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eBay corporate logo |
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| Type | Public (NASDAQ: EBAY) |
| Founded | San Jose, California USA (1995) |
| Location | San Jose, California USA |
| Key people | Meg Whitman, CEO & President Pierre Omidyar, founder |
| Industry | Auctions |
| Products | Online auction hosting PayPal |
| Revenue | image:green up.png $3.27 billion USD (2004) |
| Employees | 8,100 (2004) |
| Website | www.ebay.com |
- The title of this article is shown beginning with a capital letter due to technical restrictions. The correct title is eBay.
eBay Inc. (NASDAQ: EBAY) is an online auction website, where people from all around the world buy and sell goods and services.
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History
eBay was founded in 1995 by Pierre Omidyar as "AuctionWeb", part of a larger personal site that included, among other things, Omidyar's own tongue-in-cheek tribute to the Ebola virus. Originally, the site belonged to Echo Bay Technology Group, Omidyar's consulting firm. (The frequently repeated story that eBay was founded to trade PEZ dispensers was fabricated by a public relations manager in 1997 to interest the media. This was revealed in Adam Cohen's 2002 book and confirmed by eBay.) Omidyar had tried to register the domain name "EchoBay.com" but found it already taken, so he shortened it to his second choice, "eBay.com". eBay is headquartered in San Jose, California. Meg Whitman has served as eBay's president and CEO since March 1998. eBay boosters have claimed that in terms of revenue growth, eBay is among the fastest-growing companies of all time.
Items and services
Millions of collectibles, appliances, computers, furniture, equipment, vehicles, and other miscellaneous items are listed, bought, and sold daily. Some items are rare and valuable, while many others are dusty gizmos that would have been discarded if not for the thousands of eager bidders worldwide, proving that if one has a big enough market, one will find someone willing to buy anything. It is fair to say that eBay has revolutionized the collectibles market by bringing together buyers and sellers internationally in a huge, never-ending yard sale and auction. Large international companies, such as IBM, sell their newest products and offer services on eBay using competitive auctions and fixed-priced storefronts. Regional searches of the database make shipping slightly more rapid or cheaper. Software developers can create applications that integrate with eBay through the eBay API by joining the eBay Developers Program. As of June 2005, there were over 15,000 members in the eBay Developers Program, comprising a broad range companies creating software applications to support eBay buyers and sellers as well as eBay Affiliates.
In June 2004, eBay prohibited the sale and auction of both alcohol and tobacco products on the British site ebay.co.uk. Some exceptions to this rule are made for rare aged liquors, where a bottle may sell for many times higher than its actual value in alcohol.
There has also been controversy regarding items put up for bid that violate ethical standards. In late 1999 a man offered one of his kidneys for auction on eBay, attempting to profit from the potentially lucrative (and, in the United States, illegal) market for transplantable human organs. On other occasions, people and even entire towns have been listed, often as a joke. In general, the company removes auctions that violate its terms of service agreement within a short time after hearing of the auction from an outsider; the company's policy is to not pre-approve transactions. eBay is also an easy place for unscrupulous sellers to market counterfeit merchandise, which can be difficult for novice buyers to distinguish without careful study of the auction description.
eBay's Latin American partner is MercadoLibre.
eBay's main rivals are Amazon.com Marketplace and Yahoo.com Auction.
Profit and transactions
A screenshot of eBay's Homepage.eBay generates revenue from sellers, who pay a fee based on the selling price of each item, a fee based on the starting price, and from advertising. In February 2005 it was announced that eBay would increase fees it charges to eBay Stores sellers, which caused considerable enough controversy among eBay users that the President of eBay's North America business recently emailed all eBay users with news that other fees would be decreased. eBay does not handle the goods, nor does it transact the buyer-seller payments, except through its subsidiary PayPal. Instead, much like newspaper want-ads, sellers rely on the buyers' good faith to make payment, and buyers rely on the sellers' good faith to actually deliver the goods intact. To encourage fidelity, eBay maintains, rates, and publicly displays the post-transaction feedback from all users, whether they buy or sell. This way, the buyer is encouraged to examine the sellers' feedback profile before bidding to rate their trustworthiness. Sellers with high ratings generally have more bids and garner higher bids. However, it is possible for sellers to make their feedback private and just leave the numbered rating (number of positive, negative and neutral feedback with a positive feedback percentage), which means that bidders and sellers cannot see the comments other users have left. eBay also has a significant affiliate program, and eBay affiliates can, for example, place live eBay product images and links on their web sites.
Acquisitions
- In May, 1999, eBay acquired the online payment service Billpoint, which it shut down after acquiring Paypal.
- In August, 2001, eBay acquired Mercado Libre, Lokau and iBazar, Latin Americas auction sites.
- On July 11, 2003 eBay Inc. acquired EachNet, a leading ecommerce company in China, paying approximately $150 million in cash.
- On June 22, 2004, eBay acquired all outstanding shares of Baazee.com, an Indian auction site for approximately US $50 million in cash, plus acquisition costs.
- On August 13, 2004, eBay took a 25% stake in craigslist.org by buying out an existing shareholder who was once a craigslist employee.
- In September 2004, eBay moved forward on its acquisition of Korean rival Internet Auction Co. (IAC), buying nearly 3 million shares of the Korean online trading company for 125,000 Korean won (about US$109) per share.
- On December 16, 2004, eBay acquired rent.com for $30 million in cash and $385 million in ebay stock.
- In June 2005, eBay acquired Shopping.com, a online comparison site for $635 Million USD.
Controversy
eBay has its share of controversy, ranging from its privacy policy (eBay typically turns over user information to law enforcement without a subpoena) to well-publicized seller fraud. eBay claims that statistically fewer than 1 in 200 transactions fail.
Seller Fraud
While eBay has various measures in place to prevent seller fraud, it remains essentially an honor system: buyers send their money to sellers and trust that they will receive the promised goods. A relatively small amount of fraud occurs, but the sheer volume of business passing through eBay means many people are affected. Fraud has included:
- Paying and not receiving merchandise
- Paying and receiving items other than those described
- Paying and receiving faulty merchandise
- PayPal fraud
- Cr card fraud
- Counterfeit merchandise
- Sale of stolen goods
Other Controversies
Other notable controversies involving eBay include:
- On 28 May 2003 a U.S. District Court federal jury found eBay guilty of patent infringement and ordered the company to pay US$35 million in damages. The jury found for plaintiff MercExchange, which had accused eBay in 2001 of infringing on three patents (two of which are used in eBay's "Buy It Now" feature for fixed-price sales) held by MercExchange founder Tom Woolston. As of November 2004 this decision is under appeal.
- On 28 July 2003 eBay and its subsidiary PayPal agreed to pay a $10 million fine to settle allegations that they aided illegal offshore and online gambling. According to the settlement, PayPal between mid-2000 and November 2002 transmitted money in violation of various US federal and state online gambling laws. Paypal was also forced out of this market, which accounted for some 6% of its volume. These offenses occurred prior to eBay's purchase of PayPal.
- On 17th December 2004 Avnish Bajaj, CEO of eBay's Indian subsidiary Baazee.com, was arrested after a video clip showing oral sex between two Indian students was sold online. The company denied knowing the content of what they were selling and removed the offensive material as soon as they became aware of it. The Indian government attempted to make the case that Bajaj broke a law under India's IT Act, that forbids "publishing, transmitting or causing to publish" obscene material, even though the actual material was never published on Baazee's servers. eBay is strongly supporting Baazee.
- On 14th June 2005 eBay backed down and removed auctions listing the sale of free tickets for the Live 8 charity auction. Hundreds of people complained about such auctions, and following a statement from Bob Geldof that declared eBay a "cyber pimp", many of these auctions were bombarded with fake bids. Under normal circumstances, selling of charity tickets is not illegal under UK law.
- In 2005, the Australian NRL tried unsuccessfully to persuade eBay to prevent scalpers from selling grand final tickets online.
Trivia
The five most expensive items sold on eBay (as of 2002)
- A 340-year-old copy of Shakespeare's Pericles, Prince of Tyre, which survived the Great Fire of London in 1666 (£5million)
- Grumman Gulfstream II jet ($4.9 million)
- 1909 Honus Wagner baseball card ($1.65 million)
- Diamond Lake Resort, western Kentucky ($1.2 million)
- Shoeless Joe Jackson's "Black Betsy" baseball bat ($577,610)
- Round of golf with Tiger Woods ($425,000)
Largest item
One of the largest items ever sold was a World War II submarine sold by a small town in New England that decided it did not need the historical relic anymore.
Largest failed auction
One of the largest items ever to be put up to auction and not sold was a decommissioned aircraft carrier. The auction was placed by an anonymous seller from Brazil on eBay Motors.
Unusual sale items
- In June 2005, Karolyne Smith sold the right to permanently tattoo an ad on her forehead to GoldenPalace.com for $10,000.
- In May 2005, a Volkswagen Golf that had previously been registered to Josef Cardinal Ratzinger (who had been elected Pope Benedict XVI the previous month) was sold on eBay's German site for €188,938.88. The winning bid was made by the GoldenPalace.com online casino, known for their outrageous eBay purchases. 1
- In January 2004, a man put up a Windows file folder for sale, which was at £10,000,000 when it was ended by eBay officials.
- 18-year-old lesbian Rosie Reid caused controversy when she sold her virginity for £8,400 to a 44-year old London man. A 19-year-old also offered to sell his virginity on the website.
- In 2004, a Seattle man posted pictures of himself wearing his ex-wife's wedding dress. While he initially admitted he was selling the dress to earn some money for Mariners tickets, the bidding got into the thousands of dollars.
- There was at one point an auction for the first ride on Kingda Ka, the tallest roller coaster on Earth. The winning bid was $1691.66, and the winner rode in the front seat. 2
- A Sydney man pocketed AUS$1,035 after auctioning a piece of Nutri-Grain resembling ET, in Dec 2004.
- A 50,000-year-old mammoth. With a minimum bid set at US $250,000, Max was put up for sale in 2004 by his Dutch owner due to lack of space and sold for £61,000. A bargain considering he was one of the five best and most complete mammoth skeletons in the world, consisting of 90% of his original bone material.
- The owner of Cockeyed.com sold advertising space comprising a single pixel on the homepage for 21 days for $100 3.
- Mystery Auctions have become popular on eBay. In these auctions, sellers do not disclose the item being purchased. These auctions have been known to exceed $5000.
Prohibited items
eBay in its earliest days was essentially unregulated. But as eBay grew, it found it necessary to restrict or forbid auctions for various items. Among the hundred or so banned categories (note that these relate to ebay.com (the US site), other regions may vary in their rules) :
- Tobacco (tobacco-related items and collectibles are allowed) 4
- Alcohol (alcohol-related collectibles, including sealed containers, as well as wine sales by licensed sellers are allowed) 5
- Nazi paraphernalia 6
- Bootleg recordings 7
- Firearms and ammunition 8
- Dirty used clothing 9
- Human parts and remains 10
As well as a long list of other items that are either wholly prohibited or restricted in some manner 11
Controversial practices of users
- Bid sniping is placing a high bid during the last few seconds of an auction such that no time remains for other users to counterbid. This practice is allowed on eBay. Many other auction sites, such as Yahoo! Auctions, offer an option which extends the auction by some minutes when a last-minute bid is placed, in order to prevent sniping. Ebay's "proxy bidding" feature allows the buyer to specify the maximum the are willing to pay for an item regardless of "snipes". 12
- Shill bidding is the deliberate use of secondary registrations, aliases, family members, friends, or associates to artificially drive up the bid price of an item. (This is also known as "bid padding".) Shill bidding is not allowed on eBay, but is very common all the same. 13 Furthermore, shill bidding is a crime in many jurisdictions, and can be prosecuted under United States wire fraud laws. 14
See also
Further reading
- Cohen, Adam (2002). The Perfect Store: Inside eBay, Little, Brown & Company. ISBN 0-316-15048-7 (Hardcover, 336 pages)
- Belbin, David (2004). The eBay Book: Essential tips for buying and selling on eBay.co.uk, Harriman House Publishing. ISBN 1-897-59743-6