- Business and Employment
The Birth of eBay
The online auction Web site, eBay, was founded in San Jose, California, on September 3, 1995, by Pierre Omidyar, a French-born computer programmer of Iranian descent. eBay was originally known as AuctionWeb.
The very first item sold on eBay was a broken laser pointer for $14.83. Unable to believe his eyes, Omidyar contacted the winning bidder to ask if he understood that the laser pointer was broken. The buyer responded via email, "I'm a collector of broken laser pointers."
And so was born the trading post for weird and wonderful items of every kind. In recent years, water that was said to have been left in a cup Elvis Presley once drank from was sold on eBay for $455. The few tablespoons came from a plastic cup Presley sipped at a concert in North Carolina in 1977. A Coventry University student got £1.20 on eBay for a single cornflake. A group of four men from Australia auctioned themselves on eBay to spend the weekend with the promise of "beers, snacks, good conversation and a hell of a lot of laughs" for AU$1,300.
The company now known as eBay officially changed the name of its service from AuctionWeb to eBay in September 1997. Originally, the site belonged to Echo Bay Technology Group, Omidyar's consulting firm. Omidyar had tried to register the domain name echobay.com ,but found it already taken by the Echo Bay Mines, a gold mining company. His second choice was eBay.com, sufficiently neutral to make the transition from consulting to auction platform reasonably seamless.
The eBay Song
Top eBay Categories for 2008
Based on eBay's Q1-08 gross merchandise volume report, the following eBay.com categories delivered $1 billion or more in worldwide annualized gross merchandise volume for eBay:
eBay Motors at $18.0 billion
Consumer Electronics at $5.8 billion
Computers at $4.2 billion
Clothing & Accessories at $5.3 billion
Home & Garden at $4.2 billion
Collectibles at $2.8 billion
Books/Music/Movies at $3.5 billion
Sports at $2.9 billion
Business & Industrial at $2.6 billion
Toys at $2.4 billion
Jewelry & Watches at $2.3 billion
Cameras & Photo at $1.7 billion
Antiques & Art at $1.5 billion
Coins & Stamps at $1.4 billion
Tickets & Travel at $1.5 billion
eBay Grows and Grows
eBay grew by leaps and bounds. Ten years after its inception, in a survey conducted by AC Neilson on behalf of eBay, more than 724,000 Americans reported that eBay is their primary or secondary source of income. Another 1.5 million individuals said they supplemented their income by selling on eBay.
eBay went public on September 21, 1998, and both Omidyar and his first employee, Jeffrey Skoll, became instant billionaires. eBay purchased PayPal on October 14, 2002, and also owns Skype, StubHub, Shopping.com, StumbleUpon.com, and various other businesses. eBay also has minority interests in a number of businesses, such as eBay's 28.4% ownership of Craigslist - this percentage is currently the subject of a dispute, after Craigslist's board of directors ratified an arrangement which would unilaterally dilute eBay's holding by 10%.
Today, PayPal has 149 million registered users and is accepted by millions of merchants worldwide - on and off eBay. PayPal's Q1 2008 global total payment volume of $14.4 billion accounted for nearly 9 percent of worldwide eCommerce.
Given the strength of PayPal's competitive position, is it really necessary for eBay to prop it up by requiring eBay sellers to offer PayPal as an option, and by attempting to make PayPal the only acceptable form of payment in Australia and the UK?
The history of eBay is littered with controversy and similarly dubious business practices. For example, the story that eBay was founded to help Omidyar's fiancée trade PEZ Candy dispensers was fabricated by a public relations manager in 1997 to interest the media. (This particular wrinkle was revealed in Adam Cohen's 2002 book "The Perfect Store: Inside eBay" and later confirmed by eBay.)
On July 28, 2003, eBay and its subsidiary PayPal agreed to pay a $10 million fine to settle allegations that they aided illegal offshore and online gambling. These offenses occurred prior to eBay's purchase of PayPal.
An investigation by The Sunday Times in January 2007 uncovered substantial evidence of shill bidding on eBay. In late 2006, eBay effected a policy change which resulting in eBay showing less information about eBay bidders once auctions reached a certain value. This policy has been criticized for making shill bidding much harder to detect on eBay, to the potential disadvantage of eBay buyers and significant advantage to unethical eBay sellers, who may artificially inflate the price of an auction by bidding on their own eBay listings.
Not all the shady practices are eBay's own - eBay buyers and eBay sellers have had their share of publicity for bad behaviour.
In May 2000, eBay seller Kenneth Walton auctioned an oil painting on eBay for $135,805, due to speculation that it might be the work of California modernist Richard Diebenkorn. Walton pretended to know nothing about art and claimed to be surprised by the price the painting fetched, and the auction attracted international media attention.
In several investigative reports by The New York Times, it was revealed that Walton was in fact an experienced eBay art dealer with several unhappy customers, and that he had colluded with two other eBay sellers to bid up each other's auctions. The Times described this as a "shill bidding ring". Walton and his cohorts were banned from eBay and subsequently pleaded guilty to fraud after a threat by the federal government of the first ever prosecution for shill bidding on eBay.
eBay Statistics for March 31, 2008
There were 647 million new listings added to eBay.com worldwide in Q1-08.
In Q1-08, eBay's gross merchandise volume (GMV), the total value of all successfully closed items on eBay Inc.'s trading platforms, was $16.0 billion.
This means that eBay.com users worldwide trade $2,040 worth of goods on the site every second.
At any given time, there are approximately 115.3 million eBay listings worldwide, and approximately 6.9 million eBay listings are added per day.
Fraud on eBay
Frauds that can be committed by eBay sellers include:
* receiving payment and not shipping merchandise;
* shipping items other than those described;
* giving a deliberately misleading description in the eBay listing;
* knowingly and deliberately shipping faulty merchandise;
* selling counterfeit or bootleg merchandise on eBay;
* knowingly selling stolen goods on eBay;
* inflating total bid amounts by bidding on their own eBay auction with "shill" account(s);
* misrepresenting the cost of shipping; and
* shipping at a slower service than that paid for.
Frauds that can be committed by eBay buyers include:
* PayPal fraud, namely filing false shipping damage claim with the shipping company and with PayPal;
* credit card fraud, in the form of both stolen credit cards and fraudulent chargebacks;
* receiving merchandise and claiming otherwise;
* returning items other than received; and
* the buyer sending a forged payment-service e-mail that states that the buyer has made a payment to the seller's account (an unsuspecting seller may ship the item before realizing that the e-mail was forged).
eBay At A Glance, April 21, 2008
Market capitalisation $39.23 billion.
Revenue 8.1 billion.
Profit margin 5.32%.
EBITDA $2.71 billion.
Quarterly earnings growth (year on year) 21.9%.
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The Growth of eBay
In the first six months of 2005, eBay members in the U.S. sold merchandise worth approximately $10.6 billion. In 2007, eBay members sold merchandise worth nearly $60 billion - a tripling of volumes in just two years. The domain ebay.com attracted at least 902 million visitors annually by 2008 according to a Compete.com study. eBay has worked to improve the experience for the eBAy user, introducing features such as My eBay pages, groups and eBay blogs.
With a presence in 39 markets, including the U.S., and approximately 84 million active users worldwide, eBay has shaped the face of Internet commerce. In 2007, the total value of sold items on eBay's trading platforms was nearly $60 billion. This means that eBay users worldwide trade more than $1,900 worth of goods on the site every second.
Difficult economic times are no threat to eBay. According to a survey conducted by Harris Interactive on behalf of eBay in 2008, Americans are cutting back on spending in general, but 42 percent of U.S. adults are currently turning to sites like eBay to save money on purchases, ensuring that eBay's income from fees on transactions will continue to be strong.
The eBay survey by Harris Interactive also found that one in 10 U.S. adults (11 percent) is currently selling personal or household items to generate extra cash, with the majority (59 percent) doing so via online sales or auction sites like eBay. Additionally, 30 percent of all adults say they are likely to sell their personal or household items over the next three months to earn extra cash.
Marsha Collier, eBay selling expert and author of the book "eBay for Dummies", said in a recent press release that "a recent eBay/Nielsen survey discovered that the average U.S. household has 52 unused items around the house originally worth $3,100, meaning almost everyone can find existing unused items they can sell to generate additional income. When the going gets tough, the tough sell on eBay!"
Panic selling of gas-guzzling vehicles also pays into eBay's hands, via the wholly-owned subsidiary site, eBaymotors.com. eBay Motors announced recently that its three millionth passenger vehicle had sold in the U.S. Sales volumes are forecast to rise.
On January 29, 2008, a series of new policy changes were announced including an increase in the final value fee and a decrease in the listing fee (when averaged out, the fees actually cost sellers more). This policy was designed to curb the practice some eBay sellers had adopted of listing items worth thousands at a starting price of $0.99, thus paying the minimum listing fee.
Among the more controversial moves in 2008 was the announcement that sellers would soon only be able to leave positive feedback for buyers, and would no longer have the ability to provide negative or neutral ratings regardless of the experience.
The January 2008 policies also give greater benefits to higher volume sellers. eBay now explicitly gives higher volume "Powersellers" a 5% to 15% discount on the final value fees. These sellers can also receive better terms on shipping costs and preferential positioning in search results.
The eBay Home Page
2007 Top 10 eBay selling markets
Here is a snapshot of the top-10 eBay selling markets last year by rank:
1. Los Angeles-Long Beach, California - 196,089 eBay sellers in Los Angeles sold 24,051,645 items for a total of $1,396,037,518. Best-selling categories for Los Angeles sellers were cell phones and their accessories as well as clothing and accessories.
2. New York - 158,859 New York City eBay sellers sold 12,621,651 items for a total of $1,045,503,913. Best-selling categories for New York sellers were jewelry, gems, watches and clothing and accessories.
3. Chicago - eBay sellers numbering 172,972 in Chicago sold 10,229,844 items for a total of $908,708,440. Best-selling categories for Chicago sellers included toys and sports memorabilia.
4. Philadelphia - 120,900 Philadelphia eBay sellers, 7,069,212 items, for a total of $584,383,915 - collectibles and toys.
5. Dallas - 85,484 Dallas eBay sellers, 5,003,292 items, a total of $754,493,210. Best-selling categories for Dallas eBay sellers included jewelry, gems and watches, and clothing and accessories. Dallas eBay sellers also made more money on sales of cars and trucks than did eBay sellers in any other top-10 U.S. seller market.
6. Orange County, California - 75,486 Orange County eBay sellers sold 6,945,490 items for a total of $636,654,084. Best-selling categories for Orange County sellers were auto parts and cell phones and accessories. Of course, these eBay sellers could be combined with the L.A. eBay sellers to make the greater L.A. area eBay's super-seller zone, accounting for almost $2 billion in gross mechandise revenue.
7. Washington, D.C. - 112,462 D.C. eBay sellers, 5,024,888 items, $393,720,726 - books and toys.
8. Houston - 76,450 Houston eBay sellers, 4,297,389 items, $528,872,858 - health and beauty, and collectibles.
9. Nassau-Suffolk, New York - 70,714 Nassau-Suffolk eBay sellers, 5,396,880 items, $400,253,200. Sports memorabilia and health and beauty were best-selling categories here.
10. Fort Lauderdale, Florida - 39,623 Fort Lauderdale eBay sellers, 2,838,954 items, $631,845,063 -. home furnishings and auto parts.
Just A Few Of The Many Unusual eBay Listings
Bridgeville, California (pop. 25) was the first town to be sold on eBay in 2002, and has been up for sale on eBay 3 times since.
In February 2004, a scrapped F/A-18 Hornet fighter jet was listed on eBay by Mike Landa, of Landa and Associates, with a starting bid of $1,000,000. The auction ended without a sale because nobody could come up with the money.
A seaworthy 16,000-ton aircraft carrier, formerly the British HMS Vengeance, was listed on eBay early in 2004. The auction was removed when eBay determined that the vessel qualified as ordnance, even though all weapons systems had been removed.
In 2004, a partially-eaten, 10-year-old grilled cheese sandwich said to bear the image of the Virgin Mary sold on eBay for $28,000.
One of the tunnel boring machines involved in the construction of the Channel Tunnel was auctioned on eBay in 2004.
A man from Brisbane, Australia, attempted to sell New Zealand on eBay at a starting price of $.01AUD. The price had risen to $3,000 before eBay closed the auction. An Australian newspaper reported in December of 2004 that a single piece of the Kellogg's breakfast cereal Nutri-Grain sold on eBay for AUD$1,035 because it happened to bear a slight resemblance to the character E.T. from the Steven Spielberg movie. Apparently the seller went on to make even more money in relation to the eBay sale for his appearance on a nationally televised current affairs program, money of which eBay was unable to claim a percentage.
In June of 2005, the wife of Tim Shaw, a British radio DJ on Kerrang! 105.2, sold Tim's Lotus Esprit sports car on eBAywith a Buy It Now price of 50 pence after she heard him flirting with model Jodie Marsh on air. The car was sold within 5 minutes, and it was requested that the buyer pick it up the same day.
In May of 2005, a Volkswagen Golf that had previously been registered to Cardinal Joseph Ratzinger (better known as Pope Benedict XVI) was sold on eBay's German site for €188,938.88 ($277,171.12 USD). The winning bid was made by the GoldenPalace.com online casino, known for their outrageous eBay purchases.
In late November 2005, the original Hollywood Sign was sold on eBay for $450,400.
In January of 2006, a British man named Leigh Knight, sold an unwanted Brussels sprout left over from his Christmas dinner for £1550 on eBay in aid of cancer research.
In May of 2006, a Chinese businessman named Zhang Cheng bought a former Czech Air Force MIG-21 fighter jet on eBay from a seller in the United States, for $24,730.
In January of 2007, another cooked, uneaten Brussel Sprout was sold on eBay, this one for over £15,000 ($29,000). In February of 2007, after Britney Spears shaved all of her hair off in a Los Angeles salon, the hair was listed on eBay for $1million USD before the listing was taken down.
In January of 2008, four golf balls were auctioned on eBay after being surgically removed from a carpet python. The story attracted considerable international attention and the balls eventually sold for around $1,400. The python recovered and was released.
In May of 2008, Paul Osborn of UK puts his wife Sharon for sale in eBay alleging that she had an affair with a coworker. Also in May, the China Daily reported that a German couple were being investigated by authorities after listing their baby boy on eBay with a starting price of 1 euro. Despite the mother's plea that it had been a joke, the baby was taken from the parents and put into care.
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