eBay Inc. is an American Internet company that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell goods and services worldwide. In addition to its original U.S. Web site, eBay has established localized Web sites in thirty other countries. eBay Inc. also owns PayPal, Skype, StubHub, and other businesses.
Origins and early history
The online auction
Web site was founded in San Jose, California
, on September 3, 1995, by French
computer programmer 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. In 1997, the company received approximately $5 million in funding from the venture capital firm Benchmark Capital
The very first item sold on eBay was a broken laser pointer for $14.83. Astonished, Omidyar contacted the winning bidder to ask if he understood that the laser pointer was broken. In his responding email, the buyer explained: "I'm a collector of broken laser pointers." The frequently-repeated 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 was revealed in Adam Cohen's 2002 book, The Perfect Store, and confirmed by eBay.
Chris Agarpao was hired as eBay's first employee and Jeffrey Skoll was hired as the first president of the company in early 1996. In November 1996, eBay entered into its first third-party licensing deal, with a company called Electronic Travel Auction to use SmartMarket Technology to sell plane tickets and other travel products. The company 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 (the domain has recently been put up for sale) but found it already taken by the Echo Bay Mines, a gold mining company, so he shortened it to his second choice, eBay.com.
eBay went public on September 21, 1998, and both Omidyar and Skoll became instant billionaires. The company purchased PayPal on October 14, 2002.
In addition to its original U.S. Web site, eBay has established localized Web sites in many other countries:
Items and services
Millions of collectibles
, and other miscellaneous items are listed, bought, and sold daily. In 2005, eBay launched its Business & Industrial category, breaking into the industrial surplus business. 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. Anything may be offered for sale as long as it is not illegal and does not violate the eBay Prohibited and Restricted Items policy. Services and intangibles can be sold, too. Large international companies, such as IBM
, sell their newest products and offer services on eBay using competitive auctions and fixed-priced storefronts. Separate eBay sites such as eBay US and eBay UK allow the users to trade using the local currency. Software developers can create applications that integrate with eBay through the eBay API by joining the eBay Developers Program. On June 2005, there were over 15,000 members in the eBay Developers Program, comprising a broad range of companies creating software applications to support eBay buyers and sellers as well as eBay Affiliates.
Controversy has arisen over certain items put up for bid. For instance, 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 or to garner free publicity. In general, the company removes auctions that violate its terms of service agreement 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.
Beginning in August 2007, eBay required listing in "Video Games" and "Health & Beauty" to accept its payment system PayPal
and sellers could only accept PayPal for payments in the category "Video Games: Consoles". Starting January 10, 2007, eBay says sellers can only accept PayPal as payment for the categories "Computing > Software", "Consumer Electronics > MP3 Players", "Wholesale & Job Lots > Mobile & Home Phones", and "Business, Office & Industrial > Industrial Supply / MRO". eBay announced that starting in March 2008, eBay had added to this requirement that all sellers with fewer than 100 feedbacks must offer PayPal and no merchant account
may be used as an alternative. This is in addition to the requirement that all sellers from the United Kingdom
have to offer PayPal.
Further, and as noted below, it is a requirement to offer Paypal on all listings in Australia and the UK.
In April 2006, eBay opened its new eBay Express site, which is designed to work like a standard Internet shopping site for consumers with United States addresses (eBay Express)
Selected eBay items are mirrored on eBay Express where buyers shop using a shopping cart to purchase from multiple sellers. The UK version was launched to eBay members in mid October 2006 but on 29 January 2008 eBay announced its intention to close the site. The German version was also opened in 2006 and closed in 2008 (eBay Express Germany)
The Site is now ceased.
eBay Specialty Sites
In June 2006, eBay added an eBay Community Wiki
and eBay Blogs
to its Community Content which also includes the Discussion Boards, Groups, Answer Center, Chat Rooms, and Reviews & Guides. eBay has a robust mobile offering, including SMS
alerts, a WAP
site, and J2ME
clients, available in certain markets.
Best of eBay is a new specialty site for finding the most-unusual items on the eBay site. Users can also vote on and nominate listings that they find.
eBay Pulse provides information about popular search terms, trends, and most-watched items.
eBay offers several types of auctions.
- Auction-style listings allow the seller to offer one or more items for sale for a specified number of days. The seller can establish a reserve price.
- Fixed Price format allows the seller to offer one or more items for sale at a Buy It Now price. Buyers who agree to pay that price win the auction immediately without submitting a bid.
- Dutch Auctions allow the seller to offer two or more identical items in the same auction. Bidders can bid for any number from one item up to the total number offered.
For auction-style listings, the first bid must be at least the amount of the minimum bid set by the seller. Regardless of the amount the first bidder actually bids, until a second bid is made, eBay will then display the auction's minimum bid as the current high bid. After the first bid is made, each subsequent bid must be equal to at least the current highest bid displayed plus one bidding increment. The bidding increment is established by eBay based on the size of the current highest displayed bid. For example, when the current highest bid is less than or equal to $0.99, the bidding increment is $0.05; when the current highest bid is at least $1.00 but less than or equal to $4.99, the bidding increment is $0.25. Regardless of the amount each subsequent bidder bids, eBay will display the lesser of the bidder's actual bid and the amount equal to the previous highest bidder's actual bid plus one bidding increment. For example, suppose the current second-highest bid is $2.05 and the highest bid is $2.40. eBay will display the highest bid as $2.30, which equals the second-highest bid ($2.05) plus the bidding increment ($0.25). In this case, eBay will require the next bid to be at least $2.55, which equals the highest displayed bid ($2.30) plus one bidding increment ($0.25). The next bid will display as the actual amount bid or $2.65, whichever is less. The figure of $2.65 in this case comes from the then-second-highest actual bid of $2.40 plus the bidding increment of $0.25. The winning bidder pays the bid that eBay displays, not the amount actually bid. Following this example, if the next bidder is the final bidder, and bids $2.55, the winner pays $2.55, even though it is less than the second-highest bid ($2.40) plus one bidding increment ($0.25). However, if the next bidder is the final bidder and bids an arbitrarily large amount, for example $10.00 or even more, the winner pays $2.65, which equals the second-highest bid plus one bidding increment.
For Dutch Auctions, which are auctions of two or more identical items sold in one auction, each bidder enters both a bid and the number of items desired. Until the total number of items desired by all bidders equals the total number of items offered, bidders can bid any amount greater than or equal to the minimum bid. Once the total numbers of items desired by all bidders is greater than or equal to the total number offered, each bidder is required to bid one full bidding increment above the currently-displayed winning bid. All winning bidders pay the same lowest winning bid.
eBay has established detailed rules about bidding, retraction of bids, shill bidding (collusion to drive up the price), and other aspects of bidding. These rules can be viewed on the help pages.
In 2007, eBay began using detailed seller ratings with four different categories. When leaving feedback, buyers are asked to rate the seller in each of these categories with a score of one to five stars, with five being the highest rating and one the lowest. Unlike the overall feedback rating, these ratings are anonymous; neither sellers nor other users learn how individual buyers rated the seller. The listings of sellers with a rating of 4.3 or below in any of the four rating categories appear lower in search results. Power Sellers are required to have scores in each category above 4.5.
Profit and transactions
eBay generates revenue from a number of fees. The eBay fee system is quite complex; there are fees to list a product and fees when the product sells, plus several optional fees, all based on various factors and scales. The U.S.-based eBay.com takes $0.20 to $80 per listing and 5.25% or less of the final price (as of 2007). The UK
based ebay.co.uk (ebay.co.uk offices)
takes from GBP
£0.15 to a maximum rate of GBP
£3 per £100 for an ordinary listing and from 0.75% to 5.25% of the final price. In addition, eBay now owns the PayPal
payment system which has fees of its own.
Under current U.S. law, a state cannot require sellers located outside the state to collect a sales tax, making deals more attractive to buyers. Although some state laws require purchasers to pay sales tax to their own states on out-of-state purchases, it is not a common practice. However, most sellers that operate as a full time business do follow state tax regulations on their eBay transactions. However for the tax called Value added tax (VAT), eBay requires sellers to include the VAT fees in their listing price and not as an add-on and thus eBay profits by collecting fees based on what governments tax for VAT.
The company's current business strategy includes increasing international trade. eBay has already expanded to over two dozen countries including China and India. The only places where expansion failed were Taiwan and Japan, where Yahoo! had a head start, and New Zealand where TradeMe, owned by the Fairfax media group is the dominant online auction website.
A more recent strategy involves the company increasingly leveraging the relationship between the Ebay auction site and Paypal: the impact of driving buyers and sellers to use Paypal means not only does Ebay turn buyers into clients (as a pure auction venue its clients used to be predominantly sellers) but for each new Paypal registration it achieves via the Ebay auction site it also earns offsite revenue when the resulting Paypal account is used in non-Ebay transactions. In its Q1 2008 results total payment volume via Paypal increased 17% but off the Ebay auction site it was up 61%.
Controversy and criticism
Prohibited or restricted Items
In its earliest days, eBay was essentially unregulated. However, as the site grew, it became necessary to restrict or forbid auctions for various items. Note that some of the restrictions relate to eBay.com (the US site), while other restrictions apply to specific European sites (such as Nazi paraphernalia). Regional laws and regulations may apply to the seller or the buyer. Among the hundred or so banned or restricted categories:
- Tobacco (tobacco-related items and collectibles are accepted.)
- Alcohol (alcohol-related collectibles, including sealed containers, as well as some wine sales by licensed sellers are allowed)
- Drugs and drug paraphernalia
- Nazi paraphernalia
- Bootleg recordings
- Firearms and ammunition, including any parts that could be used to assemble a firearm as well as (as of July 30, 2007) any firearm part that is required for the firing of a gun, including bullet tips, brass casings and shells, barrels, slides, cylinders, magazines, firing pins, trigger assemblies, etc. Crossbows and various types of knives are also forbidden
- Used underwear (see Panty fetishism) and dirty used clothing
- Teachers' editions of textbooks including home school teacher's editions.
- Human parts and remains (with an exception for skeletons and skulls for scientific study, provided they are not Native American in origin)
- Live animals (with certain exceptions)
- Certain copyrighted works or trademarked items.
- Lock-picking tools, accessories, and practice locks fall into the category of burglar tools.
- Lottery tickets, sweepstakes tickets, or any other gambling items.
- Military hardware such as working weapons or explosives.
- Virtual items from massively multiplayer online games, restrictions which vary by country
- Many other items are either wholly prohibited or restricted in some manner.
- Non-physical items no longer can be sold through eBay. They can only be advertised through classified ads on eBay and do not get feedback.
Unusual sale items
- In May 2006 the remains of U.S. Fort Montgomery a stone fortification in upstate New York built in 1844 were put up for auction on Ebay. The first auction ended on June 5, 2006, with a winning bid of $5,000,310. However, the sale was not completed, and the fort and lands surrounding it remain for sale and have been re-listed on the site several 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. He was the legal owner of the plane after purchasing it from a scrap yard and also offered to have the plane restored for flying condition for a Buy It Now price of $9,000,000. Landa also told potential buyers that maintenance of the plane would cost roughly $40,000 a month for just 2 to 3 hours of flying time. The FBI told Landa that he could only sell the plane to an American citizen residing in the United States, and that the plane must not leave US airspace. The auction ended without a sale.
- In January 2006, a British man named Leigh Knight sold an unwanted Brussels sprout left over from his Christmas dinner for £1550 in aid of cancer research.
- In May 2006, a Chinese businessman named Zhang Cheng bought a former Czech Air Force MIG-21 fighter jet from a seller in the United States for $24,730. It is not known whether the Chinese government will allow the plane to be delivered.
- In June 2005, the wife of Tim Shaw, a British radio DJ on Kerrang! 105.2, sold Tim's Lotus Esprit sports car with 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 2005, a Volkswagen Golf that had previously been registered to Cardinal Joseph Ratzinger (who had been made 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.
- A seaworthy 16,000-ton aircraft carrier, formerly the British HMS Vengeance, was listed early in 2004. The auction was removed when eBay determined that the vessel qualified as ordnance, even though all weapons systems had been removed.
- Water that was said to have been left in a cup Elvis Presley once drank from was sold 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 for a single cornflake.
- A man from Brisbane, Australia, attempted to sell New Zealand at a starting price of $.01AUD. The price had risen to $3,000 before eBay closed the auction.
- An Australian newspaper reported in December 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 sale for his appearance on a nationally televised current affairs program.
- One of the tunnel boring machines involved in the construction of the Channel Tunnel was auctioned on eBay in 2004.
- A group of four men from Australia auctioned themselves to spend the weekend with the promise of "beers, snacks, good conversation and a hell of a lot of laughs" for AU$1,300
- Disney sold a retired Monorail Red (Mark IV Monorail) for $20,000
- The German Language Association sold the German language to call attention to the growing influence of Pidgin English in modern German.
- In late November 2005, the original Hollywood Sign was sold on eBay for $450,400.
- In January 2007, a cooked but uneaten Brussel Sprout was sold on eBay, finishing at over £15,000 ($29,000) .
- In February 2007, after Britney Spears shaved all of her hair off in a Los Angeles salon, it was listed on eBay for $1million USD before it was taken down.
- In September 2004, the Indiana Firebirds arena football team was auctioned off, first in a regular auction that failed to reach the reserve price, and again as a "Buy it Now" item for $3.9 million.
- Bridgeville, California (pop. 25) was the first town to be sold on eBay in 2002, and has been up for sale 3 times since.
- In April 2005, American entrepreneur Matt Rouse sold the right to choose a new middle name for him. After receiving an $8,000 "Buy It Now" bid, the Utah courts refused to allow the name change. He currently still has his original middle name "Jean".
- 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.
- In January 2008, four golf balls were auctioned on eBay after being surgically removed from the carpet python which had inadvertently swallowed them whilst raiding eggs in a chicken enclosure. The story attracted considerable international attention and the balls eventually sold for more AUD$1,400. The python recovered and was released.
- In May 2008, Paul Osborn of the UK listed his wife Sharon for sale on eBay, alleging that she had an affair with a coworker.
- In June 2008, Ian Usher put up his "entire life" on auction. The auction included his house in Perth, belongings, introduction to his friends and a trial at his job. When bidding closed, his "life" sold for $384,000.
- In August 2008, Dr Richard Harrington, Vice President of the UK Royal Entomological Society, announced that a fossilized aphid he bought for £20 from a seller in Lithuania, was a previously unknown species. It has been named Mindarus harringtoni after Dr Harrington. He had wanted to name it Mindarus ebayi, but this name was disallowed as being too flippant. The 45-million-year-old aphid, preserved in a piece of Baltic amber, is now housed in the Natural History Museum in London.
- In October 2008, amidst 2008 Icelandic financial crisis one seller had put up Iceland for sale. Auction started with 99 pence but had reached 10 million pounds (US $17.28 million). However, singer Bjork was "not included" in the sale. The notice read Located in the mid-Atlantic ridge in the North Atlantic Ocean, Iceland will provide the winning bidder with — a habitable environment, Icelandic Horses and admittedly a somewhat sketchy financial situation. Bidders' questions included: "Do you offer volcano/earthquake insurance?"
as an arbiter, eBay allows sellers to donate a portion of their auction proceeds to a charity of the seller's choice. The program is called eBay Giving Works in
the US, and eBay for Charity in
Some high-profile charity auctions have been advertised on the eBay home page, and have raised large amounts of money in a short time. For example, a furniture manufacturer raised over $35,000 for Ronald McDonald House by auctioning off beds that had been signed by celebrities.
To date the highest successful bid on a single item for charity was for a letter sent to Mark P. Mays, CEO of Clear Channel (parent company of Premiere Radio Networks the production company that produces The Rush Limbaugh Show and The Glenn Beck Program) by United States Senator Harry Reid and forty other Democratic senators, complaining about comments made by conservative talk show host Rush Limbaugh. The winning bid was $2,100,100, with 100% of the proceeds going to the Marine Corps-Law Enforcement Foundation, benefiting the education of children of men and women who have died serving in the armed forces. The winning bid was matched by Limbaugh in his largest charity donation to date.
eBay offers various online help features, including a library of self-help resources, e-mail contact forms and "Live Help," which lets users chat with customer service representatives via instant messaging
. Although this is not available to users on international sites such as eBay.co.uk, members of international eBay Web sites are welcome to utilize eBay.com's Live Help service. eBay does offer some phone support to its customers although this is limited to sellers of the rank "Bronze PowerSeller" and above, the company's term for members who sell at least an average of $1,000 worth of goods per month on the site, as well as to eBay Store owners.
On May 8th, 2008, eBay announced the opening of its newest building on the company's North Campus in San Jose, which is the first structure in the city to be built from the ground up to LEED
Gold Standards. The building, the first the company has built new in its 13-year existence, uses an array of 3,248 solar panels, spanning , and providing 650 kilowatts of power to eBay's campus. All told the array can supply the company with 15-18 percent of its total energy requirements, reducing the amount of greenhouse gases
that would be produced to create that energy by other means. SolarCity
, the company responsible for designing the array, estimates that the solar panels installed on eBay's campus will prevent 37 million pounds of carbon dioxide
from being released into the environment as a result of replaced power production over the next three decades. Creating an equivalent impact to remove the same amount of carbon dioxide from the atmosphere would require planting of trees. The design of the building also incorporates other elements to reduce its impact on the environment. The building is equipped with a lighting system that detects natural ambient light sources and automatically dims artificial lighting to save 39 percent of the power usually required to light an office building. eBay's newest building also reduces demand on local water supplies by incorporating an eco-friendly irrigation system, low-flow shower heads, and low-flow faucets. Even during construction, more than 75 percent of the waste from construction was recycled. eBay also runs buses between San Francisco and the San Jose campus to reduce the number of commuting employees.
Notes and references
- Cihlar, Christopher (2006). The Grilled Cheese Madonna and 99 Other of the Weirdest, Wackiest, Most Famous eBay Auctions Ever. Random House. ISBN 0-7679-2374-X.
- Cohen, Adam (2002). The Perfect Store: Inside eBay. Little, Brown & Company. ISBN 0-316-15048-7.
- Collier, Marsha (2004). eBay For Dummies. John Wiley. ISBN 0-7645-5654-1.hi
- Hillis, Ken and Michael Petit with Nathan Epley (2006). Everyday eBay: Culture, Collecting and Desire. Routledge. ISBN 0-415-97436-4.
- Jackson, Eric M. (2004). The PayPal Wars: Battles with eBay, the Media, the Mafia, and the Rest of Planet Earth. World Ahead Publishing. ISBN 0-9746701-0-3.
- Kent, Peter & Finlayson, Jill (2005). Fundraising on eBay. McGraw-Hill. ISBN 0-07-226248-6.
- Klink, Edward & Klink, Stephen (2005). Dawn of the eBay Deadbeats: True Tales of Treachery, Lies, and Fraud from the Dark Recesses of the World's Largest Online Auction Marketplace. Mooncusser Media. ISBN 0-9768372-1-8.
- Nissanoff, Daniel (2006). FutureShop: How the New Auction Culture Will Revolutionize the Way We Buy, Sell and Get the Things We Really Want. The Penguin Press. ISBN 1-59420-077-7.
- Spencer, Christopher Matthew (2006). The eBay Entrepreneur. Kaplan Publishing. ISBN 1-4195-8328-X.
- Walton, Kenneth (2006). FAKE: Forgery, Lies, & eBay. Simon Spotlight Entertainment. ISBN 1-4169-0711-4.
- Ford, Michael (2007). Scams & Scoundrels: Protect yourself from the dark side of eBay. Elite Minds Inc. ISBN 978-0-9774760-2-2.
- Ford, Michael (2007). Dont Bid On It: Until I Tell You How eBay Really Works. Elite Minds Inc. ISBN 978-0-9774760-1-5.