The World’s Online Marketplace



The World’s Online Marketplace

Group 4

Carter Sample, Brandin Neal, Garrett Berry, and Raymond Harris

Key Words: Internet, Auction, businesses, buying, selling, e-commerce, collectibles

In the world of online retail, one business truly stands out. eBay is the world’s foremost online auction site. It is also one of the most successful online ventures in the history of the internet. eBay allows people from all over the world to buy and sell virtually anything from the safety and comfort of their own homes. eBay is much more than a simple auction website. eBay is a gigantic online marketplace used by tens of millions of buyers and sellers, as well as tens of thousands of businesses. Many of these businesses use eBay as their primary distribution channel. eBay is important to the business community for many reasons. eBay allows small businesses to purchase materials, equipment, and supplies at prices that are usually below wholesale. eBay also gives ordinary people the opportunity to start their own small business.

eBay was founded in 1995 by a man named Pierre Omidyar. He created it to give his girlfriend a way to trade Pez dispensers with other collectors. He originally intended to call the site Echo Bay Technology, but when he found that there was already a domain registered as Echo Bay he shortened it to eBay. Originally, eBay was used primarily as a place to buy and sell collectibles and antiques. eBay grew fairly quickly under the control of Omidyar and co-founder Jeff Skoll. In 1998, Harvard Business School Graduate Meg Whitman took over as eBay’s chief executive. eBay also had their first public stock offering in September of 1998. eBay’s growth rate has soared in recent years, the website has grown from 2 million users at the beginning of 1999 to 135 million users by 2005. Under Whitman’s control, many more categories of merchandise have been added, as well as many new options buyers and sellers can utilize, such as the “buy it now” feature. eBay has also recently acquired other companies. eBay now owns , a website that allows users to post items for sale at set prices and then wait for other users to buy their items. Another important company that eBay owns is Paypal. Paypal is a company that allows people to make secure, insured cash exchanges over the internet. Paypal is the most popular method of payment on eBay.

eBay has continued to grow at a very quick rate over the years. The result is that at any given time, there are now millions of items for sale on eBay. Although the original focus of the website was on collectibles, it is now possible to buy almost anything imaginable on eBay. People have attempted to sell everything from human kidneys to their own souls. People commonly put the right to name their baby up for auction. One woman even put her virginity up for sale on eBay.

eBay actually operates as an intermediary between buyers and sellers. Potential buyers and sellers register as eBay users, then buyers use search and browsing functions to find the items they are interested in. Buyers can examine a specific webpage (hosted on eBay) for each item they are interested in. These pages usually include detailed descriptions and pictures of the item or items for sale. The page also usually provides information about what forms of payment the seller accepts, and what countries they will accept bids from. Sellers use eBay’s simple listing system to design a webpage for their auction. They have many options available in setting up their auction, including reserve prices, starting prices, and “buy it now” options. The items are shipped directly from one user to another after they are sold. eBay makes money by charging small fees for listing items and a small percentage of the final sale. This is a very advantageous way of operating because it allows eBay to make money from items without taking ownership of these items. eBay also saves a tremendous amount of money because they do not have to stock, store, or ship any of the items on their website. eBay is a much more efficient company than most retailers. They do not have to pay for stores or distribution centers from which to ship products. Due to their innovative method of operating, even the outrageous cost of gasoline today is not affecting eBay as drastically as it does traditional retailers. eBay also saves a tremendous amount of money by being able to operate with fewer than 8,100 employees. When this number is compared to the tens or hundreds of thousands of employees that large retailers need to function efficiently, it becomes apparent how much money eBay saves on personnel expenses.

eBay has definitely had an impact on businesses worldwide, especially small businesses. Businesses can use eBay to buy anything they might need. Since most items can be bought at a significant savings on eBay, this can be a way for many businesses to purchase supplies and equipment at unheard of prices. eBay also allows individuals to set up their own small web-based business from their home with an extremely low starting cost. These small businesses can use eBay to ensure that their products have the potential to be seen and bought by tens of millions of other eBay users worldwide. This is something that would probably be impossible for most small businesses before eBay was created. Many large businesses are incorporating eBay into their marketing mix as well. Many of these traditional “brick and mortar” organizations are creating eBay stores to help their products reach new consumers.

There are a few downsides to doing business on eBay that all users should be aware of. There are many unscrupulous sellers on eBay. Many sellers will intentionally misrepresent their product in an attempt to get more money than it is worth. For example, some sellers will sell refurbished electronics as “brand new.” A bid on eBay is a legally binding contract, so bidders should always be sure to read everything on the page and be sure that they’re really bidding on what they think they are. Sellers should also be wary on eBay. Many times buyers will email sellers asking them to cancel the auction and do business with them outside of eBay. Not only is this dangerous, it is illegal. Also, sellers should be wary of bidders who have negative feedback ratings or no feedback at all. They may wish to cancel bids from these users, if possible. Also, it is possible for buyers not to pay for items once they have won, and it is possible for sellers to refrain from shipping items after they have been paid. Users should not be shy about filing complaints if they are feel they have been wronged.

eBay is a remarkable website that is changing the way many companies do business today. It allows people and organizations to buy and sell almost anything imaginable from other users all over the world. eBay can be a very positive tool for businesses to take advantage of, but buyers and sellers alike need to make sure that they do not get taken advantage of as well. eBay is still continuing to grow, if businesses wish to maintain their competitive advantage, they are going to have to learn to make use of the world’s premier online marketplace.

References

Mullen, Amy. (2005). The History of Ebay. Retrieved November 17, 2006, from



Statistics You Won't Find on eBay (2006). The Auction Software Review. Retrieved November 23, 2006, from

Experts: Buying & Selling Through eBay & Other Auctions. (2006). All Experts. Retrieved November 23, 2006, from

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