Business Model – eBay

eBay, Inc. is the largest and most popular marketplace on the Internet, allowing members to buy and sell almost anything. It was launched in 1995 by Pierre Omidyar whose vision was to create a virtual marketplace for the sale of goods and services for and by individuals. Together with Meg Whitman, branding guru and Harvard Business graduate, they created a site which is a person- to- person interface for buying and selling products. eBay proclaims “trust” between buyers and sellers as the key to the success of the marketplace.
From its inception, eBay has trodden the different path to get to where it is (Gopalkrishnan & Gupta 2). It has thrived by advertisement done through word of mouth and through agreements with a few Internet companies such as AOL and Disney. The large portion of savings from low advertising costs is invested in innovative marketing strategies to keep them ahead of its competitors. Its philosophy of giving the power to users has facilitated creation of a wide base of users who have faith in its services. Also eBay’s ability of provide access to such a broad variety of products at relatively low prices will continue to attract more users and profits in the future.
So how is eBay different from traditional auction houses like Christie’s and Sotheby’s? The difference between traditional and online auction houses is elaborated in the table below:

Feature
Traditional Auction Houses
Online auction through eBay

Product Type
Luxury products
Diversified product offering

Product Accessibility
Real. Can be seen by the potential buyer.
Virtual

Market reach
Local
Worldwide

Customer base
Select small group
Wide customer base of more than 150 million people

Payment mode
Direct
Through intermediaries

Delivery of product
Instant
Delayed. With a time lag

eBay being an online auction site, the internet, its features and connectivity have had a big impact on the success of the portal. There have been advantages and disadvantages of using the internet as a medium to reach customers and conduct online sale and purchase of commodities.

Advantages
Disadvantages

Convenience to the customer:

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