The Business Model of eBay

1. EBAY
eBay is an American multinational corporation and e-commerce company,
providing consumer-to-consumer and business-to-consumersales services via the
Internet. It is headquartered in San Jose, California. eBay was founded by Pierre
Omidyar in 1995, and became a notable success storyof the dot-combubble.
Todayit is a multibillion-dollar business with operations localized in over 30
countries.
The Business Model of eBay
eBay has built an online person-to- person trading community on the Internet,
using the World Wide Web. Buyers and sellers are broughttogether in a manner
wheresellers are permitted to list items for sale, buyers to bid on items of
interest and all eBay users to browsethrough listed items in a fully automated
way. The items are arranged by topics, whereeach type of auction has its own
category. eBay has both streamlined and globalized traditional person-to- person
trading, which has traditionally been conducted through such forms as garage
sales, collectibles shows, flea markets and more, with their web interface. This
facilitates easy exploration for buyers and enables the sellers to immediately list
an item for sale within minutes of registering. Browsing and bidding on auctions is
free of charge, but sellers arecharged two kinds of charges:
*.When an item is listed on eBay a non refundableInsertion Fee is charged, which
ranges between 30 cents and $3.30, depending on the seller's opening bid
on the item.
*.A fee is charged for additional listing options to promote the item, such as
highlighted or bold listing.
*.A Final Value (final sale price) fee is charged at the end of the seller'
auction. This fee generally ranges from1.25% to 5% of the final sale price.
Early years
The Auction Web was founded in California on September 3, 1995 by French-born
Iranian-American computer programmer Pierre Omidyar (born June 21, 1967) as

2. part of a larger personal site. One of the first items sold on AuctionWeb was a
broken laser pointer for $14.83. Astonished, Omidyar contacted the winning bidder
to ask if he understood that the laser pointer was broken. In his responding email,
the buyer explained: "I'm a collector of broken laser pointers." The frequently
repeated story that eBay was founded to help Omidyar's fiancée trade Pez candy
dispensers was fabricated by a public relations manager, Mary Lou Song, in 1997
to interest the media, which were not interested in the company's previous
explanation about wanting to create a "perfect market".This was revealed in Adam
Cohen's book, ThePerfect Store (2002), and confirmed by eBay.
Profit and transactions
eBay generates revenue by a complex system of fees for services, listing product
features, and a FinalValueFee for sales proceeds by sellers. As of November
2012, the U.S.-based eBay.com charges $0.10 to $2, based on the opening or
reserve price, as an insertion fee for a basic auction-style listing without any
adornments. The Final Value Fee amounts to 10% of the total amount of the sale,
which is the price of the item plus shipping charges. Fixed-price listings have an
insertion fee of $0.30, and the final value fee varies based on category and total
amount of the sale (e.g., 13% for DVDs & Movies up to $50). The UK-based
ebay.co.uk takes from £0.15 to a maximum rate of £3 per £100 for an ordinary
listing and up to 10% of the final price. Reduced Final Value Fees are available to
business registered customers.
Acquisitions
StubHub
StubHub was acquired by eBay in January 2007 for a reported $310 million.
According to CNN Money, 2007 was a very successfulyear for the company,
handling five million individual transactions, more than in the previous six years
combined of its history. Staffing at StubHub had increased to 350 workers by the
time of the sale. Eight months after the acquisition, StubHub reached an exclusive
agreement with Major League Baseball (MLB). They get a piece of the 25% in
commissions StubHub earns on either end of a seasontiy in 2007, alleging
"intentional interference" with Ticketmaster's contractual rights.

3. Skype
In October2005, eBay Inc. acquired Skype Technologies developer of the Skype
VoIP and Instant messaging service, significantly expanding its customer base to
more than 480 million registered users worldwide. eBay later sold a majority stake
in Skype in November 2009, while retaining a minority investment in the
company. This eventually led to the sale of the entire Skype business to Microsoft
for $8.5 billion in May 2011.
GittiGidiyor
GittiGidiyor, a subsidiary of eBay, is a Turkish e-shopping mall. The company's
URL comes from the Turkish translation of "Going, going, gone". GittiGidiyor
offers a wide variety of products, similar to the main eBay website.
PayPal
On October3, 2002, PayPal became a wholly owned subsidiary of eBay. Its
corporateheadquarters were sited in San Jose, California, United States at eBay's
North First Street satellite office campus. On September 30, 2014, eBay Inc.
announced the divestiture of PayPal as an independent company, which was
completed on July 20, 2015.
Corrigon
In October2016, eBay acquired Corrigon, a visual search engine, for less than $30
million.
Prohibited or restricted items
Generally, if the sale or ownership of an item is regulated or prohibited by one or
more states, eBay will not permit its listing. Among the hundred or so banned or
restricted categories:
 Tobacco (tobacco-related items and collectibles are accepted.)
 Alcohol (alcohol-related collectibles, including sealed containers, as well as
some wine sales by licensed sellers are allowed, somesites such as
ebay.com.au allow licensed liquor sales) (eBay announced September 21,
2012, it will begin removing listings for beer and liquor fromits site after a
story was aired on ABC series 20/20.)

4.  Drugs and drug paraphernalia
 Items that "promoteor glorify hatred, violence, racial, sexual, or religious
intolerance, or promoteorganizations with such views." This includes Nazi
paraphernalia, although there are exceptions to this rule for Nazi items
such as stamps, letters, and envelopes displaying Nazi postmarks (must
comply with the currency and stamp policy)
 Bootleg recordingsFirearms and ammunition (as of January 1, 1999),
including any parts that could be used to assemblea firearmas well as (as
of July 30, 2007) any firearmpart that is required for the firing of a gun,
including bullet slugs, brass casings and shells, slides, cylinders, magazines,
firing pins, trigger assemblies, etc. Various types of knives are also
forbidden.
 Police and emergency servicevehicular warning equipment such as red or
blue lights and sirens (antique or collectible items areexempt)
 Intentionally soiled underwear (see Panty fetishism) and dirty used clothing
Forged, illegal, stolen, or confidential documents, which include passports,
Social Security cards, drivers licenses, voter registration cards, birth
certificates, schooldocuments, medical records, financialinformation,
governmentlicense plates, or governmentclassified information
documents. Any item that is used to modify documents is also restricted.
Conclusions
eBay has changed the landscape of micro auction from consumers to consumers.
It is the fastest growing C2C auction site with more than 90 percent market
share. The success factors for eBay are – flexibility and ease with which
consumers can transact with each other, very efficient and least cost transaction
mechanisms, and finally reliability of payment systems. Consumers consider
eBay as the largest electronic garage sale where millions of buyers see the
products of sellers. Performance indicators of 2002 of eBay that were discussed
thorough out the paper, clearly indicate that a revenue of $14.87 billion ($470 per
second), 12 million listed items over 18,000 categories, in four countries, is highly
impressive.