Because auctions are the ideal business for the Internet. It is a high margin, highly scaleable operation for the host. Beyond strong margins, in Amazon's case the addition of auctions will enrich its product offerings more than adding any other specified product line ever could. Adding a new product line takes one year for Amazon. Now, in one fell swoop, Amazon will add thousands of product lines without adding any inventory or significant buildout costs.
Auctions can offer the richest diversity of product anywhere.
The online auction leader has a community that is probably closer to 3 million than 2 million now, and most users won't have any reason to leave unless Amazon can grow more quickly than eBay and offer even more buyers and more sellers. There won't be much rest for management in its quest to keep the eBay community ahead of Amazon's. Increasingly, Amazon represents e-commerce of any and all kinds. If management can fold auctions into the offerings, it will become a major player in the field, probably hurting second and third-tier players the most. For more Foolishness on Amazon and eBay, see the Fool's Lunchtime News and hit the Rule Breaker , eBay and Amazon message boards.