Marketing Spotlight

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  • Topic: EBay, Online auction business model, Auction
  • Pages : 3 (799 words )
  • Download(s) : 374
  • Published : November 10, 2008
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Marketing Spotlight: EBAY

Pierre Omidayar, a French-Iranian immigrant, created eBay as a way to help his girlfriend sell and trade her Pez candy dispenser collection. Soon the site grew into a broader auction site where consumers could auction collectibles like baseball cards and Barbie dolls. The momentum continued, with sellers posting new and unusual items and customers coming to eBay looking for everyday products from used furniture to new digital cameras. Small businesses discovered that eBay was an efficient way to reach consumers and other businesses. Large companies saw eBay as an opportunity to sell bulk lots of unsold inventory. By helping buyers get the best price for their items and by letting customers decide the price they want to pay for products, eBay had created a pricing revolution.

By 2003, eBay was transacting $23 billion in worldwide sales in 23 merchandise categories. The site has 62 million registered users and receives 43 million unique visitors a month. Yet, eBay itself doesn't buy any inventory or own the products on its site. It earns its money by collecting a fee for the auction listing, plus a commission when the sale is completed. With eBay's expansion into other categories, collectibles now make up only 13 percent of eBay sales. eBay is constantly creating new categories of merchandise for buyers and businesses, like used restaurant equipment (pots, pans, espresso makers).

For example, after noticing that someone was auctioning a real Ferrari in the toy car segment of eBay, eBay created a new category: used cars. Traditionally, used cars were sold locally, but eBay Motors created a national used-car marketplace that is now one of eBay's largest segments. Given the reputation of used car salespeople, how could anyone trust a seemingly anonymous car seller in a distant location? eBay Motors created the following trust-building elements in its used car brokerage operations: • online reputation ratings of buyers and sellers...
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