eBay Pierre Omidayar, a French-Iranian immigrant, designed the code for an auction Web site in 1995 that would provide everyone with equal access to a single worldwide marketplace. Omidayar couldn't believe his eyes when a collector paid $14.83 for the first item, a damaged laser pointer. Soon after, the site expanded into a larger auction site where people could sell everything from baseball cards to Barbie dolls. Individuals and small businesses discovered that eBay was a cost-effective way to reach out to new customers and other enterprises, and huge corporations began utilising it to sell massive volumes of unsold inventory. From 250,000 auctions in 1996 to 2 million auctions in 1997, the company has grown significantly. Meg Whitman was hired as CEO in 1998, and she was instrumental in taking eBay public later that year. Because eBay's popularity allowed customers to choose how much they would pay for an item, it ushered in a new era of pricing. Customers gained control and obtained the best possible price for the goods, while sellers made significant margins because to the site's efficiency and broad reach. Buyers and sellers have used eBay as an informal market value reference for years. Even a corporation working on a new product design looked on eBay to see what the current pricing was for anything from a copier to a new DVD player. Economists were also fascinated by the online marketplace, which they used to test pricing theories and compare them to actual buying and selling behaviour. eBay does not purchase inventory or own the things it sells. It makes money by charging fees for each listing, as well as a final-value fee based on the auction or fixed price. If an item sells for $60.00, for example, the seller will pay 8.75 percent on the first $25.00 ($2.19) and 3.5 percent on the remaining $35.00 ($1.23). As a result, the sale's final-value fee is $3.42. This pricing system was created to entice high-volume sellers while discouraging those who just list a few low-cost items. Collectibles today make up a modest percentage of eBay sales, thanks to the company's expansion into a wide range of other categories, including boats, vehicles, and travel, as well as health and beauty and home and garden. For individuals who don't want to wait for an auction and are willing to pay the seller's price, eBay now offers extra pricing alternatives, including a fixed-price "buy it now" option. The fixed-price model can also be combined with a "best offer" option, which allows sellers to counteroffer, reject, or accept an offer. The company's business concept is focused on bringing people together who would otherwise be strangers. Years before Twitter and Facebook, it was the first example of online social networking, and consumer trust was a fundamental component of its success. While others doubted that people would buy stuff from strangers, Omidayar believed that humans are inherently kind, and that eBay's founders did two things well: they formed a strong online community and developed mechanisms to enable strangers trust each other. On the basis of feedback from each transaction, the company tracks and publishes the reputations of both customers and sellers. Items as described, communication, shipping time, and shipping and handling rate are now the four seller requirements. The ratings are anonymous, but buyers can see them. The highest-ranking sellers appear at the top of the search results. eBay has grown its capabilities, services, and relationships over time in order to continue to grow its community and connect people all over the world. For example, once eBay members made it obvious that PayPal was the preferred form of payment, the business bought PayPal, an online payment service, in 2002. Consumers were given a safe way to transfer money, currency and language barriers were reduced, and businesses were able to sell their products all over the world as a result of the acquisition. Although eBay was a dot-com darling and has enjoyed incredible success since then, it has faced its share of difficulties. A global recession, increased competition from Google and Amazon.com, and challenges growing overseas into regions such as China are among them. After ten years as CEO, Meg Whitman stepped down in 2008 and was replaced by John Donahoe. Under Donahoe's leadership, eBay has acquired 34 acquisitions, mostly in the e-commerce and payments space, such as Shopping.com, StubHub, and Bill Me Later, but also in the back-end technology space. Donahoe is repositioning the company to compete GSRM7223 Marketing Management Managing Pricing Decisions UNITAR International University Page 14 of 15 with Amazon.com, including extending its online marketplace to include a large number of returnable goods at fixed rates. Auctions now account for only 30% of eBay's sales. eBay Now, a programme that collaborates with major stores such as Macy's, Target, Home Depot, and Toys "R" Us to deliver items in roughly an hour for a small fee, has also been promoted by the corporation. On the world's largest online marketplace, people may now purchase and sell practically any goods or service. Sellers can post everything from appliances and computers to vehicles and real estate as long as it is legal and does not break eBay's rules and norms. The global reach of eBay has a huge impact. In 2014, the online marketplace had over 500 million items listed and around 150 million active users. Every two seconds, a pair of shoes is sold, a man's necktie is sold every 23 seconds, a major appliance is sold every 26 seconds, and an LCD television is sold every six minutes. Donahoe intends to double eBay's active user base to more than 200 million by 2015, and boost revenue from $14 billion to $23 billion, thanks to its high volume, acquisitions, and consumers' increased use of mobile devices.

Questions

1. Why has eBay thrived where so many others have failed as an online auction marketplace?

2. Examine eBay's pricing structure. Is it perfect, or might it be better? Why? How?

3. Discuss Donahoe's eBay vision. Is it possible for the business to cease online auctions?

4. Whats the pricing strategy of eBay now? with new contenders in the market like Amazon, Alibaba and JD.com? Sources: Douglas MacMillan, Can eBay Get Its Tech Savvy Back?