Ebay History

Topics: EBay, Auction, Online auction business model Pages: 9 (3450 words) Published: October 10, 2011
Millions of buyers and sellers have made eBay Inc. the world's largest and most popular Internet site for individuals and businesses to exchange goods. By 1999 eBay had 5.6 million registered users and listed over 3.1 million items for sale; by 2004 there were an estimated 65 million registered users from 150 countries, 971 million items for sale, and gross merchandise sales hit $15billion. eBay owns local sites in 19 countries, has stakes in another eight foreign nations, and provides users with its own online pay service, PayPal Inc. As eBay's revenues continue to grow, the sky seems the limit despite competition from Yahoo!, Amazon.com, and an ever increasing number of imitators. Paris-born Pierre Omidyar, who immigrated with his family to the United States when he was six, graduated from Tufts University in 1988 with a degree in computer science. While at Tufts, Omidyar met his future wife, Pam, who had an unusual hobby: she collected and traded Pez candy dispensers. When Pam complained it was hard to find people with similar interests, Omidyar decided to create a small online auction service. AuctionWeb was launched Labor Day weekend in 1995. Set up as a sole proprietorship in San Jose, California, the online bazaar was considered a "grand experiment" by its creator. Little did he know the impact his brainchild would have on the Internet, auctions, and corporate history. At the time he launched AuctionWeb, Omidyar was working at the General Magic Corporation as a software developer. His background included cofounding Ink Development Corp., which became eShop, a pioneer of online shopping before it was bought by Microsoft. Omidyar also developed consumer applications for Claris, a subsidiary of Apple Computer, and had even written a software program for his high school library at the age of 14. For the first five months of AuctionWeb's existence, Omidyar offered the new service for free, building a base of buyers and sellers through word of mouth. In May 1996 he incorporated eBay (which stood for "electronic Bay Area"), becoming its chief executive and quit his day job. By the end of 1996 the company had six employees, including Jerry Skoll, eBay's original president. Prior to AuctionWeb, online auctions were either business-to-business or business-to-consumer. There was nothing comparable to Omidyar's concept either online or offline; flea markets and yard sales were the most similar kind of person-to-person interaction offered by the precursor of eBay. Unlike traditional auctions, there was no auctioneer. At AuctionWeb sellers posted information about their items, and buyers were able to browse the site and submit bids by electronic mail (e-mail). The actual auction for an item was held over three to four days, with bidders receiving e-mail notices when someone made a higher bid. They could then counter the bid or drop out. The winning bidder made arrangements with the seller for payment and shipping. eBay served the role of a broker; the firm did not own any of the items being sold and was not responsible for distribution. Bidding was free, but it did cost between 25 cents and $2 to list an item for sale, plus a commission of between 2.5 and 5 percent of the sale price. The site was profitable almost from the beginning, unlike the vast majority of e-commerce sites. Much of the site's success appeared due to Omidyar's sense of what people wanted: a simple, central location to buy and sell items, and the ability to talk with (and perhaps eventually meet) people with similar interests. From the beginning, eBay's auction service sought to create the sense of an old-fashioned marketplace and encouraged communication between hobbyists and collectors. During 1996 the site hosted more than 250,000 auctions in some 60 categories including Beanie Babies, stamps, coins, and computers. By the end of the year it was overseeing about 15,000 simultaneous auctions daily, with 2,000 of them new each day. The site received over two...
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