Watch out eBay, here comes Yahoo!

Yahoo! joined an elite club this week when it announced that it has a million simultaneous items being sold on its auction site -- joining online auction pioneer eBay as the only two sites to have reached that mark.

While eBay still has more than three times the number of items on its site, Yahoo's rapid growth from zero to a million items in just over a year makes it clear that eBay faces serious competition. "Having a million simultaneous auctions proves to us our model -- which is different from other models -- is working," said Tony Surtees, Yahoo! vice president and general manager of commerce. "We're growing at a fast speed."

Surtees said the biggest difference between Yahoo! Auctions and others like eBay can be summed up in two words: "We're free," he said. "We don't charge any money. That seems to have an effect on people. Sellers can come on a no-risk basis and put their things up for sale."

The other thing Yahoo offers, he said, is integration with the rest of Yahoo -- which offers things like the ability to show streaming audio and video of items for sale over Yahoo's Broadcast.com and tools for making an individual storefront.

Yahoo also has the advantage of being able to leverage its 80 million registered users. eBay currently has 5.6 million registered users.

For its part, eBay offered a gracious, though somewhat pointed hand. "We congratulate them," said Kevin Pursglove, eBay senior director of corporate communications. "A while back here, we remember how excited we were when we hit the million mark."

Well, it wasn't that long ago -- eBay crossed the bar of listing a million items a day last December. But in the 11 months since then, the site has more than tripled that number and now has about 3.3 million daily auctions, according to industry analysts.

But looking at the number of items on sale isn't necessarily an apples-to-apples comparison, said David Trossman, analyst with First Union Securities. "I'm not sure that measuring the number of auctions on the site is the be-all/end-all of the site," he said. "There's a lot more to it than just that one statistic that Yahoo is talking about." Because Yahoo! offers free listings and automatically relists an item that isn't sold, that number may be boosted with junk that no one wants, Trossman said.

"Think of these as inventories," he said. "I've got two warehouses. One is full of a million Pokemon cards. The other is full of a million baseball cards from teams in the '80s. There's a million cards in each one, but one of them has a line of 13-year-olds out the door and the cards are turning over. The other has no one on line and nothing's turning over."

While Trossman admits the example is a bit of a hyperbole, he said it illustrates why other measures like the gross price of items actually sold may be more telling. But for eBay, however you measure it, the number is a sure sign that the days of online auction sites being referred to as "eBay and everyone else" are probably over.

"Yahoo is a very well managed team with a good business plan in place," said eBay's Pursglove. "We're going to face more competition in the space. As time goes on these competitors will have very deep pockets and the advantage of time. We think the competition is only going to get stronger, but we're confident. We're the pioneers."

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