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Business Model Canvas Examples
Ebay business model.
The eBay business model revolves around a marketplace where buyers can bid on items or purchase them directly from sellers. eBay is an online marketplace that allows people to buy and sell goods. The company was founded in 1995 and has since grown to become one of the world’s largest e-commerce platforms, with millions of users in over 190 countries.
In addition to its marketplace, eBay also offers other services to its users, such as payment processing, financing, and advertising. The company makes money through various revenue streams, including fees from sellers, advertising, and partnerships with other companies. eBay has a diverse customer base, including individuals and businesses of all sizes.
The company also has partnerships with various retailers and technology companies to expand its reach and offerings. eBay faces competition from other online marketplaces, such as Amazon and Alibaba , as well as traditional brick-and-mortar retailers. Despite this, eBay has continued to grow and evolve its business model to stay competitive in the e-commerce market.
A brief history of eBay and The Reason Behind Their Success
eBay was founded in 1995 by Pierre Omidyar, a French-born computer programmer. The company’s initial goal was to create a platform where individuals could buy and sell items to each other directly. However, Omidyar quickly realized that the real potential of the platform was in its ability to facilitate auctions. This allowed people to bid on items, driving up their prices and giving sellers the opportunity to earn more money for their goods.
eBay’s unique business model proved to be incredibly successful. By 1997, the company had over one million registered users, and it continued to grow at an impressive rate. In 1998, eBay went public and became a publicly-traded company.
One of the key reasons behind eBay’s success was its low fees. Unlike traditional brick-and-mortar auction houses, which often charge high commissions, eBay only charges a small fee for each listing. This made it an attractive option for both buyers and sellers. Additionally, eBay’s online platform made it easy for people to search for and bid on items, even if they were located far away from the seller.
Another reason behind eBay’s success was the way it embraced the internet and leveraged its capabilities. By allowing sellers to list their items online and enabling buyers to bid on them, eBay created an efficient and accessible marketplace that appealed to a wide range of users.
In the early 2000s, eBay expanded its business by acquiring a number of other companies. In 2002, the company acquired PayPal, a popular online payment platform, which allowed eBay users to easily and securely make payments for their purchases. In 2005, eBay acquired Skype, a popular internet-based communication platform that allowed users to communicate with each other in real time. These acquisitions helped to strengthen eBay’s position as a market leader and further enhanced its appeal to users.
Today, eBay is one of the largest and most successful online marketplaces in the world. With over 182 million active users and millions of items listed for sale, it remains a popular destination for both buyers and sellers. While the company continues to face competition from other online marketplaces, its unique business model and strong brand recognition have helped it to maintain its position as a leader in the industry.
Who Owns eBay
eBay is now a publicly-owned company, with the majority of its shares held by mutual fund holders at 49.23%. The Vanguard Group, Inc. is the largest institutional shareholder with a 10.77% stake, followed by BlackRock Fund Advisors with 5%. Individual stakeholders own 11.33% of eBay, while other institutional holders own the remaining 39.83%.
eBay Mission Statement
eBay’s mission statement is “to provide a global online marketplace where practically anyone can trade practically anything, enabling economic opportunity around the world.”
How eBay makes money
eBay makes money through the fees that it charges users for listing and selling items on its platform. It also generates revenue from advertising and through its payment processing services. Additionally, eBay has a growing e-commerce business that allows it to sell products directly to consumers. These various streams of revenue allow eBay to continue to grow and expand its business.
Categorically, eBay makes money in these ways:
- Fees from listing and selling items on the platform;
- Advertising fees from eBay’s marketing services;
- Revenue from subsidiaries*.
*While PayPal can be considered a subsidiary of eBay, the company decided on September 30, 2014, to “spin off PayPal into a separate publicly traded company.”
A few other ways that eBay makes money, as well as a breakdown of the above categories, are given below:
- Listing fees: eBay charges sellers a fee to list their items for sale;
- Final value fees: eBay collects a percentage of the final sale price when an item sells;
- Promoted listings: eBay charges sellers an additional fee to have their listings appear higher in search results and other prominent locations on the site;
- eBay Plus subscription: eBay offers a paid subscription service called eBay Plus, which provides customers with additional benefits such as free shipping and exclusive deals;
- Advertising: eBay generates revenue through the display of product ads leading to external online retail websites;
- StubHub: eBay owns the online ticket marketplace StubHub, which makes money through listing and transaction fees;
- Other ventures: eBay also generates revenue through its investments in and partnerships with other companies.
Fees from listing and selling items on the platform
eBay makes money from fees charged to users for listing and selling items on its platform. These fees are typically a percentage of the final sale price and vary depending on the item’s category and the seller’s status on the platform. For example, a standard seller may be charged a 10% fee for selling a piece of clothing, while a power seller (a high-volume seller with a good reputation on the platform) may be charged a lower fee of 6%. These fees provide a significant source of revenue for eBay.
Advertising fees from eBay’s marketing services
eBay makes money from advertising fees by charging advertisers for the ability to promote their products on eBay’s platform. This allows advertisers to reach a large audience of potential customers who are actively using eBay to search for and buy products. When a user clicks on an advertiser’s ad, the advertiser is charged a fee, which generates revenue for eBay. Additionally, eBay may offer additional marketing services, such as featured listing placements or promotional emails, for which advertisers can pay additional fees.
Revenue from subsidiaries
eBay makes money from its subsidiaries, such as StubHub, by earning a portion of the revenue generated by these businesses. StubHub is an online ticket marketplace that allows users to buy and sell tickets for sports, music, and other live events. When a user buys a ticket on StubHub, the company charges a fee for its services. This fee generates revenue for StubHub, and since eBay owns StubHub, a portion of that revenue goes to eBay as well. In this way, eBay can generate additional revenue by leveraging the success of its subsidiary companies.
eBay Business Model Canvas
The eBay Business Model can be explained in the following business model canvas :
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eBay Customer Segments
eBay’s customer segments consist of:
- Buyers: These are individuals or businesses that use eBay’s platform to purchase goods from sellers;
- Sellers: These are individuals or businesses that use eBay’s platform to sell goods to buyers;
- Advertisers: These are businesses that use eBay’s platform to promote their products to a large audience of potential customers. They may pay for additional marketing services, such as featured listings or classified ads, to increase the visibility of their products on eBay’s platform.
eBay Value Propositions
eBay’s value propositions consist of:
- For buyers: eBay’s value proposition is the ability to shop for a wide variety of goods from sellers around the world, often at competitive prices. eBay also offers features such as buyer protection and easy returns to make the shopping experience more convenient and secure;
- For sellers: eBay’s value proposition is the ability to reach a large audience of potential customers and sell their goods easily and efficiently. eBay also offers features such as seller protection and payment processing to make the selling experience more convenient and secure;
- For advertisers: eBay’s value proposition is the ability to reach a large and engaged audience of potential customers who are actively using eBay to shop for products. eBay also offers additional marketing services to help advertisers increase the visibility and effectiveness of their advertising on eBay’s platform.
eBay Channels
eBay’s channels consist of:
- The eBay website and mobile app
- Search engine results
- Email marketing
- Social media advertising
- Affiliate marketing programs
- Partnerships and collaborations with other companies
- Offline advertising, such as television or print ads
eBay Customer Relationships
eBay’s customer relationships consist of:
- Customer support and service
- User reviews and ratings
- Social media
- Community forums
- Subscription services
- Loyalty programs and rewards
- Personalized product recommendations
- Network Effects
eBay Revenue Streams
eBay’s revenue streams consist of:
- Listing fees
- Final value fees
- Promoted listing
- eBay Plus subscription
- Advertising
- Subsidiaries
eBay Key Resources
eBay’s key resources consist of:
- A large and active user base
- A user-friendly platform for buying and selling goods
- A robust and secure payment processing system
- A team of employees with expertise in e-commerce, technology, and customer service
- Data and algorithms for personalized product recommendations and targeted advertising
- Physical infrastructure for storing and processing data
- Intellectual property, such as trademarks and patents.
- Partnerships
- Brand Reputation
- Auction-style listings
eBay Key Activities
eBay’s key activities consist of:
- Maintaining and improving eBay’s platform
- Processing and facilitating payments
- Providing customer support
- Marketing and advertising
- Developing and implementing technology and algorithms
- Managing relationships with subsidiaries and partners
- Protecting intellectual property and ensuring compliance.
- Bidding Process
eBay Key Partners
eBay’s key partners consist of:
- Payment processors
- Shipping and logistics companies
- Affiliate marketing networks
- Subsidiaries, such as StubHub
- Strategic partners and collaborators in the e-commerce industry
eBay Cost Structure
eBay’s cost structure consists of:
- Logistics Costs
- Infrastructure and equipment costs
- Marketing and advertising expenses
- Payment processing fees
- Costs associated with maintaining and improving the eBay platform
- Legal and compliance costs
- Fees for partner and collaborator services
- Customer Service
eBay Competitors
- Amazon: Amazon is a large, global e-commerce company that offers a wide variety of products and services, including online marketplaces for buying and selling goods. Amazon’s platform is known for its extensive selection of products, competitive pricing, and fast delivery options. The company also offers services such as Amazon Prime, which includes free shipping and access to streaming media, and Amazon Marketplace, which allows third-party sellers to reach Amazon’s large customer base.
- Alibaba: Alibaba is a Chinese e-commerce company that operates a platform for wholesale and retail trade, as well as other services such as cloud computing and digital media. Alibaba’s platform is used by businesses of all sizes to buy and sell goods and services, and the company has a strong presence in the Asian market. Alibaba also operates the popular online shopping site Taobao and the business-to-business platform Alibaba.com.
- Walmart: Walmart is a large, multinational retailer that operates both brick-and-mortar stores and an online marketplace. Walmart’s online platform offers a wide variety of products at low prices, and the company also offers services such as in-store pickup and grocery delivery. Walmart’s physical stores give it a significant advantage in terms of distribution and logistics, and the company has a strong presence in the U.S. market.
- Etsy: Etsy is a website where you can buy handmade and vintage items. The platform is popular with small businesses and individual sellers who offer unique, handmade, or vintage items. Etsy’s focus on handmade and vintage products sets it apart from other online marketplaces, and the company also offers services such as personalized recommendations and support for sellers.
- Wish: Wish is a mobile-based e-commerce platform that offers a wide variety of products at low prices. Wish’s platform is known for its focus on low-cost items, and the company uses algorithms and data to personalize product recommendations and target ads to individual users. Wish also offers features such as price tracking and coupons to help users save money on their purchases.
- Rakuten: Rakuten is a Japanese e-commerce company that operates online marketplaces and offers other services such as cashback rewards and digital media. Rakuten’s platform is popular in Japan and other parts of Asia, and the company’s cashback rewards program is a major differentiator.
eBay SWOT Analysis
Below, there is a detailed swot analysis of eBay:
eBay Strengths
- A large and active user base: eBay has millions of users around the world who buy and sell goods on the platform, which gives it a strong network effect and makes it an attractive destination for buyers and sellers;
- A user-friendly platform: eBay’s platform is easy to use and offers features such as personalized recommendations and detailed product listings to help users find what they’re looking for;
- A robust and secure payment processing system: eBay’s payment processing system is secure and reliable, which helps to build trust and confidence among users;
- A team of experienced employees: eBay has a team of employees with expertise in e-commerce, technology, and customer service, which helps to maintain and improve the platform and support users;
- Data and algorithms: eBay uses data and algorithms to personalize product recommendations and target advertising to individual users, which can improve the user experience and drive sales;
- Intellectual property: eBay has a portfolio of intellectual property, such as trademarks and patents, which can help to protect its brand and prevent competitors from copying its innovations.
eBay Weaknesses
- Intense competition: eBay faces intense competition from other online marketplaces and e-commerce platforms, which can make it difficult for the company to differentiate itself and maintain its market share;
- Dependence on third-party sellers: A significant portion of the goods sold on eBay are provided by third-party sellers, which means that the quality and reliability of those goods are outside of eBay’s control. This can lead to customer dissatisfaction and damage eBay’s reputation;
- Limited control over pricing: Since eBay’s platform is an open marketplace, sellers are free to set their own prices for the goods they offer. This means that eBay has limited control over pricing and may be unable to offer the lowest prices for certain products;
- Reputation for low-quality goods: In the past, eBay has been associated with low-quality goods and counterfeit items, which can damage its reputation and make it less appealing to buyers;
- Challenges in managing subsidiaries: eBay owns a number of subsidiaries, such as StubHub, which can add complexity to the company’s operations and make it difficult to achieve synergies and efficiencies.
eBay Opportunities
- Expansion into new markets: eBay has a strong presence in many markets around the world, but there are still many potential markets where the company could expand. For example, eBay could look to enter emerging markets with large and growing populations, such as India and Indonesia, or expand its presence in existing markets by offering new products or services;
- Expansion into new product categories: eBay offers a wide variety of goods, but there are still many product categories where the company could expand. For example, eBay could look to offer more services, such as home cleaning or appliance repair, or expand into new areas, such as groceries or home furnishings;
- Partnerships and collaborations: eBay could look to partner with other companies or organizations to expand its reach and offer new products or services. For example, eBay could partner with retail chains to offer in-store pickup for online orders, or collaborate with manufacturers to offer exclusive products or discounts;
- Subsidiaries and acquisitions: eBay could look to grow through acquisitions or the expansion of its existing subsidiaries. For example, the company could acquire other online marketplaces or e-commerce platforms to expand its reach, or invest in its subsidiaries, such as StubHub, to grow those businesses.
eBay Threats
- Intense competition: eBay faces intense competition from other online marketplaces and e-commerce platforms, which can make it difficult for the company to differentiate itself and maintain its market share. These competitors may have competitive advantages in areas such as product selection, pricing, delivery speed, or customer service, which can make it difficult for eBay to compete;
- Changes in consumer behavior: The e-commerce industry is rapidly evolving, and consumer behavior is constantly changing. If consumers shift away from using online marketplaces like eBay in favor of other shopping channels or platforms, eBay’s business could be adversely affected;
- Economic downturns: Economic downturns can lead to reduced consumer spending, which can impact eBay’s business. If consumers are more cautious about their spending during an economic downturn, they may be less likely to buy and sell goods on eBay’s platform, which could impact the company’s revenue and growth;
- Reputation and trust: eBay’s reputation and the trust of its users are crucial to the company’s success. If eBay fails to protect its users’ personal information, resolve disputes effectively, or prevent the sale of counterfeit or low-quality goods, its reputation could be damaged, and users may be less likely to use the platform;
- Regulatory risks: As a large and influential company, eBay is subject to regulatory scrutiny and may face fines or other penalties if it fails to comply with relevant laws and regulations. This can be a significant risk for the company and can damage its reputation.
eBay is a successful online marketplace that allows buyers and sellers to easily connect and conduct transactions. The company’s business model is based on generating revenue through fees charged to sellers and advertisers, and it also leverages its subsidiaries to generate additional revenue. eBay has strengths, such as a large and active user base, but it also faces competition and regulatory risks. The company has opportunities for growth, such as expansion into new markets and product categories, but it must also address threats to maintain its success.
Daniel Pereira
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How Does eBay Make Money? eBay Business Model In A Nutshell
eBay’s core business is a platform business model that makes money from transaction fees through its marketplaces. In short, eBay primarily makes money by charging fees on successfully closed transactions. For instance, in 2022, on a $73.9 billion worth of gross merchandise value sold on eBay, the company generated $9.79 billion in revenues at a 13.25% take rate (fee).
eBay origin story
At the end of 2021, eBay had 147 million active buyers and 17 million sellers, which drove over $87 billion in Global Merchandise Volume (the volume of successful transactions that happened on the platform).
eBay Inc. was formed as a sole proprietorship in September 1995 by Pierre Omidyar.
Before that, on Labor Day of 1995, eBay was called Electronic Bay, then Auction Web eBay, and it had no guarantees, no fees, or any mechanism to moderate disputes on the platform, nor payments platforms integrate (eBay would, later on, purchase PayPal, that would be then spun-off in 2015).
As the story goes, cheques would start to pile up so much on Pierre Omidyar’s desk that he had to move those to a business account finally and scale what would become one of the most valuable internet companies, which would IPO by September 1998 (about three years after its launch).
Back in 1998, that is how the company would get described in its financial prospectus:
eBay is the world’s largest and most popular person-to-person trading community on the Internet. eBay pioneered online person-to-person trading by developing a Web-based community in which buyers and sellers are brought together in an efficient and entertaining auction format to buy and sell personal items such as antiques, coins, collectibles, computers, memorabilia, stamps and toys.
eBay Financial Prospectus of 1998
By 1998 eBay was growing at a staggering rate.
eBay business overview
eBay Inc. is a global marketplace platform, which today primarily consists of transaction revenues and marketing revenues:
- The core Marketplace platform includes the online marketplace, like ebay.com, and its mobile apps.
- Other services offered on top of its platforms: those are services meant to support the activity of third-party sellers on the platform.
What’s eBay’s unique business advantage?
We are fiercely loyal in protecting eBay’s unique advantage as a true marketplace in service of small independent businesses, consumer sellers, and buyers, and working to dramatically simplify the buyer and seller experience.
As the 2018 Shareholders’ Letter mentioned, eBay highlights its crucial strength of empowering independent sellers and businesses.
That is a crucial point to emphasize, as it enables us also to understand why eBay is at its core platform business model , and how it is different from other companies like Amazon.
What are the core value propositions of eBay?
As a platform business model eBay has two core players:
- And sellers
They both enable the platform to be successful. Indeed, to offer great value to the buyer, the platform is centered on great variety.
And to be valuable to sellers, it has to attract a broad range of buyers willing to buy any object on the platform.
The company is focusing in the coming years toward:
- Evolving to a managed marketplace.
- Building a foundational product catalog.
- Managing the end-to-end payment process.
- Offering great selection and value .
Great selection and value are at the core of the eBay business model , which includes “new, everyday items as well as rare and unique goods.”
What value does the platform drive for each of its key players?
eBay value propositions for buyers
For buyers, eBay offers:
- Expansive inventory at a usually good value .
- Multiple delivery options.
- eBay’s 110% Best Price Guarantee (in the US for certain categories of products).
- Offerings below $10.
- Money-Back Guarantee and eBay Authenticate (a mechanism checking the authenticity of certain categories of products).
eBay value propositions for sellers
For sellers, eBay offers:
- The choice to list products and services through fixed-price listings or an auction-style format.
- Ability to list items that are newly refurbished, used, and rare.
- Promoted Listings.
- eBay’s Top-Rated Seller program.
- Insights on optimal listing and pricing through the Seller Hub portal.
How is the eBay business model different from Amazon? A platform business model at its core
Unlike other digital commerce businesses, we don’t compete with our sellers and we refuse to compromise the shopping experience to push “house brands” and irrelevant posts. Millions of small businesses and consumers sell only on eBay. I believe it’s because of our purpose and policies — this matters to customers. We fundamentally object to unnaturally bundling services to overcome barriers to competition. At eBay, we empower third party sellers to thrive, which actually serves consumers seeking value and selection. We are a benchmark on this. We always have been.
In its 2018 Shareholders’ Letter, eBay emphasizes the fact that the platform doesn’t compete against its third-party sellers, as it happens instead on a platform like Amazon, which, while enabling third-party sellers to host their products on top of Amazon e-commerce, it still also features its own branded products.
This is a key difference between eBay and Amazon.
In addition, where Amazon takes the money from transactions, then pays a fee to third-party sellers. eBay, instead, primarily takes a fee on a successful transaction.
In short, Amazon’s key strength is managing the cash generated through the platform.
EBay’s primary strength is its ability to connect buyers and sellers on various items not necessarily available elsewhere.
How does eBay make money?
eBay makes money in three ways:
- Primarily through fees collected on successfully closed sales on eBay.
- And other seller services are offered on top of its marketplaces.
eBay made over $9 billion in transaction revenues from marketplace fees in 2021. At the same time, it made around $650 million in marketing services in the same year.
What are the key metrics to understand eBay’s business model?
Each company’s business model has its logic, and as such, it measures its success through a set of metrics.
For eBay, those are:
- Gross merchandise volume.
- And transaction take rate.
Gross merchandise volume
Gross Merchandise Volume (“GMV”) is defined as the volume of successfully closed transactions between users on eBay Marketplace and StubHub platforms.
This is a useful metric to understand the volume of transactions happening on the platform.
In 2021, the GMV was over $87 billion.
Transaction take rate
The transaction take rate is given by the Marketplace net transaction revenues divided by Marketplace GMV.
For instance, the transaction take rate in the eBay marketplace was around 11.9% in 2021.
The ability of the platform to increase its transaction rate over time while keeping its buyers and sellers community thriving is a signal of the platform’s strength.
It means the platform has become more valuable for both sides of the marketplace.
Thus, monitoring the increased take rate, over time, together with the growing community of buyers and sellers, is a crucial way to understand whether eBay’s marketplace becomes more or less valuable.
How does eBay primarily spend money to make money?
To make money, companies must spend money.
Depending on the business model you might also be running, the essential expenses to make the bottom line work out might change.
In eBay, those key expenses can be summarized as customer support, site operations, and payment processing, which amounted to over $2.3 billion, or over 22% of its total revenues in 2018.
eBay Annual Report 2019
Other key expenses are related to sales and marketing (32% of total revenues in 2018), primarily consisting of advertising and marketing program costs (both online and offline), employee compensation, user coupons and rewards, contractor costs, facilities costs, and depreciation on equipment.
Other key expenses related to product development and other general and administrative expenses.
eBay spin-off of PayPal
I covered in the PayPal business model how the company acquired at a certain point by eBay in 2002 for $1.5 billion.
At the time, PayPal needed a strong payment processing system within its core platform.
As the years went by, PayPal’s growth went far beyond eBay, which had worked as a primary growth driver for the company in the first years of operations. Until PayPal itself became more valuable than eBay.
Indeed, by 2018 PayPal made over $15 billion in revenues and over $2 billion in net income . In October 2018, PayPal’s market cap passed $120 billion, compared to eBay’s $32 billion.
Key takeaways from eBay’s business model
- eBay, at its core, is a platform business model , or two-sided marketplace (with buyers and sellers as the two sides) measuring its growth based on the volume of successful transactions closed on its marketplaces.
- It makes money primarily through transaction fees on its core platform.
- Where business models like Amazon are still a hybrid between e-commerce and platform business, the company offers branded Amazon products, de facto, in some circumstances operating in conflict with third-party sellers.
- eBay’s strength is that the company is aligned in doing its independent sellers’ businesses.
- eBay bought PayPal for $1.5 billion back in 2002; then, it spun it off in 2015.
- In the first years of operations, eBay was the primary platform driving the growth of PayPal.
- As PayPal scaled, the company’s growth went far beyond eBay.
- eBay remains a core e-commerce platform where the value of its operations is driven by its ability to empower third-party sellers by offering a wide variety of goods and merchandise.
Read next: PayPal Business Model
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eBay Business & Revenue Model: How Does It Works & Make Money?
The E-commerce marketplace industry has seen tremendous growth during the COVID-19 pandemic. After all, the pandemic has completely transformed the way people buy – resulting in an exponential rise in usage of online shopping platforms like eBay.
As of the 2nd quarter of 2021, eBay’s revenue amounted to over 2.67 billion U.S. dollars – a 14% increase year-over-year.
Table of Contents
- ⦁ eBay – A Platform to Buy and Sell Anything
- ⦁ Key Stats and Facts About eBay
- ⦁ The Success Timeline of eBay
- ⦁ eBay Story: What’s the Reason Behind Its Success?
- ⦁ eBay’s Customer Segments
- ⦁ Value Propositions offered by eBay
- ⦁ The eBay Business Model Explained
- ⦁ The eBay Revenue Model Explained
So, if you’re thinking of building a platform like eBay, you’re on a right track to commence a lucrative business. That being said, it’s a must for you to have a solid understanding of eBay’s business & revenue model to kick off your venture the right way.
In this post, we’ve covered how eBay works and makes money in detail. But before getting to that, let’s first have a look at what eBay is all about and some key facts related to the platform.
eBay – A Platform to Buy and Sell Anything
eBay is a multi-vendor online marketplace that connects millions of buyers and sellers from all over the globe to buy and sell new or used products. It facilitates both B2C (business to consumer) and C2C (consumer to consumer) transactions via eBay’s website and app.
At present, eBay is available in 180 countries as an online shopping platform with a wide range of products along with other unique services such as online auction, stubhub.com (event ticket trading) and online classified ads.
That’s why it’s no wonder to see that eBay was the second most popular e-commerce and online shopping website based on visit share – as of June 2021.
Key Stats and Facts About eBay
- ⦁ Year of Foundation: 1995
- ⦁ Founders: Pierre Omidyar
- ⦁ Headquarters: San Jose, California, United States
- ⦁ Industry: e-Commerce
- ⦁ Number of Funding Rounds: 2 (As Per eBay’s Crunchbase Profile )
- ⦁ Total Funding Amount: $6.7M
- ⦁ Number of Acquisitions: 65
The Success Timeline of eBay
Here’s a quick look at eBay’s success timeline.
Also Read (That Might Interest You): Udemy Business and Revenue Model Explained
eBay Story: What’s the Reason Behind Its Success?
Though eBay is one of the oldest online marketplaces worldwide, it is still one of the multibillion-dollar e-commerce platforms in the industry. After all, eBay is the only platform to offer a product auction feature to both buyers and sellers in addition to buying products at a fixed price.
Thus, it’s no surprise to see why millions of buyers and sellers from all over the world prefer to trade on eBay.
Thanks to eBay’s product auction listings feature, those in possession of rare and collectable items found a platform to welcome the best offers. At the same time, collectors found a place where they could bid and purchase rare items.
Well, that’s not at all what makes eBay so successful.
eBay has a large product catalogue with thousands of products including antique Items, collectables, out-of-season, used products and the new arrivals in categories like electronics, appliances and fashion.
All in all? One can buy and sell nearly everything on eBay and no wonder – millions of transactions happened on the platform every single day.
Moreover, eBay leaves no stone unturned when it comes to delivering outstanding customer experience in the form of amazing features like eBay’s money-back guarantee, eBay Top Rated Seller program, SafeHarbor program and Verified Rights Owner Program.
eBay’s efforts through these programs have helped the company win a loyal global customer base that’s has been a significant part of its success.
eBay’s Customer Segments
eBay has a two-sided marketplace business model, with two customer segments of the platform are:
Individuals or businesses who are interested in listing products up for auction or sale.
As of now, eBay has 19M sellers worldwide and over 1 billion active listings posted by individual sellers and large or small businesses alike who create eBay stores to leverage the platform to its full potential.
Individuals who are interested in bidding on products up for auction or purchasing products via a fixed price offered by sellers. As of the 2nd Quarter of 2021, eBay had around 159M active buyers all over the world.
Value Propositions Offered by eBay
eBay is a leading e-commerce marketplace that provides a unique set of benefits and perks to its key players – buyers and sellers. Have a look!
For Buyers:
- ⦁ Large product catalog
- ⦁ Quality assured products
- ⦁ Free shipping & fast delivery
- ⦁ Order tracking system
- ⦁ An option to review & give feedback related to products
- ⦁ Money back guarantee
For Sellers
- ⦁ Global customer base
- ⦁ Bidding & Buy It Now feature for product selling
- ⦁ Powerful marketing & distribution channel
- ⦁ Decent customer satisfaction rating of 77% as of 2020 (As per Statista )
- ⦁ eBay’s Top Rated Seller program
The eBay Business Model Explained
eBay was originally merely an online auction website where sellers listed their products for bidding and the highest bidder getting the products. With time, eBay has evolved into an online e-commerce marketplace platform that enables both C2C and B2C transactions.
The platform doesn’t own any inventory. It simply acts as a mediator between buyers and sellers – enabling people to buy or sell their items.
Here’s a quick overview of how eBay works for its two key players – sellers and buyers.
Firstly, sellers will register on the eBay platform to begin listing their products on the platform. While listing, the platform enables sellers to add product images, product descriptions, price, shipping details and other related things to make products appealing to buyers.
- ⦁ Auction-Style Listings
Some listings on the platform are auction-based where the item is sold to the highest bidder. In the auction-style listing, sellers also need to mention the minimum bidding price, the duration of the bidding window and available payment options.
- ⦁ Fixed-Price Listings (Buy It Now)
The other type of product listing that exists on eBay is listing products at a fixed price. In this scenario, sellers will list their items with the “Buy It Now” option. Through available payment options, buyers can purchase the product.
In fact, eBay now provides the option to sellers to open their own stores on the platform, with some additional tools to promote your brand or business.
Like sellers, buyers will register on the eBay platform to start bidding or buying the items through the platform. eBay offers two ways to buyers for buying a wide range of products. The first one is the bidding option and the second is the Buy It Now.
- ⦁ Buying via Bidding
When it comes to buying via bidding, eBay allows buyers to bid the price they are ready to pay to purchase the product listed in auction-style listings by sellers. A buyer with the highest bidding price acquires the item through available payment gateways options.
- ⦁ Buy It Now
In this option, buyers simply pay the fixed price set by the sellers to purchase the product. eBay marketplace platform also offers shopping features such as a shopping cart for buyers to store their favorite items temporarily and can buy them later.
Moreover, eBay enables buyers to keep track of their purchase history and can save their searches as well.
That’s how eBay works for both buyers and sellers – a platform business model that has made eBay a well-known online marketplace worldwide.
Also Read (That Might Interest You): How to Build an Auction Website and App Like eBay
The eBay Revenue Model Explained
eBay marketplace platform makes money in several ways. Let’s have a look at eBay’s revenue model in detail:
1. Listing Fee Model
eBay enables every type of seller to list a minimum of 200 products on its online marketplace platform free of cost. Once the limit is exhausted, eBay charges a listing fee (or insertion fee) of $0.35 for each listing.
2. Commission Based Revenue Model
eBay earns a commission on every sale made by sellers on the platform. This commission is earned in the form of the Final Value Fee and is gauged as a percentage of the total amount of the sale, along with $0.30 per order.
3. Advertising Based Revenue Model
eBay doesn’t earn revenue just via listing fees or commissions upon successful sales. The platform allows sellers to advertise their products on eBay in trade for money. To advertise on eBay, sellers have to pay a fixed amount.
In addition to these revenue models, eBay brings significant revenue from international trade and through its acquisitions of leading companies such as StubHub.
Interested in Creating Online Marketplace Like eBay?
While deciding to build an e-Commerce marketplace platform like eBay, there is another important decision you need to make i.e., the budget for the marketplace development.
If you want to save overall development costs, hiring a dedicated remote development team over building an in-house team to build an app like eBay is the way to go.
By outsourcing development to remote developers, you get to save on not just training for your team but even on infrastructure – resulting in significant cost-savings benefits.
We at InfoStride strive to help companies onboard remote developers quickly with flexible engagement models to meet the budget requirements. Our resources are available to hire on a full-time, part-time, hourly, monthly or project basis.
When you decide to hire InfoStride’s remote talent for your marketplace development needs, you can expect:
- ⦁ Pre-screened and trained experts
- ⦁ Support for end-to-end development of your eCommerce platform
- ⦁ State-of-the-art development center to empower your remote team to work on your projects without facing any hassle and securely
- ⦁ Support from onboarding to offboarding resources
- ⦁ Deployment of time zone aligned developers for your project
Still, have questions? Schedule a free consultation session with our experts to clear any doubts you have in mind about hiring remote developers or building a marketplace app like eBay.
Conclusion
One of the key reasons why eBay is one of the leading online marketplaces worldwide is its business model that’s quite different from other players in the e-commerce industry. eBay’s auction feature along with buying products at a fixed price is what sets eBay apart from others.
When it comes to building a marketplace app like eBay, it’s all about getting a solid understanding of eBay’s business and revenue model.
eBay brings considerable revenue to the table from various sources including but not limited to the listing fees model, commission on every sale, advertising, international trade and more.
If you feel we miss something crucial related to eBay, let us know in the comments below.
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About Author
Amandeep Kaur
After earning her bachelor’s degree in computer science and engineering, she decided to coalesce her technical knowledge with her zeal for writing. She loves to explore and write on the latest advancements in the software development and staffing industry.
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How Ebay Works: Business & Revenue Model
B2C and C2C multinational e-commerce online marketplace Ebay based in California started their operations in 1995 and went public in 1998. With over $9.6 billion annual revenue and 170 million active users as of quarter 4th of 2017, Ebay is well accepted e-commerce online marketplace .
Ebay sell their products either via a silent auction where users can submit the maximum price they are willing to pay for the product or via buy it now where user buy products at the listed price. As of 4 th quarter of 2017, 39% of buyers were female and likewise 44% of sellers are female. Over 65% of Ebay’s revenue generates from Ebay online marketplace transactions and only 10% revenue comes from StubHub which is online ticket marketplace acquired by Ebay in 2007.
Ebay is an online marketplace for buying and selling of new and used products. Online marketplace deals in both B2C and C2C marketplace. Ebay is available in 180 countries for buying and selling of wide variety of goods. Ebay revenue comes from seller for listing of products and commission on sale of product. Buyers need to pay the product price only to buy products on online marketplace. Sellers can list first 50 items on the Ebay online marketplace free of cost every month. After that company charges the listing fee depending upon the product category. Company also charges commission fee on sale of products. Over 90% gross merchandise volume generates from Ebay’s marketplace.
Ebay Founders, Funding received and Timeline:
Founders : Pierre Omidyar
Founded Date : September 1, 1995
Headquarter : San Jose, California, United States
Number of Funding Rounds : 1
Total Funding Amount : $6.7M
Number of Acquisitions : 62
IPO Date : September 24, 1998
IPO Share Price : $18.00
Timeline of Ebay:
Ebay Revenue generation Model:
First online marketplace Ebay is known for huge variety of products. Websites similar to Ebay are doing well but Ebay business model is way different to its competitors. Ebay offers buyer and seller an online marketplace platform to buy and sell products. Ebay don’t store the inventory of products rather directs the order directly to the seller.
With over 1.93 million (as on 2017) active sellers on Ebay, Ebay allows sellers to list first 50 products on the online marketplace platform free of cost. After that Ebay charges listing fee on each item. Additionally, Ebay charges upto 10% commission on sale value pre-tax including shipping charges. Online marketplace Ebay offer two ways to sellers to sell and buyers to buy wide variety of products. Buy it Now and bidding option are made available to users. In bidding option, buyer has an option to bid the price they are willing to pay to buy the product. Buyer with highest bidding price gets the product and in Buy it Now option seller update the price of product.
Other revenue generation model on websites like Ebay is Advertisement. Online marketplace websites like Ebay sells advertising on their websites that go on external websites. Ebay also own some classified ads that generate some revenue for the online marketplace platform. Other revenue souce is giving license of their in-house technologies to other companies. Online marketplace like Ebay generate revenue from various sources but the major chunk of revenue comes from online marketplace.
Features of Online Marketplace Ebay:
Return policy of product with 100% money back gaurantee.
Ebay accepts all the online payment options with EMI payment method with allow buyer to pay in monthly installments.
Ebay authentication policy for all the products and product verification by experts.
Bidding option to buy products. At least 30% price difference in lowest bid price and buy it now price.
Product wishlist and product feedback & review via catalog on the website.
Report link to buyers for fake and unauthenticate product.
Value Proposition of Online Marketplace Ebay:
- Large product catalogue
- Quality assured products
- Free shipping
- Fast Delivery
- Review and Feedback of products
- Order tracking
- Product return policy with 100% money back guarantee
- Global online audience
- Good customer satisfaction
- Bidding and buy it now feature for selling of product
- Effecient marketing and distribution channel
- opportunity to enhance sale
Why Ebay is successful
Ebay has a large list of competitors. Even with first player to enter in online marketplace domain around the world, Ebay is facing a huge competition. Ebay is the only place to offer auction of products that attract large set of audience around the world. No other online marketplace is able to offer auction feature to buyer and seller both. Rare collectable items and huge toy collection along with auction listing appeal to buyers.
Ebay online marketplace is successful with its unique interface. Ebay offers search algorithm unlike of search engine which search information, but Ebay search for physical products around the world. Online marketplace Ebay retains their market share of audience and safeguard Ebay from large set of online marketplace competitors. Number of products &services offered, price and quality are most important aspects for Ebay that makes Ebay different and successful in online marketplace world.
Ebay is an online marketplace for buying and selling of products around the world. Ebay is quite different from other players. Ebay core offering is better services to buyers and sellers. Other online marketplace competitors focus more on products. Auction feature of Ebay along with buy product at fixed price is a unique offering to engage buyer and sellers.
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eBay SWOT Analysis [2022 Updated]
eBay is an American multinational company that facilitates C2C (consumer-to-consumer) and B2C (business-to-consumer) sales. It has a website through which it offers various features. This website, as part of eBay’s business model , is also its primary source of revenue and income. However, the company has also ventured into several other businesses and markets.
eBay’s History
Ebay – at a glance, ebay’s swot analysis, ebay’s strengths, brand image, global presence, customer base.
The company also has a large network of buyers and sellers. Its online platform facilitates millions of transactions worldwide each year. Similarly, its suppliers and customers have been increasing steadily over the past. It has given the company significant strength over others.
Technological innovations
Ebay’s weaknesses, new entrants, faulty products, ebay’s opportunities.
In eBay’s SWOT analysis, opportunities represent external factors that can improve a company’s prospects in the future. For eBay, these consist of the following.
A rise in online shoppers
Diversification.
eBay has already tried growing into other industries successfully through the acquisition of PayPal and StubHub. The company already has the experience to identify these industries and expand into them. eBay can further strengthen its supremacy through further such acquisitions. As mentioned, the company already has the financial prowess to do so.
Offline markets
Ebay’s threats, local competition, political issues.
eBay operates from specific locations worldwide. However, the company still runs all its operations from the US. Due to political issues, the company faces a threat of operational problems. For example, the issues between the US and China escalated to a halt in trading between them. Most multinational brands that operated in both countries suffered as a consequence.
Government regulations
Related posts, what is swot analysis and why it is important, swot analysis for walmart, alibaba swot analysis.
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eBay’s business model has been its primary source of success. It combines the company’s strengths to generate a substantial amount of revenues each year. While most experts believe it was eBay’s timing that allowed it to capitalize on the early online platform, there are several other factors that also played a crucial role in its financial growth.
The eBay Business Model can be explained in the following business model canvas: DOWNLOAD HIGH-RESOLUTION PDF OF THE EBAY BUSINESS MODEL CANVAS eBay Customer Segments eBay’s customer segments consist of: Buyers: These are individuals or businesses that use eBay’s platform to purchase goods from sellers;
eBay, at its core, is a platform business model, or two-sided marketplace (with buyers and sellers as the two sides) measuring its growth based on the volume of successful transactions closed on its marketplaces. It makes money primarily through transaction fees on its core platform.
The eBay Business Model Explained eBay was originally merely an online auction website where sellers listed their products for bidding and the highest bidder getting the products. With time, eBay has evolved into an online e-commerce marketplace platform that enables both C2C and B2C transactions. The platform doesn’t own any inventory.
Ebay revenue comes from seller for listing of products and commission on sale of product. Buyers need to pay the product price only to buy products on online marketplace. Sellers can list first 50 items on the Ebay online marketplace free of cost every month. After that company charges the listing fee depending upon the product category.
eBay is an American multinational company that facilitates C2C (consumer-to-consumer) and B2C (business-to-consumer) sales. It has a website through which it offers various features. This website, as part of eBay’s business model, is also its primary source of revenue and income.