Ebay Case Study

Topics: EBay, Online auction business model, Auction Pages: 12 (4482 words) Published: November 10, 2005
Why eBay? It's not just beanie babies and Pez dispensers.
There are 157 million users of eBay worldwide, make that 157 million and one, I am the internet powerhouse's newest recruit. With an unexpected sense of anticipation I scroll down the web page, I spot what I am looking for "One pair of brand new Prada heels, Authentic!" excitedly I click on the link and read the short novella the seller has written for my benefit. She swears she paid $580 for these on a recent trip to New York but alas they no longer fit and she's never worn them! Nice story, though I'm not sure if I believe it. However as I peruse the half dozen or so pictures provided of the shoes and their authenticity card I am convinced that at these are the bargain of the century. Hesitantly I click the "buy it now" option. I surprise myself by closing my eyes, as if when I open them the shoes will magically appear. Well one week latter I am the proud owner of a beautiful pair of heels all for the relative bargain basement price of $95 (plus postage and handling…) .Finally I have found a store that will let me shop in my pyjamas, I have entered the wonderful world of eBay! Mr eBay, a master entrepreneur?

To the uninitiated the concept of trusting a complete stranger to deliver a product after money has left your hands seems ludicrous. You might be honest but this is the internet! The user that claims to be a little old woman could just as well been a bikie named Bob. Those designer shoes you're looking at could be imported via the Russian mafia from some obscure Baltic country! However those in the know bid with confidence thanks to the ingenious safety and credibility checks eBay provides to its users. These users have founder Peirre Omidyar to thank. He wrote the computer code for an online auction house, originally called Auction Web one lazy summer day in Silicon Valley in 1995. Hoping that it might be a useful tool for computer buffs to exchange parts he launched the auction house it on his home page; www.ebay.com (Plummer 2005) and the rest as they say, is history…

The concept is not new. Flea markets, Garage sales and the like exist around the world. But the stroke of genius that makes eBay so successful is the way in which is cuts the clutter, and presents the consumer with an ordered, easy to use directory, cross referenced into every imaginable category ( Roth 2000). Mr Omidyar is often quoted as saying that he wanted to "give the individual the power to be a producer as well as a consumer"(Cohen 2005) as well as "giving the power of the market back to the individuals"(Plummer 2005). That it did, if the North American example alone is anything to go by, where an estimated 724,000 people earn a primary or secondary income from selling items on eBay (Ramstack 2005). Essentially eBay makes becoming an entrepreneur possible for anybody with a computer and something to sell. It is this accessibility and seemingly altruistic intentions that has seen internet users of the world allow eBay to explode into the multi-billion dollar beast it is today (Plummer 2005). If eBay were a country it would rank 59th in gross domestic product (Matlack 2004).

How does eBay work?
A person may register with eBay without disclosing any really specific information, just a name and email address. However if they want to become a seller they provide a valid address and confirm that's where they operate from. Eventually if one wants to become a buyer then the disclosure of a postal address is essential as to receive purchases (www.ebay.com). The internet company moves to keep users informed with chat rooms and discussion boards as well as email news letter and occasional free listing days. To sell

Once registered and having acquired a user name a potential seller gathers up their goods. Takes photographs if they see it fit and works their way through eBay's user friendly worksheet to categorise and describe the product as accurately as one can. There are severe...

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