the company thought it necessary.

Lifetime Ban

eBay says that Anderson’s bad behavior began after being temporarily banned in October 1998 for shill bidding. Shill bidding is when users place bids on their own merchandise to drive up prices.

After Anderson returned from his suspension, he allegedly began sending harassing, profane, obscene, and threatening messages. He has also, according to eBay, posted pornography on public sites and caused an eBay message board to crash by overloading it with messages.

eBay says that its lifetime ban had no affect on Anderson because as soon as they shut down one account, he would create another account with a different alias. According to court documents, Anderson has created and used more than 50 bogus electronic identities.

The company says it has “terminated 40 to 45 of his accounts in the last three months alone.”

For his part, Anderson reportedly claims that he only has three eBay accounts and that he is being singled out by a group of eBay customers with a vendetta.

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