Yahoo! Trumpets Auctions Progress - TheStreet

Despite a sharp drop-off in the number of auction listings on its site,



is touting its decision in January to drastically alter its strategy by charging fees as one that is paying off.

The news won't cause executives at


(EBAY) - Get Report

, the dominant online auctioneer, to lose sleep. But Yahoo! Friday unveiled a host of metrics that it says shows its auction business is far from dead. The average selling price of an item has risen to $62 from under $40 in the five months since the company began charging fees. While the number of listings has fallen dramatically -- the company doesn't say exactly, but some observers

estimate volume has fallen by as much as 90% -- the company says the value of goods exchanged has remained about the same.

"The reason for the listing fees was to step up the quality of the auctions," says Brian Fitzgerald, senior producer for Yahoo! auctions. The fee, he says, forced out low-quality auctions that essentially resembled classified advertisements.

The company is also highlighting an increase in its sell-through rate, or the percentage of goods listed that eventually sell, to 31% from around 10%. That, however, does not say much. Because listings declined, that number would naturally increase.

"What they are not saying is the change in the number of items that sell," says Jared Blank, an analyst at

Jupiter Media Metrix

. "I'd imagine that number hasn't changed much."

While the company once had ambitions of going toe-to-toe with eBay, that now appears a pipe dream.

"They are not a major competitor to eBay at this point," says Blank. Blank notes that because Yahoo! charges only a listing fee, rather than a percentage of the selling price, it is cheaper to auction higher-priced goods on Yahoo!.

As a result, he says, Yahoo!'s ambition is to woo some of the larger corporations and liquidators that currently use eBay to unload high-priced goods. "The business guys are looking for an alternative to eBay," Blank says. "A lot of the power sellers feel that eBay is not concerned about customer service for them."

Key for Yahoo! to even consider competing with eBay is to boost its success rate to the same ballpark as eBay's roughly 52% rate, wrote

Prudential Securities

analyst Mark Rowen in a recent report. "While Yahoo! Auctions is now only 3% the size of eBay U.S., we believe it could become a low-cost alternative to eBay, its success rates move closer to those of eBay," he wrote.

Yahoo! shares lately traded at $18.43, up 32 cents, while eBay lost 29 cents to trade at $60.23.