eBay, One of the World’s Premier Online Marketplaces
The now-venerable site pivots from auctions to online payments and more
eBay is one of the world's premier online marketplaces and the corporate home of a number of successful Internet sites. The company has several flagship brands:
- eBay's core marketplace site, ebay.com, hosts millions of retail and wholesale transactions in some 27 countries every day. It has about 175 million active users.
- eBay Classifieds, an off-shoot of the marketplace, offers local shopping and swapping in more than 150 cities around the world.
- StubHub is an online ticketing system.
- PayPal is its fast-growing electronic payments business and now operates as a separate company.
All of the above have expanded with acquisitions in related areas, such as Half.com in the shopping space and BillMeLater in payments.
A Short History
An official company history now dismisses the legend that eBay was born to provide a place for founder Pierre Omidyar’s wife to add to her collection of Pez dispensers. In fact, its first sale, made to a Canadian buyer, was a broken laser pointer.
Created in San Jose, California, in 1995 as AuctionWeb, the company became one of the Internet’s early successes, quickly attracting an enthusiastic core of buyers and sellers of collectibles, antiques and used merchandise of all kinds. In 1997, it sold its millionth item, a Big Bird jack-in-the-box.
Shortly after, AuctionWeb changed its name to eBay. The company went public in September 1998.
The Growth Years
Gradually, the scope of its marketplace widened, and sellers of new merchandise entered the fray. The company also began its international expansion with the addition of offshoots in Germany and Great Britain.
A key business decision in 2000 added fixed-price listings, called Buy It Now, as an alternative to the auction format. This move greatly increased the site’s reach and attracted many more sellers of new merchandise. It also pulled eBay into direct competition with other major retail sites like Amazon.com and Walmart.com.
eBay also launched a classifieds platform to target local buyers and sellers. This platform has been replicated in about 150 cities and has grown beyond merchandise sales to include local services and community announcements.
Despite the fact that the bulk of its sales now come from fixed-price listings, eBay retains its ability to make news for its quirky auctions. In 2015, a well-preserved copy of the first Superman comic book ever published sold for $3.2 million, a record.
The company’s biggest acquisition came in July 2002 when it acquired PayPal, the online transactions company that had worked in tandem with eBay since its early days. As online transactions became commonplace and as mobile devices began to proliferate, PayPal’s growth rate surpassed that of the online marketplace.
PayPal was spun off into a separate company in 2015. It now offers services in more than 200 countries.
Other eBay Companies
eBay now operates marketplaces in 27 countries. It also owns shopping sites Shopping.com and Half.com. In early 2018, eBay acquired the Japanese arm of Giosis, an online shopping site based in Asia.
Other eBay companies include BillMeLater, ProStores, Rent.com, Kijiji, brands4friends, Gumtree, Milo.com, and RedLaser. eBay also maintains partnerships with Skype, MercadoLibre, Craigslist, ChannelAdvisor, EachNet, mFoundry, Union Mobile Pay, and others.
The company formerly owned the online telecommunications service Skype, which it acquired in 2005 and built into a 500 million user juggernaut. It sold a majority stake in Skype to Microsoft in 2009 but retains a 30 percent share.
eBay's 2011 acquisition of GSI Commerce Inc. for $2.4 billion was its largest acquisition since it bought Skype and signaled its move into development and operation of online sites for brick-and-mortar businesses. GSI has since been renamed eBay Enterprise Inc. It now has some 500 clients, including familiar retail names like Ace Hardware and Dick's Sporting Goods.
eBay’s Corporate Structure
The founder of the company, Pierre Omidyar, remains active on eBay's board of directors. David Wenig, formerly president of the global marketplaces division, became president and CEO in 2015, and also serves on the board.
eBay has main divisions headed by senior vice presidents for its ticketing, payments, and classifieds businesses. It has separate divisions for its marketplace operations in the Americas, Asia, and Europe.
eBay is still headquartered in San Jose, California, where it was founded.
After the Boom
eBay's revenue growth was initially 30 percent or more year over year, making the company one of the breakout winners of the dot-com race. Year-over-year growth began to slow down as early as 2008 as the company struggled to keep pace with Amazon. In 2017, eBay’s growth was 7 percent for the year, compared to 31 percent for Amazon, according to Statistica.com.
PayPal remained a hot prospect. Its revenue has grown by double digits since 2013, and it ended 2017 with year-over-year revenue growth at 21 percent.
In the years after the 2008 economic debacle, eBay has pivoted to a turnaround mode on the strength of new strategic orientations both in core businesses and marketplace platform structure, pricing, and policy.
Changes in rules and fee structures at eBay are inevitably controversial, given that they impact millions of small businesses, buyers and part-time entrepreneurs around the globe. The company focus has been on developing its high-volume, fixed-price retail channel selling, which has alienated some in eBay's traditional communities of small sellers, secondhand merchandisers, collectors, and hobbyists.
The company employs about 14,000 workers around the world. In mid-2018, it cut about 1,000 employees globally in what it termed a "routine refocusing of priorities."
Sustainability and Giving
eBay's Giving Works program has become known for enabling socially conscious development and philanthropy around the world.
Key beneficiaries have included MicroPlace, the global micro-finance platform; sustainable and fair trade platform WorldofGood.com; and the eBay Foundation's own Opportunity Project, which seeks to support market-driven development and anti-poverty innovation.