| SIC Codes: | 7389 |
| NAICS Codes: | 454112 |
The Internet auction industry includes about 350 companies with combined annual revenue of about $4 billion. eBay dominates the industry: other companies include Bidz.com and uBid.com.
Demand is driven by consumers' personal income. Profitability of individual companies depends on effective marketing to build a base of buyers and sellers. Larger firms enjoy economies of scale in technology purchasing, customer service, and telecommunications. Smaller firms compete on outstanding customer service and providing niche products. The industry is capital-intensive.
Internet auction companies operate websites that allow sellers to list their merchandise and buyers to bid on the items. The sophisticated auction software monitors bids and determines the winning buyer at the end of the auction period. Unlike traditional auctions, which have set times and locations, Internet auctions are generally open 24 hours a day and can reach buyers in remote markets. After an auction closes, companies may rely on third parties to facilitate payment or shipping between parties. Companies may certify or pre-qualify buyers and sellers to minimize fraudulent activity.