Amazon Auctions

» see auctions.amazon.com as it lived, on the wayback machine

~ the obit ~

in march 1999 i was 15, on a 33.6k modem at home in turkey, using the internet mostly for irc and downloading mp3s off random ftp servers a friend would post on icq. amazon was already a name i had heard but not a place i had ever ordered anything from, the company did not ship to turkey at any usable price point and credit cards for online purchases were not really a thing in turkish households yet. amazon auctions was an event in the us tech press that i read about in printed computer magazines a couple of months late and then forgot.

the launch was on 30 march 1999. amazon's pitch was that all eight million of its existing customers got automatically registered as auction users, which would solve ebay's cold-start problem in one move. every bidder had to register a credit card, which amazon argued would deter the fraud that had been a recurring complaint about ebay. the press release framed it as the obvious sequel to amazon's books business: same customer base, same payment infrastructure, broader catalog of things to buy.

none of that worked the way amazon expected. ebay had a four-year head start and an established seller community with its own auction-pricing culture. amazon auctions launched into that community as an outsider and could not pull either sellers or experienced bidders away from the place where the deals already were. within a year amazon stopped promoting auctions as a featured service. by 2001 it was being actively scaled down, with customer-service cuts and layoffs across the auctions team.

~ the rap sheet ~

~ what it was ~

amazon auctions ran at auctions.amazon.com with a layout that mimicked amazon's main store more than it mimicked ebay. listings looked like product detail pages, the bidding mechanism sat in a sidebar, payment ran through the same one-click amazon payment infrastructure that handled books. amazon also offered a 250 dollar fraud guarantee on every auction, which was a real benefit and also a sign that amazon was trying to compete on trust rather than on price discovery.

the early bug was a pricing mismatch. merchants brought higher-end goods to amazon auctions expecting buyers willing to pay for quality. bidders mostly came from amazon's general customer base, expecting amazon-like discount pricing on used items. the resulting bids came in low. merchants left. the bids stayed low because the remaining catalog was thinner. that loop set in within months.

~ the cracks ~

by autumn 1999 amazon had launched zshops as a parallel fixed-price marketplace, which competed with amazon auctions for sellers and slowly absorbed the inventory. the fixed-price model fit amazon's existing storefront design better than auctions did. through 2000 and 2001 amazon kept downgrading auction visibility on the homepage, reducing customer support, narrowing the categories that supported auction listings.

no specific shutdown announcement marks the end of amazon auctions. the service kept running in a degraded form for several years while zshops absorbed sellers and then itself folded into amazon marketplace in 2007. by the mid-2000s the auctions.amazon.com url returned an empty page, then a redirect. the brand quietly disappeared without a press release.

~ the next chapter ~

bezos later treated amazon auctions as a teaching case. the lesson was that network effects in marketplaces are heavier than customer-base advantages, that having eight million credit cards on file did not move sellers off ebay. the same lesson got applied a second time when amazon marketplace launched in 2001 as a fixed-price reseller layer on top of amazon's own product pages, and a third time when amazon paid 1.2 billion dollars for zappos in 2009 instead of trying to build a shoe storefront from scratch. the auctions failure is the reason every later amazon marketplace expansion has happened by acquisition or by bolting onto the existing product catalog rather than by spinning up a separate site at a separate subdomain.

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