OK, two issues I can see
The first, and possibly the big one that is causing the problem is the feedback. A score of 3 at 33% will be a massive red flag to buyers, especially when you are up against a seller with a score of 12,675 @ over 99%
That's a seriously big issue for you. My suggestion would be to start a new account altogether, it's just too much hard work to try and save that account and given that it is only a new one anyway, just not worth trying to save. Set up a new account and start fresh. 0 feedback will be better than what you currently have.
I think your return policy seems a little confusing, I would look at simplifying that for customers. That's needs to be concise, much shorter and better defined.
The other issue that I would look at is shipping. Even though you are still coming in cheaper than your competitor with their shipping combined deal, it's the illusion of the FREE SHIPPING that can attracts customers because they feel like they are getting something free. If you switch up to combining your shipping with the item, you will still be about $5.00 cheaper than them and you too can be FREE SHIPPING
I think the listing itself is OK, good description, but another thing that may be adding to the hurt is the lack of other products. Quite a lot of customers will click to see what else you have for sale, but then they see nothing. Combine that with the poor feedback and it's not a good look at all, and then judging you against your competitor you come off looking even worse.
Start again and consider the other points I made would be my best suggestion. You don't need to list a lot of items, but I always suggest having at least 10 items listed. It gives you a better chance of sales, but more importantly, it makes you look like a more respectful seller and not someone just dumping some left over old stock that doesn't work anymore.