Financial News

Ebay (NASDAQ: EBAY - news) became a victim of its own success over the weekend after a surge in the number of items for sale caused the world's largest online auction site to crash.

Millions of shoppers were left unable to use the website starting Saturday, in the crucial run-up to Christmas, after a computer system failure.

Ebay said there had been a huge rise in the number of items listed for sale on its site in the run-up to the holiday season this year. It currently has over 200m live listings, 33 per cent more than this time last year.

On Sunday the company's website still said it was working to resolve the technical problems, which had first been noticed around 11 am PST on Saturday. It will be one of the worst outages suffered by the company in recent years.

Ebay could be left with a hefty bill for compensating sellers for losses caused by the outage.

"Our immediate priority is to resolve this issue. Once that is achieved, rest assured that we will assess the economic impact of this issue and will be compensating sellers appropriately. In the meantime, we will be issuing full fee credits for affected listings," Ebay said on its website.

Many Ebay sellers have complained that they received much lower sales prices on their goods because people were unable to get on the site to bid on them. Goods tend to be listed on Ebay for a set period of time - often seven or nine days - and the bid price ramps up towards the end of the sale period as buyers compete for the item in the closing hours of the sale.

"We had a number of auctions close today that we started at $0.99 with no reserve a week ago. These items were up to $160 in retail value. The items closed between $5.84 and about $42.00," one seller wrote on a internet forum.

"Apology from Ebay? Sadly, that will not repair the damage done, or make up for monetary losses sellers faced (i.e $200 item sold @ $.99 opening bid) Refunding listing fees will not cover those losses," wrote another.

The number of individuals and retailers selling items on the site usually rises in the run-up to Christmas, but this year's rise has been particularly steep because Ebay has been working to encourage large retailers to sell more items through the site, which has up to now been the preserve of individual sellers and smaller retailers.

The company has recently been trying to beef up sales after several years of poor performance. However, a number of participants on internet forums expressed concern at Ebay's policy of courting larger retailers.