This is not uncommon on eBay. Somehow, you will find someone selling the same item you're selling at a cheaper price. This is because 1) wholesalers sell direct to the public through eBay; 2) they get their products for pennies on the dollar through liquidation. With today's economy, yes, people will tend to shop around but note that there will always be those who don't and who prefer to buy from 1) someone they have trusted and bought before and experienced great customer service from; 2) a store that's well constructed, professional and with listings that have great pictures and descriptions.
Take advantage of the traffic that eBay generates and the fact that you can make your listing as attractive as it possibly can. I personally think that the listing itself can tell a lot about what kind of service I am going to get from a seller and yes, based on my experience as a crazy but wise shopper, I shop around to get the best deals but I want my dealings to be as smooth as possible so I avoid sellers that may offer low prices but don't reply to emails, are difficult to talk to, etc.
I have also seen a lot of eBay sellers whose listings always get a lot of bids even if another seller is selling the same item very cheaply. It may take time but soon you will build a 'brand' for yourself on eBay and this will pull buyers towards your store.
So I'd say, go ahead and list it!