There is not much that can't be bought from Ebay that is not cheaper here than it is at a regular website or retail store and nowhere is this more evident than with website hosting. 

Many webhosting companies including our own sell deeply discounted webhosting via our store.  We actually began selling hosting plans on Ebay only a few months ago for our website 444hosting which provides unlimited bandwidth and storage for just $4.44 a month. 

Being active on Ebay with other categories, we started to notice that other hosting companies were selling hosting for anywhere from $1 a month to the standard off Ebay rate of $10 per month. 

Even with companies such as 1 and 1, which are one of the better deals out there for hosting, don't come close to the hosting value that can be found through Ebay - the problem being that what happens if a less than reputable company starts your website hosting and then shuts down three months later ?  The results can range anywhere from mildly annoying to catastrohphic not to mention really expensive in lost revenue, lost search engine ranking and even losing your domain if they did not register it properly.  ( which is why you should always register domains with large companies such as go daddy where the ownership and access will never be in question and they are not going anywhere )

The main questions you want to ask yourself before commiting to any hosting agreement are as follows...

1. Is there a contract that you are getting yourself into that makes up for the low price at the beginning and will cost you money in the long run ?
2. How much bandwidth is available for the account.  Most sites don't ever come close to blowing their disk storage unless they are storing graphics or media files - but even a moderately successful site can quickly surpass their traffic quota which can be costly, or in the case of some less service friendly sites, will see your site shut down with little notice until you upgrade to a higher quota.  Always go with an unlimited hosting plan to avoid this problem.
3. What about company reliability ? Do they have a real website or do they only exist on Ebay and are a home operation.  Do you research and make sure they can be trusted to be a trusted partner.
4. Make sure you understand what type of technical requirements you need such as front page extensions, php data bases, and cgi bins - all of which are important to various websites.   
5. What about email accounts, ftp transfers etc ?  Plan out your requirements before hand.
6. Good webhosts will also have numerous preinstalled scripts such as classifieds, blogs and bulletin boards.

Competing as a webhost is another thing though - we've provided a $1.99 introductory rate to our unlimited hosting via Ebay as a way to attract customers.  This is a prime example of how in a buyer driver market such as Ebay, the consumer is able to play the sellers against each other to get the best price for the product they want and purchase a hosting account at a fraction of the price you would pay directly from another hosting company.  

The moral of the story really is to always check on Ebay before buying anything elsewhere as chances are you'll find it quite a bit cheaper here than at full retail.