eBay Inc. (NASDAQ symbol: EBAY) is the world’s largest online auction and shopping site. The first appearance of the auction service was in 1995 as AuctionWeb, part of the personal Web site of Pierre Omidyar (see auctions, online and Omidyar, Pierre). Omidyar was surprised at how rap-idly the auction service (which was initially free) grew. After he imposed a modest listing fee, Omidyar found himself receiving thousands of dollars in small checks, and decided that online auctions could become a full-time business.
In September 1997, with Jeff Skoll now on board as president, AuctionWeb officially became eBay. When the company went public in 1998 (at the height of the first “Internet boom”), Omidyar and Skoll became instant mil-lionaires. Meanwhile, eBay took on Margaret (Meg) Whit-man as its new CEO, and under her leadership the company has expanded rapidly through its first decade.
eBay also seeks new markets and revenue through stra-tegic acquisitions. These include payment services such as the very popular PayPal, other e-commerce sites such as Half.com, shopping.com, and rent.com, and even Skype, the Internet phone service. eBay’s net revenue for 2007 was $7.67 billion.
Online Auctions
Auctions remain at the core of eBay’s business, with mil-lions of items in dozens of categories being listed and sold each day. Offerings can range from factory equipment (in the Business & Industrial category) to books, toys, sports memorabilia—even cars and, in a limited fashion, real estate. There are now hundreds of small- to medium-size businesses who derive their revenue from eBay, whether selling their own merchandise, acting as agents for others, or selling software or templates for managing auctions.
eBay does not charge any buyer’s fees, but makes its money by charging the seller for each listing and then a percentage of the selling price. As of 2007 eBay has regional operations in more than 20 countries, including China and India. (Yahoo, a distant second to eBay in online auctions, discontinued its U.S. auction site in mid-2007.)
Beyond Auctions
In recent years eBay has increasingly tried to build a more “traditional” online shopping experience in parallel with its auctions. The Buy It Now feature allows a seller to list an item at a fixed price, either instead of auctioning the item or as an option that can be exercised if there have been no auction bids. Sellers can organize their offerings into regu-lar “stores” to make it easier for customers to browse their merchandise. (Many traditional stores, such as antiques or collectibles dealers, now offer some of their items via their eBay store.) eBay Express, introduced in 2006, adds conve-nience by allowing users to buy selected items from mul-tiple sellers using a standard online shopping cart.
Like Amazon.com, eBay has focused considerable atten-tion on developing more ways for users to comment on their purchases and otherwise contribute content (see user-created content). The most important mechanism is feedback, which lets buyers summarize their opinions of a transaction after its completion. The feedback system has been recently expanded and structured to allow users to give specific ratings on aspects of the transaction, such as accuracy of description and shipping cost and speed. Although not perfect (feedback can be “pumped up” by setting up phony transactions between two accounts), the system does allow buyers to exercise a certain amount of caution before bidding on an expensive item from an unknown seller. eBay also offers various forms of “con-sumer protection” if items are not received or are substan-tially not as described.
Not surprisingly in a marketplace of this size, there is opportunity for various forms of fraud, including sale of counterfeit, defective, or lower-grade merchandise and, on the part of buyers, credit card fraud. eBay has been criticized for not policing fraud adequately. Generally, the service has maintained the position that it is only a facilita-tor of transactions. If it had to guarantee the authenticity of merchandise, it would have to operate like a conventional auction house, with the attendant fees. However, eBay has solicited the help of experts in fields such as coins and stamps to help them identity counterfeit or misdescribed items.
eBay provides a number of forums for user comments, including discussion boards and chat rooms. Users can also write reviews and guides to help, for example, nov-ice collectors who might find themselves overwhelmed by the coin or stamp listings. In mid-2006 eBay expanded its “community content” to include an eBay Community Wiki (see wikis and Wikipedia) and eBay blogs (see blogs and blogging).
eBay is always trying to make it easier to match users’ specific needs with the thousands of potentially relevant offerings. Providing recommendation information (includ-ing user-generated recommendations) is another way to make shopping easier and more satisfying, as has been shown by Amazon.com. Another possible way to get a big-ger share of users’ day-to-day purchases is to make eBay available on mobile devices as well as linking it to sites such as Facebook, where young people in particular spend much of their time (see social networking.)
Long-time eBay CEO Meg Whitman stepped down in March 2008, while calling for innovation to reinvigorate a company that many observers now consider to be staid and “old school” in the age of Web 2.0. Whitman’s succes-sor, John Donahoe, has announced a new fee structure and new ways of searching for and displaying listings—devel-opments that have provoked some controversy in the seller community.
Online Auctions
Auctions remain at the core of eBay’s business, with mil-lions of items in dozens of categories being listed and sold each day. Offerings can range from factory equipment (in the Business & Industrial category) to books, toys, sports memorabilia—even cars and, in a limited fashion, real estate. There are now hundreds of small- to medium-size businesses who derive their revenue from eBay, whether selling their own merchandise, acting as agents for others, or selling software or templates for managing auctions.
eBay does not charge any buyer’s fees, but makes its money by charging the seller for each listing and then a percentage of the selling price. As of 2007 eBay has regional operations in more than 20 countries, including China and India. (Yahoo, a distant second to eBay in online auctions, discontinued its U.S. auction site in mid-2007.)
Beyond Auctions
In recent years eBay has increasingly tried to build a more “traditional” online shopping experience in parallel with its auctions. The Buy It Now feature allows a seller to list an item at a fixed price, either instead of auctioning the item or as an option that can be exercised if there have been no auction bids. Sellers can organize their offerings into regu-lar “stores” to make it easier for customers to browse their merchandise. (Many traditional stores, such as antiques or collectibles dealers, now offer some of their items via their eBay store.) eBay Express, introduced in 2006, adds conve-nience by allowing users to buy selected items from mul-tiple sellers using a standard online shopping cart.
Like Amazon.com, eBay has focused considerable atten-tion on developing more ways for users to comment on their purchases and otherwise contribute content (see user-created content). The most important mechanism is feedback, which lets buyers summarize their opinions of a transaction after its completion. The feedback system has been recently expanded and structured to allow users to give specific ratings on aspects of the transaction, such as accuracy of description and shipping cost and speed. Although not perfect (feedback can be “pumped up” by setting up phony transactions between two accounts), the system does allow buyers to exercise a certain amount of caution before bidding on an expensive item from an unknown seller. eBay also offers various forms of “con-sumer protection” if items are not received or are substan-tially not as described.
Not surprisingly in a marketplace of this size, there is opportunity for various forms of fraud, including sale of counterfeit, defective, or lower-grade merchandise and, on the part of buyers, credit card fraud. eBay has been criticized for not policing fraud adequately. Generally, the service has maintained the position that it is only a facilita-tor of transactions. If it had to guarantee the authenticity of merchandise, it would have to operate like a conventional auction house, with the attendant fees. However, eBay has solicited the help of experts in fields such as coins and stamps to help them identity counterfeit or misdescribed items.
eBay provides a number of forums for user comments, including discussion boards and chat rooms. Users can also write reviews and guides to help, for example, nov-ice collectors who might find themselves overwhelmed by the coin or stamp listings. In mid-2006 eBay expanded its “community content” to include an eBay Community Wiki (see wikis and Wikipedia) and eBay blogs (see blogs and blogging).
eBay is always trying to make it easier to match users’ specific needs with the thousands of potentially relevant offerings. Providing recommendation information (includ-ing user-generated recommendations) is another way to make shopping easier and more satisfying, as has been shown by Amazon.com. Another possible way to get a big-ger share of users’ day-to-day purchases is to make eBay available on mobile devices as well as linking it to sites such as Facebook, where young people in particular spend much of their time (see social networking.)
Long-time eBay CEO Meg Whitman stepped down in March 2008, while calling for innovation to reinvigorate a company that many observers now consider to be staid and “old school” in the age of Web 2.0. Whitman’s succes-sor, John Donahoe, has announced a new fee structure and new ways of searching for and displaying listings—devel-opments that have provoked some controversy in the seller community.
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