The World Wide Web

Today, eBay's mission is "to supply a global trading platform where nearly any person can trade nearly anything" ("Company Overview," 2003). Founded in 1995, eBay began its existence as an on#line auction service. Sellers (who have to register with the site) list products for sale and, optionally, a minimum price (as well as a reserve cost below which they will not market the item). Today, sellers also have the option of setting a fixed price ("Buy It Now") that enables consumers to acquire the merchandise at a predetermined price and remove the bidding process. Consumers have a predefined period of time during which they may bid on solutions and then eBay validates if a bid exceeded the minimum price as well as the reserve. If the sale was successful according to these criteria, eBay notifies the consumer and seller through e-mail and they consummate the sale, for instance arranging for shipment and payment. At the time with the e-mail notification, eBay's involvement inside the transaction is concluded. The web site is not responsible for either payment or shipping (2001 Annual Report, 2002).

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Buyers aren't charged for bidding on an item, nor are they charged for having the successful bid at the end of an auction. Sellers are charged a placement fee based on the minimum beginning cost (the greatest placement fee is $3.30 for your beginning cost of $50 or more).

eBay has recently expanded its website in a couple of important and numerous directions developed to bring in each new customers and sellers. The company introduced the "Buy It Now" feature that allows clients to pay for products without having bidding, but by paying a specific price set by the seller. Also, the company has brought corporate customers for the web site selling new items. Businesses just like Disney now regularly market merchandise on eBay, and can be a key market opportunity for eBay, helping to enhance its revenues to more than $1.2 billion in 2002 (Roth, 2003).

Although bringing in large corporations selling new products has helped enhance the eBay's revenues, it has resulted in some disgruntlement in between eBay's traditional--and smaller--sellers (Pitta & Burnson, 2003). These sellers could be willing to abandon eBay to your far more attractive auction internet site that caters to their needs instead of mixing new and used items together.

When an auction is successful, eBay charges the seller a final value fee (the placement fee is charged whether or not the auction is successful). The final significance fee is according to the final selling price, and is calculated as 5.25 percent in the first $25 in the price, plus 2.75 percent with the price from $25.01 to $1,000, and one more 1.5 percent of the cost more than $1,000 (2001 Annual Report, 2002). Thus, the final value fee for an item that sells for $15 would be $0.79 (5.25 percent) as well as the final significance fee for an solution that sells for $500 would be $14.38. An merchandise that sells for $10,000 would have a final value fee of $163.13.


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