How does eBay make money?


Quick Answer

EBay has three primary sources of revenue: PayPal fees, marketplaces and eBay Enterprises. During 2012, eBay revenues totaled $14.1 billion, and estimates for 2014 revenues sit at $16.1 billion, which means that it trades at a 4.3 revenue multiple.

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Full Answer

In any given quarter, between 30 and 40 percent of eBay revenues come from fees that PayPal generates. EBay purchased PayPal for $1.5 billion. In the third quarter of 2013 alone, PayPal fees brought in $1.6 million. When something is sold on eBay, PayPal charges 30 cents plus a percentage ranging from 2.2 to 3.9 percent, depending on whether a discount applies and whether the buyer is outside the United States. Sending money using the PayPal debit card incurs a similar fee.

The marketplaces where eBay sellers list their items provide the company with another set of fees. Users may list up to 50 items a month without a listing fee; after that, fees start at 5 cents for video games, music, books and movies, but for other listings, the fee is 30 cents. EBay also gets 10 percent of the sale amount for each listing, with a cap of $250. Sellers who want premium features, such as larger pictures or room for extra information, add to the fee revenue. During the third quarter of 2013, marketplace fees added up to $2 billion, or just over half of company revenues.

EBay Enterprise allows traditional retailers to set up online sites where customers can buy their brands, and it also provides marketing assistance, fraud detection, payment processing, customer care and technology integration assistance. During the third quarter of 2013, this division created $238 million in revenue, about 6 percent of eBay's total income.

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