Early History
When you look at eBay today, it is difficult to imagine that it traces its roots to a very humble beginning. It lacks the glamour associated with hotshot entrepreneurial establishments with venture capitalist backing usually seen in hi-tech firms. Instead, eBay actually started with broken laser pointer and a home page.
Sometime before the September of 1995, Pierre Omidyar, a 28-year old developer who had worked with Claris to develop software for Apple, sat down and wrote a code that will become eBay. Originally, it was called the AuctionWeb and it has the similar server with Pierre’s page on the ebola virus. The site began with a listing of a broken laser pointer; Pierre had intended the listing to be more of a test than a serious undertaking so imagine his shock when it sold for $14.83.
He knew that AuctionWeb has the potential to become big immediately after he contacted the winning bidder. Pierre asked if the bidder understood that the laser pointer was actually broken. “I’m a collector of broken laser pointers,” was the reply.
AuctionWeb took over the entire domain, www.ebay.com. This is short for Echo Bay, Pierre’s consulting firm during that period. He has a co-founder, Jeffrey Skoll, a Stanford MBA degree holder. A year later, eBay was large enough to hire people like Meg Whitman, a Harvard graduate. Meg Whitman became the CEO and president of the company. Together with a strong business team, eBay expanded rapidly. While it previously focused on collectibles, it is now targeting nearly all kinds of markets.
eBay’s vision also shifted from commerce to connecting people all over the world. With strong branding and incredible growth, eBay was able to eclipse all other upstart auction site during the dot-com golden age. By the time the firm went public in 1998, Omidyar and Skoll were already billionaires.
eBay Business Model
As was mentioned earlier, eBay is now focused on connecting people all over the world. By this, it simply means that its business model uses the person-to-person trading over the internet. Buyers and sellers come together in a single place. Sellers list their items while buyers need to bid on these items in order to become the “winning bidder”. The items are systematically arranged by category so it is easy to view the selection.
The company doesn’t forget about its roots though because it makes use of globalized traditional transactions or person-to-person trading through the internet. This means that it still uses the concepts of garage sales, flea markets, and collectibles show but with a web interface to facilitate the exploration for buyers. Likewise, sellers can list their items for sale within minutes after their registration.
Browsing and bidding on eBay is free but the sellers need to pay two basic kinds of charges including the Insertion fee, and the Final Value fee. The Insertion fee can range from $.30 to $3.30 depending on the opening bid. Meanwhile, the Final Value fee is charged when the auction is finished; this fee can range from 1.25 to 5% of the final price. eBay will notify both the buyer and the seller through email if the bid exceeds the minimum price at the end of the auction.
As you can see, the EBay Empire was built from a simple but profitable idea. eBay has had a large impact on ecommerce and how people do business today. Aside from eBay.com, the company was also able to acquire Paypal.com and Craigslist.com among many other successful online ventures. No one can deny that eBay will continue to be a powerful force on the internet and it will continue to affect the lives of millions of users around the world.