eBay: Ever Changing

I recently took an into to business course in school. We had to do a research paper, the topic I chose was "eBay: Ever Changing." I have always loved eBay, even though a lot of others who sell on Etsy have bashed it. There are many reasons that I like selling there that are purely selfish: (1) I don't have to advertise and market as much on eBay, the customers are just there; (2) It is so much simplier to list similar items than on Etsy. I just hit "duplicate" on Turbo Lister and then go in and change whatever details need changed; (3) I started selling on eBay a while ago, and therefore have more of a customer base there as opposed to Etsy.

Don't get me wrong, I adore Etsy, I just kind of feel like I am an outcast somewhat for continuing to sell on eBay.

Back to the research paper . . .
So, I had to do this research paper, and I found out all kinds of lovely things about eBay and how and why it started, etc. eBay is NOT the bad guy that it gets made out to be.

I decided to post my paper here.

Now, warning, it is long. :) But it is pretty interesting to read. (Oh, the settings got all wonky. I tried to fix them to be as readable as possible, though.)

Without further ado . . .


As the story goes, Pierre Omidyar took Labor Day weekend to build a website so his sweetheart (now wife) could trade Pez dispensers online. This isn’t completely true, but eBay did begin as an auction site for collectibles. Although eBay did begin as an auction site for collectibles that started as a hobby it has grown into a site that many people use to start fulltime employment. EBay.com has a rich history filled with ever-changing focus and strategies in order to continue to grow.

According to eBay.com (n.d.), Pierre Omidyar founded eBay, Inc. in 1995 with the name AuctionWeb. Although the Pez dispenser story is the legend, Omidyar actually first listed a broken laser pointer as a test and to his surprise it sold for $14.83. Omidyar called the buyer to make sure that he understood that the pointer was broken to which the buyer answered, “I’m a collector of broken laser points.”

The company was built around what still remain as the company’s core values: “People are basically good; everyone has something to contribute; and an open environment brings out the best in people (eBay, n.d.).”

As can be seen by the following timeline from eBay.com, the company progressed quickly in acquisitions and features as well as in sales. According to eBay.com (n.d.), revenue topped $10,000 by June of 1996 and the company hired its first employee. Soon thereafter, the first president was hired and the founder makes eBay his fulltime job. That year the Feedback Forum was instituted and fees according to the final value of the auction were added.

The following year, 1997, eBay is hosting more than 200,000 auctions per month. In 1996, there were 250,000 for the entire year. Beanie Babies were a huge hit and surpassed $500,000.

In 1998, Meg Whitman joined the company as President and CEO, a position she still holds. The eBay Foundation was also launched to help a variety of national charities and pre-IPO shares were used to fund the charity. Additionally, eBay went public, listing shares with the symbol EBAY. A new personalization tool, “My eBay” also makes its debut in 1998.

The fixed pricing feature, as well as eBay Motors were introduced in 1999. The company added sites in the United Kingdom, Germany and Australia, as well.

In 2000, eBay continued to add international marketplaces, adding Austria, Canada, France and Taiwan. Also in 2000, eBay made the first of several Application Programming Interfaces publicly assessable. EBay also acquired half.com in 2000.

In 2001, eBay continued its mission of helping people by introducing Auction for America to offer assistance to the victims of the September 11th attacks. EBay continued its international expansion with marketplaces in Ireland, Italy, Korea, New Zealand, Singapore and Switzerland. In 2001, another feature – eBay stores – was launched.

Paypal is acquired by eBay in 2002. In 2003, Paypal Buyer Protection services are introduced for eBay transactions. The international expansion continued into Hong Kong.

2004 was a major year for eBay acquisitions. Acquisitions that year included: Marketplaats.nl, the Bazee marketplace in India, Rent.com, Shopping.com, Skype, Verisign Merchant Gateway (the major competition for PayPal), and international classified advertising sites LoQuo and Gumtree. The international marketplace continues to expand into Malaysia, the Philippines, Poland and Sweden. The China Development Center in Shanghai was opened to help accelerate technology. Features launched in 2004 included ProStores and Kijiji, a local classifieds site.

In 2006, the two millionth vehicle was sold on eBay Motors and eBay Express, a different shopping experience for buyers, was launched. Finally, in 2007, eBay acquired StubHub.com and StumbleUpon.com. The company also opened its India Development Center. The CEO stated in eBay Live! in Boston that there will be more changes to eBay.com in the next six months than have been made in the past six years.

As can be seen from the timeline, eBay has continued to progress and grow in order to remain a leader in online revenue throughout the years. The company has had to make acquisitions and add features along the way, without loosing the vision of the company. According to The Economist (2005), “to remain one of the stars of the ever-evolving web, eBay has to change with it. The company has already achieved one extraordinary transformation: from being a website begun as a hobby and often used to trade collectables such as Beanie Babies, it has become an economy in its own right.”

One of the reasons that eBay is such a success is because of the disciplined management of CEO Margaret Whitman. According to Hansell (2002), “Ms. Whitman is known for delegating responsibility to other managers … but she will dive into details when things go awry.” She will have the other executives speak their opinions before giving her own, but she has no problem overriding them if she feels that is what is best. Ms. Whitman is known for her financial prudence, for example laying-off people even when cost cutting was not needed.

Although Ms. Whitman has made mistakes, she is not afraid to change her tactics if needed. For example, originally half.com was to merge onto eBay’s main site, but then Ms. Whitman decided to keep it separate. Another example is shifting the focus from sellers to buyers on the site. According to Salter (2007), “historically, eBay made sellers the priority for a very good reason: They generate revenue.” The goal in making the shift to focus on buyers is to make “the buying experience efficient and fun again.”

According to Salter (2007), in 2005, eBay made a major error: the site’s core listings, which were mainly auctions, and the listings for individual stores that sellers could set up were all combined. Previously the auctions and the stores were separated and had to be searched separately. Within weeks of this blunder, bids were down, return visits were down, percentage of listings sold and average sales price was down. Every part of eBay.com was down. Although auctions accounted for 17% of the listings, they still accounted for 91% of sales. The reason the auction listings went down was because the store inventory fees are much lower than auction fees. Once the eBay storeowners realized that their listings were coming up in searches with the auction listings, many sellers shifted much of their inventory to store listings instead of auctions. In 2006, eBay raised its fees for store listings to try to balance out the marketplace again.

In light of that debacle, eBay decided to overhaul the buyer experience. They brought on a new team member to develop applications to gather information on browsing and sales. EBay has changed their search engine to get up-to-par with other customer-oriented sites. They have instituted a new search engine that has been helpful for buyers and also for sellers. Of course, when some sellers thrive, others will fail.

According to eBay.com (n.d.), eBay currently has a global presence in 38 markets and there are approximately 248 million registered users worldwide. Ebay’s net revenues totaled $1.32 billion in quarter 3 of 2007, 49% from the United Stated and 51% from International business.

What does the future hold for eBay? EBay has taken a plunge in sales, but is slowly regaining momentum with new strategies to improve searching and browsing for buyers. According to Salter (2007), there are many things in the works to enhance the eBay experience. For example, customized pages are in the works, as are more social commerce feature and a widget to post on your web site or MySpace page with favorite auction listings and a clock to remind you to bid.

According to eBay.com (n.d.), Social Commerce is going to be so “easy and rewarding” that “hundreds of millions will participate. And this next generation will bring with them new products, ideas and opportunities for everyone.”

EBay.com is continuously changing focus and strategies in order to continue to grow and remain a giant in online revenue. From the “humble” beginnings of selling a broken laser pointer to selling a private jet for $4.9 million dollars, there is something for everyone. EBay has acquired other companies and has added new features over the 12 years that it has been in business in order to continue to grow.

Hansell, S. (2002, May 5). Meg Whitman and eBay, Net Survivors. The New York Times, pp. 3.1.

No Author (n.d.). About eBay. Retrieved December 17, 2007, from http://news.ebay.com/about.cfm.

No Author (n.d.). Our History. Retrieved December 17, 2007, from http://news.ebay.com/history.cfm.

No Author (2005). Special Report: Meg and the power of many – eBay; eBay. The Economist, 375(8430), pp. 72.

Salter, C. (2007). EBay’s Chaos Theory. Fast Company, (120), pp. 101-107.

1 comment:

Anonymous said...

good report!!! thanx Rod