eBay

Overview of eBay - History, Features, Where It Stands Today

eBay is a popular online auction website that was started in September 1995. Commonly referred to as an online garage sale, it allows people to sell off their unused items and reach a larger target audience – selling locally greatly limits the number of potential customers, and as a result, higher sale prices. The company was started by a computer programmer named Pierre Omidyar, and Meg Whitman was hired as the CEO in 1998. The current president of eBay is John Donahoe.

The website initially offered mainly collectible items and travel products, but quickly grew into a website where anyone can sell anything. People have several options of selling items, such as the traditional auction-style listings, buy-it-now listings, and buy-it-now listings with best offer option. It has a unique bidding style system, which increases the auction price incrementally. For example, a user can place a $100 bid on an item, but if the starting price was $0.99, the auction will remain at $0.99. If someone else enters in a price of $50, the bid price will stay at $51 and not the original $100. This leads to interesting situations on popular auctions, as many people will frantically enter in prices in the last 30 seconds of the auction. As of recently, eBay is focusing on revamping its website into an online shopping mall, rather than the auction-style listings it was known for. Search engine results now try to favor listings from big time sellers that mostly offer buy-it-now listings to give it more of an online store experience. Unfortunately this has caused some controversy with the casual and low-volume sellers.

eBay owns a variety of other franchises, such as Half.com, Kijiji, and PayPal. Half.com is used mainly for used books; Kijiji is a competitor to Craigslist and has a similar functionality; PayPal is the preferred payment method for eBay users. eBay acquired other companies such as Skype, but it was not a profitable acquisition. In addition, eBay wanted to shift focus as an e-commerce and payment business website and Skype did not fit this portfolio. It was sold off in November 2009 and is not a part of eBay. They also acquired PayPal in 2002, but recently mandated the use of PayPal for eBay auction payments which has raised some controversy (checks and money orders are no longer considered acceptable, and penalties may be imposed on sellers for attempting to do so).

While eBay allows people to easily look for items to buy and sell, users still should exercise caution. Many items on eBay are counterfeit items, usually originating from the Asian countries. eBay has a program called VeRO to remove listings suspected of copyright infringement and forgeries. At one point the FBI intervened and removed many listings and prosecuted sellers. This is still an ongoing problem that they are still working on. PayPal also adds a level of buyer protection by guaranteeing refunds for sellers that do not complete the transaction – sellers must ensure that a product is delivered as-described in a reasonable amount of time. Although it provides a layer of safety for buyers, it leaves sellers vulnerable from buyers that abuse the system. There are many complaints about eBay sellers that have lost money because buyers greatly over-exaggerate their issues, and PayPal tends to side with the buyer in cases of arbitration. This has angered many sellers, along with the numerous other changes that has made it more difficult to have a profitable operation on eBay.

Changes to the PowerSeller system, as well as the final value fee system, have also upset sellers. Not only is it much more difficult to obtain PowerSeller status, eBay listings are now giving preferential treatment to listings by PowerSellers. This means that casual sellers that sell only a few items in a given period of time may have problems with listing visibility and sales price because the listing will get pushed to the back. It also is more difficult to obtain PowerSeller status as a result of the controversial feedback system recently put in place. This new feedback system incorporates a 5-star rating system, and since buyers may not accurate rate the seller, it will put sellers at a disadvantage. Star ratings below 4.6 disqualifies users from becoming a PowerSeller, and it is very difficult to increase the ratings as a result of poor buyer education (for example, people report three stars for service although there were no problems with the production/transaction). Also, a few neutral and negative feedback ratings is enough to have the status revoked, and even have accounts suspended. This places additional burdens on low-volume sellers as it is not easy for them to increase their ratings if they sell only a few items, making it a huge disadvantage for these sellers.

Another controversial change to the feedback system has angered many sellers. It is now no longer possible for sellers to leave negative feedback. eBay stated that Amazon has a similar system, and sellers had a tendency to "blackmail" buyers with negative feedback if a transaction went sour. It was also in part of the eBay restructuring program to make the place more buyer-friendly. Unfortunately this has the potential for buyers to abuse the system – there are reports of buyers "blackmailing" sellers with unreasonable demands. The final value fee system has also increased significantly over the years, which takes away a noticeable amount of money from the sellers when completing a transaction. eBay and PayPal both charge fees for using the service, and several sellers have migrated to other auction sites to avoid the "double-dipping". Some people called for a boycott of eBay during February 2008 but this only had limited success.

Despite the controversial changes and new dangerous risks for sellers, it still remains as the most popular online auction site today. It is trying to gear itself as an internet e-commerce site, rather than the online auction site it was known for previously. It remains to be seen if this will be successful; some of eBay's efforts to turn it into an online shopping mall has shown only limited success (e.g. eBay Express did not last very long and was removed). However, it still remains as the dominant player for online auctions - it simplifies the process for selling unused items, and there are a lot of active users constantly looking for items to purchase.

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Overview of the eBay and PayPal websites

Click on the pictures to see a bigger version.

This is the index page for eBay. eBay's goal of converting itself into an online shopping place (not auction-based) really shows on the front page, as it lists numerous buy-it-now (not auction) listings as a part of the advertisements. It also promotes the new buyer protection features eBay and PayPal recently rolled out. Users search for items they want by using the search bar towards the top.

This is the page displayed after logging in to a user's PayPal page. Links to various functions, such as sending payments and invoices, are displayed on the top. The interface has been cleaned up to show transactions in a fashion seen in most online banking websites.

This is the main page shown for eBay users. Any special status awarded for sellers are shown at the top. The page can be customized to show different auctions/listing and alerts, as well as keeping tracking of listings added on a "watch list" (user's saved auctions).

This is the page showing the search results for a keyword. It defaults to the Best Match sort option, which has caused some controversy as it bumps down listings by new and low-volume sellers. This algorithm favors "top-rated sellers" and listings with free shipping – buyers should now do a deeper search to find the best bargains.

This is the seller dashboard page, where statistics for the seller is collected and displayed. All seller accounts have access to this page. It shows the user's performance level (To-Rated, Above Standard, Below Standard) – this rating has a significant impact on the order in which search results are shown). It displays the PowerSeller level, if it applies. This is calculated by evaluating amount of items sold, amount of income, and seller performance statistics. eBay also gives users discounts on the final value fees if sellers meet a certain criteria. On the right side of the page, the seller performance numbers are shown. This is generated from the 1-5 star rating buyers give sellers at the end of a transaction. If sellers drop below 4.6 they are at risk of losing special privileges. Dropping below 4.3 can result in account suspensions. The number of neutral feedback, negative feedback, and any open disputes are also shown. All of these factors are used to gauge seller performance, and is used to remove under-performing seller accounts, which has greatly upset the small time sellers that were not able to increase their ratings in a timely manner.

This is the page for leaving feedback on the website. It is important for both buyers and sellers to leave appropriate feedback so that there is a measure of performance and gives users a piece of mind. As you can see on the page, sellers cannot leave negative feedback. Selecting positive feedback and then leaving a negative comment is not allowed. Users can write support information to justify their feedback rating.