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Ebay Analysis

In: Business and Management

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eBay, Inc.

(2002)

Overview

eBay 2002

Founded in 1995 by Pierre Omidyar and Jeff Skoll, the eBay online marketplace was developed in order to provide individuals a place to sell goods and services. eBay became a phenomenon that attracted some 10 million auctions in its first three years. This success provided eBay the necessary foundation to complete an initial public offering (IPO) in 1998.

eBay’s online auction concept is relatively simple. Sellers register with eBay and use its suite of online tools to place nearly any item up for sale. Buyers navigate eBay’s vast array of categories or use search functionality to find goods or services that they wish to bid on. Once the auction is won, the buyer may use PayPal, the online payment service, to complete the transaction. Perhaps the most powerful part of the eBay process lies with the feedback scores that are given by both buyer and seller following the completion of the transaction. Feedback scores are public information and allow other buyers and sellers to determine whether a person is worthy of doing business with or not. A negative feedback on eBay is akin to having a bad credit score with a bank. By providing a marketplace for “new and scarce goods, end-of-life products, and used and vintage items,” eBay provides a valuable service in which they attempt to “make inefficient markets more efficient.[1]”

While other Internet business models have failed in recent years, eBay’s business is thriving. In 2002, with more than 61 million registered users listing more than 638 million items at a total value of nearly $15 billion, eBay was able to surpass the $1 billion net revenue mark for the first time in its short history.[2]

eBay’s mission is simple: “to build the world’s most efficient and abundant marketplace in which anyone, anywhere, can buy or sell

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