Online Auctions

Q1: eBay is one of the only major Internet "pure plays" to consistently make a profit from its inception. What is eBay's business model? Why has it been so successful?

Ebay’s model is a revolutionary one that allows buyers and sellers around the world to interact with each other in order to transact in various goods and services. It has emerged with an auction format which allows users to sell and bid for products they wish to trade and nowadays, it also allows straightforward selling also. It follows what is theoretically known as a broker method and it allows buyers and sellers to interact on its platform and charge a commission on usage. The popularity of ebay stems from its ease of use, its international reach, its user interaction which captivates many through its bidding system and also due to the fact that it allows people to make money off it.


Q2: Other major web sites, like Amazon.com and Yahoo!, have entered the auction marketplace with far less success than eBay. How has eBay been able to maintain its dominant position?

EBay’s dominance stems from the fact that it has been a pioneer for years in the field of online auctioning. In contrast, other sites like Amazon and yahoo have only entered the marketplace on a more experimental basis trying to copy a model set up by eBay. The reason for their lower success is that they do not have the expertise to compete with eBay and have not been totally engaged to follow the model completely. If you look at Amazon for instance, it is more involved in direct selling, hence necessitating an extensive infrastructure for procurement, storage and delivery which is a high cost. With eBay, the only cost is the website and anything else is done by the users who are both buyers and sellers and hence have to incur all other costs. Its auctioning system which allows the goods to be sold based purely on the forces of demand and supply allows the users to remain very interested. This is why eBay remains at the top.

Q3: What method does eBay use to reduce the potential for fraud among traders on its site? What kinds of fraud, if any, are eBay users most susceptible?

Ebay’s popularity is mainly based on the fact that all the users that interact on its website place great trust in the service it offers. They feel safe transacting on the website and a breach of such trust could be fatal to ebay. This is why the website always strive to offer the users maximum protection. This is done via the use of user accounts, whereby all users must identify themselves to a certain extent. They also use password and encryptions in order to ensure that user’s privacy is not breached. The addition of paypal and the protection it offers has greatly helped to boost security on the website. Finally, in order to help identify any fraudulent sellers or members, ebay has a system of feedback which allows everyone to rate sellers on the site. The risk inherent to ebay users is privacy breach, fraud and identity theft.

Q4: eBay makes every effort to conceptualize its users as a community (as opposed to, say "customers" or "clients"). What is the purpose of this conceptual twist and does eBay gain something by doing it?

EBay has always attempted to give its client of it being a community to its users due to the fact that it believes that its service brings users together in a way more meaningful than just a pure buyer seller relationship. This idea gives the users a better sense of belonging which means that they will tend to integrate eBay as an integral part of their lives. The fact that eBay has now innovated with more member interactions on its website; the idea of community is a major part of its functioning and this allows its business to keep flourishing.

Q5: eBay has long been a marketplace for used goods and collectibles. Today, it is increasingly a place where major businesses come to auction their wares. Why would a brand name vendor set-up shop on eBay?

EBay’s popularity has been ever increasing and its number of users keeps on rising, making it as a business with a very solid customer base. Having a presence on eBay is like enjoying all the advantages of having an internet presence but this time, due to the potential number of buyers on the site, it offers even more possibility of boosting sales for these businesses. This is why they are now booming on EBay.

Q6. I have a few businesses, and I have used eBay for about 12 years on and off. Currently I have about 600 books listed on eBay (seller name ozrural). I stopped selling on eBay for a few years but they changed the rules this July and it is viable again (for me). What do you think changed?

EBay has adopted new rules regarding its payments options since July 2010. These extended payment options has aimed to increase the security of transacting on the website and promoted sales on the platform.