There’s very little a golf nut can’t get at the auction site. It’s not just golf. For anyone with anything, from a passion for Beanie Babies to Norton motorcycles, Ebay has become the first port of call.

Started in 1996 as an online swap shop for techy Californians, Ebay has been embraced across the world. Being first has rarely been a good thing in cyberspace. Good ideas can be done better and once the idea is out, competition can come from anywhere. During the dotcom boom many firms with good ideas got out in front only to become roadkill as faster-moving competitors surged past them.

Not so Ebay. The online auction service not only created its own business but has gone on to dominate it. Ten years on, the auction house is only now beginning to experience some real competition.

Google and Yahoo are also building their classified-advertising businesses alongside Amazon, the online retailer that has been rapidly expanding its business beyond books and CDs. Microsoft is expected to launch an online classified-advertising site this year.

Fearing that the rapid growth in online advertising may eventually slow, Ebay’s rivals are seeking to expand their sources of revenue.

“There are a lot of wolves licking their chops right now,” said Scot Wingo, chief executive of ChannelAdvisor, a firm that advises companies on maximising their online sales.

He said the competition had been drawn in, partly because the market is nearing maturity, especially in America.

He pointed to golf as an example. Between 10 and 20 sellers now account for 80% of the golfing goods sold via Ebay’s marketplace.

The same pattern has been repeated across many a marketplace, from computers to used books. A market that started as a collection of collectors selling to each other has followed the pattern of the American retail market — dividing into Wal-Marts and “Mom and Pop” stores.

“Those big customers reach a point where they are not growing their business on Ebay anymore,” said Wingo. They are looking for other places to reach customers, and Google, Microsoft et al are hoping to provide it. Google poached Louis Monier, one of Ebay’s technology stars, last summer.

The search giant is already testing a classified-advertising system called Google Base. The site allows people to offer anything from cars to concert tickets, but is so far unwieldly to use.

Microsoft intends to launch Windows Live Classified by the end of this year. As with Google Base, its service will offer everything from recipes to job postings. Both services are foundations on which Ebay’s would-be competitors intend to encroach on the auction giant’s territory.

Patti Freeman Evans, Jupiter Research analyst, said that the online auction and retailing market was about to undertake a fundamental shift. So far, Ebay has grown by attracting new customers. Freeman Evans calculates that last year about 60% of Ebay’s growth came from acquiring new customers and 40% from existing customers buying more. By the end of this year that picture will change.

“In the future it’s not going to be about getting new people, it’s going to be about getting the people you have got to buy more,” she pointed out.

These established customers were sophisticated and would search beyond Ebay for the best deals. “These consumers want choice,” she said.

Perhaps in response, Ebay is preparing to launch Ebay Express. This service will skip Ebay’s auction process to offer fixed prices and an online shopping cart, more like a traditional online retailer.

At present about 30% of Ebay’s auctions have an option to “Buy It Now” and get the item for a fixed price. The rest follow the auction model, with bidders waiting for ads to see if they have won.

The launch of Ebay Express will intensify competition with companies such as Amazon, but it will also bring Ebay into competition with itself.

Offering more options is the smartest move Ebay could make, said Wingo. “The eco-system is changing,” he said. “People don’t necessarily start at Ebay any more. They start at a search engine such as Google or Yahoo.”

Internet searches for items such as radios or car engines will often throw up advertisements for Ebay. The company is among the biggest advertisers on Google and Yahoo but its advertisements will be competing increasingly with plugs for services that are run by those search-engine companies themselves.

In a category that it invented itself, Ebay still remains out in front. But there is some very strong competition coming up behind.

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