Careers at eBay
eBay’s mission is to be the world’s favorite destination for discovering great value and unique selection.
eBay is an eCommerce company that provides business-to-consumer and consumer-to-consumer sale services. The company has three reportable business segments: eBay Marketplace (the flagship site), eBay Classifieds, and StubHub.
In 1995 Pierre Omidyar was a computer programmer who had previously worked at Claris creating software for Apple. He now had his own consulting firm, Echo Bay, and he maintained an online domain for the business, www.ebay.com. On Labor Day weekend he spent some time writing code for a section of the site called AuctionWeb. The idea behind it was to connect buyers and sellers in an open marketplace. Omidyar placed a listing on the site as a test – an ad for a broken laser pointer. To his surprise, he got a serious offer and a payment of $14.83. When he called the customer to confirm he knew the item was broken, the bidder admitted that he was a collector of broken laser pointers.
Believing he had something big on his hands, Omidyar dropped the name AuctionWeb and devoted the eBay website to his new service. It was initially free for users, but the site got so much traffic that his Internet service provider told him he would have to upgrade to a business account (raising the monthly hosting fee from $30 to $250). Omidyar offset the cost by charging customers a fee, and then hired the site’s first employee, Chris Agarpao, to manage the incoming revenue.
In 1996 Omidyar incorporated eBay and became its Chief Executive Officer. By that time the company’s sales had grown to the point that it needed more business expertise. Omidyar recruited Stanford MBA graduate Jeffrey Skoll as eBay’s first President. He presided over a year in which the platform witnessed 15,000 auctions daily, with 2,000 new ones every day, and two million hits weekly. By the end of 1996 eBay had hosted over 250,000 auctions in 60 categories, generating $6 million, and had six employees.
In January 1997 eBay hosted 2,000,000 million auctions, more than in all of the previous year. Its success enabled it to raise $6.7 million in funding from Benchmark Capital. The company also benefitted from a low complaint rate, as it observed only 27 disputes out of a million transactions in a four-month period. Still, it decided to play it safe by implementing a feedback form for buyers to publish reviews about their transactions. Sellers were given ratings based on their quantity of successful reviews, ratings that new buyers could use to evaluate them.
The next few years saw major milestones. Meg Whitman joined the company as President and CEO in 1998 and built up a strong executive team. She transformed eBay from a marketplace for collectibles to a venue for every type of product. She then took it public, and employees witnessed its stock price triple in a matter of days, making Omidyar and Skoll instant billionaires. By 2000, eBay was the top online auction site with over 10 million registered users and $10 million worth of transactions daily. The site’s parent company has since expanded to run the platforms StubHub and Classifieds.
Benefits at eBay
Business model of eBay
eBay has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate:
- Sellers: Individuals or businesses who put items up for auction.
- Buyers: Individuals who bid on items up for auction.
eBay offers four primary value propositions: accessibility, customization, risk reduction, and brand/status.
The company creates accessibility by providing a channel through which individuals can obtain items that might be difficult to find in brick-and-mortar venues or elsewhere. It also provides sellers with a customer base for such items.
The company’s platform enables users to personalize their usage in a number of ways. Sellers can list their products and services either through fixed-price listings (featuring a pre-determined price) or an auction-style format (featuring a minimum price for opening bids). Sellers can also specify item condition in a wide variety of ways, including new, used, refurbished, rare, branded, and unbranded. Lastly, buyers can either have items shipped to them or pick them up from a retailer’s physical store.
The company reduces risk for users through a number of special programs. For example, the eBay Money Back Guarantee protects buyers of qualified products when the items are not received or do not match their description. Other programs include Seller Performance Standards, Verified Rights Owner Program, and Feedback Forum. These help to create a sense of trust and safety for users.
The company has a strong brand. It is one of the first online auction sites, so it is well-established. It is also the largest online marketplace in the world, with over 800 million items listed as of December 2015. About 59% of its Gross Merchandise Volume (GMV) is generated outside of the U.S.
eBay’s main channel is its website, through which it acquires users. The company also recruits customers through a mobile app. Furthermore, it promotes its offering through online (display, paid search, and affiliate) advertising and offline brand campaigns.
eBay’s customer relationship is primarily of a self-service, automated nature. Customers utilize the service through the main platform while having limited interaction with employees. The company’s website features a “Help” section with detailed answers to potential questions.
That said, there is a personal assistance component as the eBay offers phone and online chat support.
eBay’s business model entails maintaining a common platform between two parties: sellers and buyers.
eBay has two key partnerships:
- Shipping Partners: The company maintains alliances with USPS, UPS, and FedEx through which sellers can receive special discounts on shipping.
- Partner Network: The company maintains an affiliate marketing program. Sites that advertise its service, drive traffic towards it, and convert the visit into a purchase or winning bid earn a percentage of eBay’s revenue as a commission.
eBay’s main resource is its proprietary software platform that connects buyers and sellers. The company also depends upon technology and engineering staff to maintain and update the platform. Lastly, it relies heavily on sales/marketing staff to promote and sell its offerings.
eBay has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. The size of its platforms are designed to enable users to leverage its economies of scale, e.g. in customer service and customer acquisition.
The company’s biggest cost driver is sales/marketing expenses, a fixed cost. Other major drivers are in the areas of administration and product development, both fixed costs.
eBay has two revenue streams:
- Net Transaction Revenues - The company generates revenues from three types of fees charged to sellers: listing fees, final value fees (fees payable on closed transactions), and other service fees.
- Marketing Services and Other Revenues - The company generates revenues from ad sales, marketing service fees, and lead referral fees, among others.
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