EBAY Business Model

2 Pages   |   837 Words


ebay was launched in 1995 by its founder named San Jose. The idea behind its creation was to enable buyers and sellers meet at a single platform and buy/sell anything they want, without any limitations of the type of products and specifications. The co founder of eBay, Meg Whitman, implied her knowledge of brand marking and trade marking on the sustainability of the website. So, in 1998, she gathered a group of experienced business people from significant market players and shaped the vision of eBay. It was envisioned to be a platform for people’s connection, and abstained from promoting the view of eBay as a seller.


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The company started off as a place to auction products which have a significance meaning, i.e. are precious collectibles. It speedily moved to normal products with a particular concept of average sale price. The ASP was an important concept for the company, as higher the ASP, higher the transaction fees of eBay were. The management intelligently formed partnerships with relatively larger players such as Disney and GM. This strategy not only helped in the brand making of the company, but also served the purpose of achieving ASP as the transaction fee standard

Business Model
eBay has been promoting the concept of a platform, where people have direct interaction with each other and buy/sell products through it. The products are displayed in a particular style, where they are listed according to their type. Similar products are listed in a single section, where buyers can bid on these products according to product demand. The products can be found and selected in a completely electronic way which makes it fast and easy for the buyers to shop around. Categorical listing helps the buyers to find products of their choice in a convenient manner.

eBay has revolutionized the trading process which was previously being conducted in the form of temporary markets and sales. It has utilized its website interface to an optimum level in order to attract as many customers as possible. As most of people have access to internet, people can easily come on to this platform to buy and sell their products in an innovative manner. The speedily process of buying and selling makes it further convenient, as the process can easily be completed in just a few minutes. 

There is no fee on surfing and placing a bid, but the sellers are bound to pay a certain fee in the name of inserting the product for bidding. The fee depends upon the amount of opening bid of the product. Promotion charges are optional and the seller has to the option to promote their product or not. There is a final charge at the point of sale of the product, which is a certain percentage of the final price.

Marketing Strategy
eBay uses the concept of M Commerce into its marketing strategy. It uses mobile technology and laptop technology in order to carry transactional proceedings. It is a phenomenon which has a huge potential to grow and is expanding at an increasing pace. M commerce includes the sale and purchase of products around the world through the wireless technology. The introduction of smart phones and mini computers, the ease of using of the internet has increased. There are a number of players in M commerce industry such as Ericsson, Nokia and Palm.

The company uses the popularity of this industry into the idea of eBay Anywhere. It is a concept where buyers and sellers have ease of accessibility and they are able to buy/sell products through their mobiles, laptops, and tablets. eBay has formed a strategic partnership with big mobile companies such as 2ROAM and AT&T. A strategic partnership with prominent names of the industry helps eBay to establish itself into the market and promote the company through an emerging technology. However, competitors like Yahoo!Mobile and Amazon Anywhere, create a challenging market place for the eBay management.

Internationalization Strategy

The creation of 24 regional sites of eBay, was for the sole purpose of providing more convenience to the buyers and sellers across the region. There is a direct relationship between the regional network size and the number of users(buyers and sellers). Greater the size of the network, higher will be the number of buyer/sellers due to the increase in network size. The international strategy should also focus on the language of the people living in a particular region. It will help in establishing a connection with the people in a convenient way. eBay should avoid closing if any connections with its regional offices, to make them experience the sense of responsibility and acceptance. The expansion of eBay is largely based upon its extremely effective market strategy and accessibility feature. Everyone can access this platform making it popular day by day.

The cost of telecommunication channels is decreasing on a frequent basis which enabled eBay to exploit this mode effectively. The channel it chose for trading was based on telecommunication, and it successfully materialized the concept of buying and selling through online procedure.

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