Vying with eBay for 'Bad Present' Boom

Sven Schmidthaus has had enough of Internet auction giant eBay's iron-grip dominance. Driven by the desire to provide an alternative to online consumers looking to buy and sell items, he founded the "LiveAuktionshaus" a year ago.

"I think competition to eBay is necessary because you notice with eBay that it's the market leader," Schmidthaus said. "They constantly raise the prices and we think it's outrageous to pocket money twice."

Luring customers with 'free' tags

Instead, LiveAuktionshaus offers all its new customers a starting credit of €5, an offer that's valid until mid next year. In addition, customers can sell any number of items without a fee. They can also park them under 23 categories and choose between different options such as fixed time limits, minimum prices or a singling out as "top offer".

These special options will also cost customers starting mid next year. But the owners of "LiveAuktionshaus" are clear about one thing: the prices will cost just about a fifth of eBay prices.

At the same time just like eBay, the site will have a customer screening program which will provide security and deter fraudsters. Schmidthaus is optimistic that the simple navigation of his website and enduring low prices could eventually even lure eBay customers.

Despite the optimism, there are fears that the company could suffer the same fate as other Internet bidding sites. "We can turn into a competitor but that's only if we're not bought over by eBay before that or driven into the ground like it's happened with other online auction sites," Schmidthaus said.

Few customers, security snags

Experts however remain skeptical of the success rate of "LiveAuktionshaus". George Tryba from the Consumer headquarters in the state of North Rhine-Westphalia said there's no dearth of free auction sites on the Internet. "But their problem is that they have very few customers. So it's uninteresting for them even though there are no registration fees," Tryba said.

"So the products find no buyers or you're left with offers that are eventually quite pricey when it comes to fixed prices." According to Tryba, the only advantage that smaller online auction sites offer is when they charge no fees for the selling and bidding of products.

Security is a further problem, the consumer expert added. "Each person who buys and sells at eBay should be clear about that he's at a flea market, even if it's an electronic one," Tryba said.

"Even the security that eBay promises should be treated carefully because I can easily manipulate my customer profile, give myself a good image and if I want to rip off someone, it's easy. Buyer security is relatively weak."

Hoping for post-Christmas boom

Schmidthaus however isn't deterred by this gloomy assessment.

"We now have about one thousand users and that's a satisfactory record for the first year," he said. "The users are naturally very happy with us and find it great that someone is trying to provide some real competition to eBay."

The latter will also be put to the test once Christmas is over and a flood of rejected Christmas presents find their way on to the Internet. LiveAuktionshaus will be hoping that many of those boring spice racks and striped ties come their way.