Taking on the juggernaut that is Ebay?

In order to persuade me not to use eBay to sell items, you'd have to persuade me that: - the same mass of customers would be there, ready to buy my product - it's either cheaper than eBay, or offers a better service for the same price - incentivize me. Much as I'd love to encourage innovation and new companies in this workspace, you'd pretty much have to incentivize/pay potential customers to use your service. And mass advertising.

The incessant e-bay mini-fees really get on my nerves for some reason. I think I would switch to a new system if it didn't have all the "8 cents to make the title bold", or "5 cents to add another picture", etc.

no suggestions on how you reach critical mass, but i wanted to say i still think it is possible. http://www.etsy.com/ is an example of someone who has done it recently. etsy is not exactly the same as ebay but many of the things sold there used to be sold on ebay.

I was recently talking with another site about this same thing -- if you intend to draw sellers away from eBay/Craigslist, you need to show them how they can make the same, or more, money off your service. Lower fees or simpler process or advantageous positioning means nothing if the seller is going to make 10-20% less money with your service. Without the seller being able to predict and see that your service is providing them better net profits after expenses than your competitors, there's no attraction to sellers to use the service. The sentence "Sure I make a lot less money at their site, but they've got a automated arbitrage system," doesn't sound like a winning business model for the people you want to attract.

One of the reasons why Paypal really, really took off was that they offered $5 to all new customers, and $5 to all referrals at the start of their business. Of course, they had all the basics of nifty technology, fulfilling a niche market and all that already, but if they hadn't offered the $5, they would still be catering to a small sector of the community, if at all.

Amazon offered $5 to new customers and $5 to referrals too at the beginning of their business, now that I come to think of it.

Don't try to take on eBay. That is setting yourself up for failure. That is like trying to take on facebook, or World of Warcraft. Instead, what I would suggest is that you specialize. Do something niche. Do something that eBay doesn't do, doesn't sell. Etsy is a great idea because it is a community of like-minded hand-made item sellers. What you want to create is the eBay of model airplanes, say. Or the eBay of coins, or 18th century costumes. Maybe even of guns - GunBay. Or, the eBay of services. People put up what they are good at, and how many hours they will spend doing that, and people bid on that. It would require, of course, that the person doing the service be local.

Try to make your site fun and interesting, like eBay was in the early years. eBay has totally lost this aspect of their business, and it isn't coming back. Remember when it used to be fun just to browse eBay and look at all the wacky stuff people were selling? Now its like the sleaziest of flea markets and isn't any fun at all. Feels like wall-to-wall scammers. In my opinion, the time is totally right for someone to reboot the whole idea. Good luck!

Ebay would be hard to take head on, but you could get at it indirectly. Most things that are heavy are a pain to sell through ebay because of the high shipping cost, listing it on craigslist doesn't always mean you're getting full value. If you live in a big enough location, how about a local auction service for stuff that is too hard to sell on ebay for people that would prefer the auction format to craigslist?