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| Company type | Public (NASDAQ: EBAY) |
|---|---|
| Industry | Auctions |
| Founded | San Jose, California USA (1995) |
| Founder | Pierre Omidyar  |
| Headquarters | San Jose, California USA |
| Key people | Meg Whitman, CEO & President Pierre Omidyar, founder |
| Products | Online auction hosting, Electronic commerce, Shopping mall PayPal |
| Revenue |  $3.27 billion USD (2004) |
| Operating income | 2,350,000,000 United States dollar (2022) |
| Net income | −1,269,000,000 United States dollar (2022) |
| Total assets | 23,847,000,000 United States dollar (2016) |
| Number of employees | 8,100 (2004) |
| Website | www.ebay.com |
eBay Inc. Nasdaq: EBAY is an online auction & shopping mall website, where people from all around the world buy and sell goods and services.
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Profit and transactions
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 1999, eBay acquired the auction house Butterfield & Butterfield, which it sold in 2002 to Bonhams.
- In 1999, eBay acquired the auction house Alando for $43 million, which changed then to eBay Germany.
- 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.
- In November 2004, eBay acquired Marktplaats.nl for €225 million. This was a Dutch competitor which had a 80% marked share in the Netherlands, by concentrating more on small ads than actual auctions.
- 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
- Credit card fraud
- Counterfeit merchandise
- Sale of stolen goods
- Paying inflated amounts due to "shill" bidding
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. The decision was appealed to the US Federal Court of Appeals and was upheld in part and rejected on others. As of Nov 2005, eBay has appealed to the US Supreme Court to effectively block injunctive relief to patent holder Mercexchange.
- 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 most expensive items sold on eBay
- 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)
- Ferrari Enzo ($933,503)
- 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.
- 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.
- 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 .
- An incomplete package of diapers, bought and opened in the 1980s, raised more than $700US for the Children and Families Ministry at a United Church in Victoria, British Columbia Canada.
- Mystery Auctions have become popular on eBay. In these auctions, sellers do not disclose the item being purchased. These auctions have been known range from $1 to $7,500.
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)
- Alcohol (alcohol-related collectibles, including sealed containers, as well as wine sales by licensed sellers are allowed)
- Nazi paraphernalia
- Bootleg recordings
- Firearms and ammunition
- Dirty used clothing
- Human parts and remains
As well as a long list of other items that are either wholly prohibited or restricted in some manner
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 they are willing to pay for an item regardless of "snipes".
- 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. Furthermore, shill bidding is a crime in many jurisdictions, and can be prosecuted under United States wire fraud laws.
See also
Further reading
- . ISBN 0-316-15048-7.
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