eBay’s early years capitalized on the unique strengths of the internet, building a multi-billion dollar enterprise off of auctioning everything from broken laser pointers to movie scripts. Business Week’s Catherine Holahan sees a change in eBay’s business, moving from auctions to now earning half its revenue from the Buy it Now option where the seller sets the price.

eBay’s growing reliance on fixed price sales leads to question why auctions are dying off. It seemed the internet was built for auctions, allowing a large number of people to sell and buy as they wished. Holahan writes auctions initially had novelty and excitement that has since died down due to power users gaming the system and leaving average Joe’s without empty-handed. Buy it Now is stress-free. Michael Masnick points out eBay now has more competition, where low auction prices are now competing with every discount retailer online. Nick Carr claims eBay was just a fad, but if that’s true, it was a huge $40-billion market cap fad.

I agree with Mathew Ingram’s point that auctions work for some things, not others, and eBay needs to balance the auctions with new business models. The challenge will be convincing people it’s more than an auction company.

I think eBay has more problems than that, specifically Amazon’s claimed a great deal of the retail space eBay could have dominated. eBay introduced store fronts to give small retailers online spaces without the vast expenditure, but Amazon’s service is much more developed. eBay can try competing head on with Amazon, but playing catch-up is never fun and rarely effective (good luck Microsoft). eBay’s stumbled with its expansions, acquiring Skype and StumbleUpon without effective synergies (and now rumored to be trying to sell Skype). Evolving from pure auctions to some kind of e-commerce giant will be challenging, but hopefully invigorating to the industry. Plus, it’ll be good to give Amazon some more competition.