In 1999, Amazon introduced auctions to its already popular website. With Amazon Auctions, individuals and small businesses could conduct auctions which consumers could bid on.
In order to get a share of the market from its rival eBay, Amazon introduced some additional features and planned to use its existing customer base to promote the service. Users looking up products would see listings of products being auctioned alongside the ones being sold. Amazon also gave customers a $250 anti-fraud guarantee through which users could get their money back if the products didn’t turn out as advertised in the auction.
By 2001, Amazon was scaling back its widely publicized auction business. This was marked by a reduction in customer service and staff layoffs as Amazon shifted its focus onto other horizons. Despite all the hype surrounding the platform, it took only two years for Amazon’s enthusiasm to die down as it slowly started neglecting the service.
Just one year after Auctions launched, Amazon stopped making the effort to promote it as a featured service. It probably didn’t help that many of Amazon’s charter merchants started pulling out soon after the launch. Merchants complained that shoppers who were largely uninformed about the auction format were bidding too low for expensive objects. There were also complaints by customers highlighting that the merchants’ prices were too high. This mismatch caused dissatisfaction on both sides of the marketplace.
Amazon auctions clearly did not meet the company’s expectations of profitability and popularity. Unsurprisingly, dislodging a well-established online monopoly like eBay proved to be a very hard task (Google+ and Facebook being the most notorious similar examples).