When QXL launched its online "car boot sales" at the end of 1998, all 15 employees were told to put the contents of their flats up for auction to get the market going.

Mr Stan Laurent, senior vice-president sales and marketing, said: "We were just setting up a consumer-to-consumer auction site. You've got to start somewhere to get goods on to it."

Eighteen months later buyers can bid for 3,479 Beanie Babies, 72 classic cars, or a single Turkish flag that once flew from Wembley's twin towers.

This a fraction of what is available in the US on eBay, the gorilla of the industry.

But, although the European market is still undeveloped, some believe the battle to become the most popular site for people to exchange bric-a-brac is already reaching a climax. Mr Miles Saltiel, director of technology research at WestLB Panmure, said: "The network effects (of users gravitating to the most popular sites) are so brutal they have reduced the market from many competitors 18 months ago to one economically viable participant now. It's eBay (the US market leader) one, all the rest zero."

QXL in Britain, iBazar, the leading French auctioneer, and a host of smaller operators, would dispute this doomsday view.

So too would Irish sites. Ebay has presence in the Republic, but the main destinations for Irish people looking to participate in online auctions are buyandsell. net and ebid.ie, according to figures from Nielsen/Netratings.

Ebay has made strong inroads into Europe since it transferred their profitable US model to Europe last year. According to eBay's first-quarter figures, it had a gross auction value of about $87 million (€96 million) in Europe, compared with about $15 million for QXL.

Ebay is probably market leader in Germany and at least a strong competitor to QXL in Britain. Figures from MMXI, the Internet research company, suggest QXL has almost twice the number of unique users that eBay has in Britain. As for iBazar, unless it is bought, it appears safe until eBay executes its plan to enter France in the "near future".

Mr Jim Rose, chief executive of QXL, has spent the past four days of his summer holiday in Madeira renegotiating the takeover of Ricardo, the number two in Germany. He said: "Everybody fears eBay because of what it has done in the US. But it is only in two European countries. If you swapped our name for theirs, people would be saying how great our business is with a position in 12 countries, and market leadership in about eight." The key to success is creating the most liquid market, attracting the most new buyers and sellers, who in turn spread the word to friends and colleagues and reinforce that lead. Ms Jennifer Mowat, UK country manager for eBay, said: "If you go shopping, you don't want to go to the nearest corner where there are two shops. You go where there are the most products.

"Over half of our users come as a result of word of mouth, they are doing the work on our behalf." Ms Mowat said: "If you are the only person in your local pub who likes collecting Beanie Babies, you are probably not going to shout about it, but you can come to eBay and find thousands of like-minded people." Customers are able to indulge their pet interests through chatrooms, which the company uses to build communities of traders to keep traffic through the site high. The hope is that users become hooked and start trading as a way of life.

It is the heavy users that create the basis for each market, with some even building up businesses based on the auction sites. One example is an English woman who buys copies of the Big Issue magazine and sells them on eBay to US collectors.