I may not be the smartest monkey in the zoo, but I believe it IS possible to take on E-Bay. Just don't try to do it on a global scale. Think locally. Look in the Sunday paper. How many people have classified ads posted there? Give them an alternative. Play up local delivery. "Many of our customers will deliver right to your door." "Don't pay E-Bay for insurance. Go get your auction items right down the street." Just brainstorming here. Are you going to topple E-Bay? Probably not, but do you really want to work with millions of dollars of venture capitol and wait years for a profit? Get local stores to put items up for auction at a discount. Put items up yourself. I hate it when people say you can't take on a big company. I'm typing this on a computer running Linux. Talk about taking on the big guys!
I wish you the best of luck.
Jason
http://databuilders.net
P.S. Mind if I ask what software you are using to run your site? I'd like to review auction software on my site. Thanks.