Dunno about eBay vs. Amazon or what has happened to the Bay over the years. It still works fairly well for me, but I sell unique items, collectibles. I mean the barrier to entry is low, just sell across all venues.
I'm sure eBay revenue is due to competition from other marketplace sites (wal-mart, amazon, overstock, etsy) but also because of traditional retail's slow but eventual adoption of web-business.
Are you pulling any other web-marketing strings? I recently investigated setting up a web shop to lessen my ~30% revenue cost of eBay but decided that the marketing (SEO, etc.) would cost only slightly less than that and it would be a full time job. I don't know much about web-marketing strategies tho and I'd like to.