eBay Cuts Butterfields Staff

eBay (Nasdaq: EBAY) cut 15 percent of the workforce at its high-end Butterfields auction house on Wednesday.

The San Jose, California auction giant said the move is aimed at bringing the real-world auction house, which specializes in rare items such as celebrity memorabilia and historic firearms, closer to profitability.

In all, 32 of the 200 workers at Butterfields lost their jobs. This staff reduction represents the second round of layoffs at Butterfields this year; 14 workers were cut in July when eBay scaled back a previously announced expansion plan and curtailed operations in Chicago, Illinois and New York City.

All of the layoffs are in the real-world auction side of the business and are part of a move to bring more of the business online, the company said.

“This restructuring is aimed at giving more profitability to the live business,” said Butterfields general manager Geoff Iddison. He added that the layoffs reflect a larger trend in the auction house world.

High-End Woes

Despite the widespread popularity of online auctions, the market for high-priced items has proven difficult to crack.

Last month, a cooperative effort between Sotheby’s and Amazon.com (Nasdaq: AMZN), sparked by a $45 million (US$) investment from the e-tailer, shut down after less than a year in operation. Sotheby’s now runs its own auction site.

Big Ticket Items

eBay bought Butterfields, then known as Butterfield & Butterfield, early in 1999 in a stock deal worth $260 million, hoping to add more big-ticket items to its catalog of items being sold on the Web.

In a sign that high-priced items were slow to be accepted online, the company announced at the end of October that it would begin charging a buyer’s premium of 10 percent on items in its Great Collections area, a move designed to sweeten the pot for dealers who may be reluctant to offer top merchandise for sale on the Web.

At the time, the company said the fee would “attract more qualified sellers who might not have listed their finest works of arts on the Great Collections site previously due to economic reasons.”

eBay does not release the Butterfields earnings in its quarterly financial results, but the move acknowledges that the offline auctions have not yet become as profitable as eBay’s core online auction business, which has made the company one of the first profitable dot-coms.

Butterfields was founded in 1865 and now ranks as the fourth-largest auction house in the United States.

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