SAN JOSE, Calif., (


) -- It seems


(EBAY) - Get Report

has found the secret sauce to online sales: free shipping.

After years of watching its auction format fade in popularity as other Net retailers like


(AMZN) - Get Report

gained clout and market share, eBay has decided to shake up its approach a bit.

Among the biggest problems for eBay shoppers is the erratic and somewhat gouging shipping costs for the items they were bidding on. While other sites offered quick purchasing and modest or free shipping, eBay's transactions were delayed until actions were over and shipping charges looked more like penalties.

eBay Is a Winner

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With more free shipping options on eBay, the big Internet flea market has been able to regain some lost ground.

"Free shipping is a very powerful change for eBay, not only improving actual business metrics but also fending off competition," Collins Stewart analyst Sandeep Aggarwal writes in a research note Friday.

Aggarwal went positive on eBay in June when it appeared some changes in the company's sales approach were actually working. He notes Friday that free shipping increased by nearly 1% this month compared with August and that 83% of items found in the Best Match category offer free shipping.

The improvements of eBay's core business and the reduced distractions from other ventures came into focus this week. On Tuesday, an investment group led by Silver Lake Partners paid

eBay $1.9 billion for a 65% stake

in its Internet calling business,



In the past three months, eBay shares are up 19%, while rival Amazon has seen an 8% decline in the same time frame.

Written by Scott Moritz in New York.