I think an auction's network effect is harder to beat. Search doesn't have the network effect so Google was able to win just by being the best, to beat google at search now you're going to have to be an order of magnitude "better" and have non copyable tech. Facebook was able to beat Myspace even though they had the network because for personal identity the tone and "coolness" is very important. But for an auction it's all very impersonal the only thing that matters is the size of the network, there's not a lot of opening for a competitor. The only way I can imagine to beat ebay would be with a massive amount of money to just pay people to come over.
Hard to beat, but not impossible. As far as auction sites go, NYSE/ARCA was (about 15 years ago) pretty much the only site providing double auctions for stocks. Now there are lots of them - BATS, BSX, assorted darkpools.
to beat ebay you'd start by establishing a base in one market (either one geographical region, or one type of product), and then expand from there. And even if you don't manage to beat ebay, you'd have a decent chance of establishing a moderately-sized business along the way.