Since the early years of the Internet consumers have hunted for bargains at eBay. The online marketplace was an exciting place to shop and consumers enjoyed bidding on items and winning auctions. Millions of small businesses became eBay sellers and a global, vibrant ecommerce community emerged benefiting almost everyone involved.

But for many consumers auctions have become time-consuming and frustrating. Instead of wading through an uncertain auction process, online buyers are choosing to use search and shopping tools to quickly and conveniently find and buy fixed priced products. This shift has resulted in traffic declines at eBay while competitors such as Amazon, Wal-Mart and Craigslist enjoy increasing numbers of online shoppers.

eBay has identified this trend and has announced a series changes to improve their “Buy it Now” fixed price service. They are also redesigning their site and releasing new search tools in hopes of creating a better buying experience for consumers.

To better understand how small sellers are being impacted by the shift from auctions to fixed price sales, we recently interviewed a number of web merchants about their web presence and views on online auctions. The key results are:

– About 60% of the merchants — interviewed sell via online auctions. Almost all report their business is shifting from auctions to fixed price sales.

– None of the merchants — interviewed not currently using online auctions report plans to start using online auctions.

– Almost all the merchants — interviewed said they thought online auctions are becoming less important. Most of merchants currently using online auctions said they would likely stop using them in the next 3-5 years.

– Over 80% of the merchants — interviewed reported plans to increase their investment in their own websites. The most mentioned reasons were control and the ability to develop stronger customer relationships. Many also mentioned customer and business partner credibility and success with web marketing.

– Over half of the interviewed merchants — have multiple online store fronts and almost all of the single store front merchants report plans to add additional store fronts. The most common number of store fronts is two and the most common mix is a company ecommerce site and one other store front.

While we don’t believe that online auctions are going to disappear, it is clear that they are losing the interest of both consumers and web merchants.

Notes on methodology: 40 small (less than 50 employees) online merchants were interviewed in person (9), via the phone (23) and via email (8) between June and early September of 2008. The sample was random but informal and the results are not statistically significant.

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About the Author: Steve King is a partner at Emergent Research, a research affiliate at the Institute for the Future, and senior fellow at the Society for New Communications Research. He is a co-author of the Intuit Future of Small Business report series, and he blogs at Small Biz Labs.

Steve is a member of the Small Business Trends Expert Network.