“Web 2.0 is a trend in the use of World Wide Web technology that aims to enhance creativity, communications, secure information sharing, collaboration and functionality of the web” (StiltonStudios.net, pg 1). For the past couple of years, Web 2.0 applications have become very popular and important for people that use the internet. One Web 2.0 communication medium that many use is eBay. eBay is an online marketplace that allows its users to bid and auction off items. From day one, eBay was founded on what remain the company’s core values, a belief that: people are basically good, everyone has something to contribute, and an open environment brings out the best in people (eBay.com). On this belief, eBay has become one of the biggest online marketplaces. This application heavily relies on users to buy and sell items in order for the website to continue to function. Without users, the website would cease to exist. Therefore, it would be very important that eBay always have a lot of members and the members be satisfied. Although many people have had great success in finding items and also have acquired much wealth, there are a lot of problems with eBay that have resulted in many members leaving to find alternate websites. Even though eBay is an industry leader, it is currently struggling to adapt to the problems that have recently occurred in reference to user feedback, higher selling fees, and the decline of people wanting to participate in auction style shopping.
On September 3rd, 1995, a 28 year old software developer named Pierre Omidyar came up with a code that would eventually evolve into what we know as eBay today. Originally called AuctionWeb, this online auctioning site began with the listing of a single broken laser pointer that would eventually sell for $14.83. Pierre knew that he had created something special because when he contacted the winner of the bid, they knew the pointer was broken and still wanted it because he was a collector of broken laser pointers. This meant that people were willing to buy and collect all types of items, which changed the whole notion of what has value in the world. If people are willing to buy broken laser pointers, even more people are going to be willing to sell them. By 1997, AuctionWeb officially changed its name to eBay, short for Echo Bay, and became large enough to require the skills of a Stanford MBA, Jeffrey Skoll as president, and Meg Whitman, a Harvard graduate, as CEO. eBay finally went public on September 21, 1998, and both Omidyar and Skoll became instant billionaires. In addition to its original U.S. website, eBay has established localized websites in 30 other countries (eBay.com)
The eBay community is made up of 212 million people around the world that want to sell and buy items. The community includes individual buyers and sellers, small businesses, and even enterprises. Seller’s and small businesses make up 95% of eBay’s members (TheBidFloor). The type of people that use eBay are people in need of certain goods, people who want to buy items at a cheaper rate, people who want to sell items for money, and people who rely on eBay as a primary source of income. One of the most important aspects of eBay is the fact that users help one another be successful on the site. They make connections and form communities because they share common interests of items that they buy or sell. These users form relationships with one another through discussion boards, chat rooms, Online Workshops, and eBay Groups. These forums help the users receive assistance from other users, share ways to be successful on eBay, or just to socialize.
IV. FUNCTIONS (HOW IT WORKS)
eBay works like an auction. It allows people to trade online at any time and any item that they want. People place bids on items of their choice and have a certain amount of time to keep bidding. When the bidding is over, whoever has the highest bid wins the item. You receive a message when someone outbids you and you can chose to continue to bid or try another item. You can also purchase items without bidding. However, the item may not be cheaper than if you were to bid.
There are three primary agents involved in eBay. First, I am going to talk about the seller. Sellers are users that have items that they put up for auctioning. These sellers have the option of three different types of selling auctions. They can do the most common one that allows the seller to offer one or more items for sale and for a certain amount of days. For this type of auction, the seller can start the bid at a minimum price they are willing to accept for the item. The other option is a fixed price format. This allows the seller to offer one or more items at a fixed price that they can purchase right away. The last type of auction allows the seller to offer two or more of the same item in the same auction (Wikipedia). Sellers are required to pay basic fees. The basic fee depends on the auction style the seller prefers. This includes an insertion fee when putting up the item for sale plus a final value fee when the item sells (eBay/Fees.com). Sellers are also able to set their own shipping and handling fees. Sellers have the option of putting up a picture of their item to attract more buyers. It’s important for the seller to do some research on the items they are going to sell so they have a good starting price and are not overpricing the items (Karp, 2006) According to a survey conducted for eBay by ACNielsen International Research located on TheBidFloor.com, 724,000 Americans reported that eBay is their primary or secondary source of income.
The next primary agent involved in eBay is the buyer. When you go onto eBay's front page, you can either search for an item by typing it in or searching by categories. This is helpful because sometimes you’re not completely sure what you want, but by looking at a list of things you may find something of your interest. There are also eBay stores where you can look at and purchase items. In addition, there are subsidiaries of eBay. These eBay sites include Half.com (textbooks), Motors.ebay.com (cars), PayPal, Kijiji, ProStores, Rent.com, Stubhub, and Shopping.com. There are about 19 million products on eBay, so sometimes people would rather “windowshop” for items in case they aren’t completely sure what they want. Some items include collectibles (most popular), clothing, appliances, electronics, furnishings, and other miscellaneous products. They can be rare and valuable, or old items that have not been used in years. Basically, anything can go for sale unless it’s illegal or violates eBay’s restricted items (TheBidFloor).
Most of these items that are purchased on eBay are done so by bidding through online auctioning. Bidding on eBay's auction-style listings is called proxy bidding. When someone goes on eBay and types in the item they want into the search bar, the hunt is on. People begin looking at what the lowest and best bid is so they can purchase the item at a cheaper price. When the item is found, the bidding begins. When a buyer first places their bid, they also have a maximum bid. There also is a bid increment. As the auction proceeds, eBay automatically increases the buyer’s bid on their behalf up to their maximum bid. By doing this, the buyer maintains their position as the highest bidder or to meet the item’s minimum price set by the seller. The bid increment is the minimum amount the buyer’s bid will be raised. It is based on most current high bid of the item (eBay.com). At first, I was not sure how eBay generated so much money and how people profited so much from it. After doing research, I found out that eBay generates revenue from a number of fees. There are fees to list a product and fees when the product sells, plus several optional fees(eBay.com/Fees). The company's current business strategy includes increasing international trade.
The third agent in eBay is the eBay administrators. They are the providers of the market place that mediate and police what items are being sold. There are some restricted items that cannot be sold on eBay, including alcohol, drugs, human parts, and even teachers’ editions of textbooks. eBay administrators are also in charge of making sure that people’s identity is kept safe. In order to ensure this, eBay now has an online payment system, known as PayPal. This is a secure service which instantly transfers payments from one members account to the other. What’s good about this is that no one has to reveal any credit card details, which makes people more comfortable to make purchases. The administrators of eBay also police the positive, negative, and neutral feedback that people receive. Feedback and commenting to other users is an important aspect of the Web 2.0 application that makes it different than Web 1.0. eBay requires a 4.3 average or better rating in order for the seller to continue to sell goods in reference to handling and shipping feedback. A 4 on the eBay scale is known as a “reasonable” transaction and a 3 on the scale is known as neutral (BusinessWeek). Feedback is a very important feature to eBay because it acts as the user’s reputation. This is important because having a good reputation is vital to the person selling items. If the person has a bad reputation, they aren’t able to sell products due to their account being suspended by eBay administrators. Many people base who they buy items from on the seller’s rating and feedback. According to the article, “How to Obey on Ebay” in the Economist, “Many of the traders on eBay have come to value their reputations greatly, and those with enough positive-feedback scores are allowed to participate in buyer-protection schemes, which offer refunds. But as in any market, the rule is always caveat emptor: let the buyer beware” (pg. 66, 2005).
As stated earlier, eBay does have some problems that are causing people to find other means of conducting their businesses and lives. According to an article in Businessweek, a couple received negative feedback and was not allowed to sell items anymore, which caused them to shut down their business because it was based on selling to customers all around the world through eBay. If a seller keeps receiving 4’s, this will potentially decrease their rating causing them to be suspended by eBay. They received under a 4.3, resulting in suspension. This is not fair because some people mistakenly click the wrong rating, some people are too lazy to leave good feedback, or some people think that the seller’s fees are too high. Sometimes seller’s fees have to be high in order for them to make money, since eBay raised the price of selling an item. As stated earlier, hundreds of thousands of people rely on eBay as a source of income. If people’s accounts are being suspended due to feedback, they are no longer able to conduct business and able to make a living. This is detrimental to people that rely on eBay as their primary source of income due to disability, age, or just the type of business they run. Another problem they had with eBay is the lack of communication from the corporate headquarters. The telephone system has automated messages and E-mails are met with similar responses. This is a problem when people have suspended accounts, questions, and/or comments.
eBay has also had its share of controversy, including cases of fraud. One of the biggest internet fraud cases in U.S history had to do with eBay. People were bidding and purchasing items that they thought were for sale on eBay, but they never received any of the items. The victims shelled out over 5 million dollars to these scammers(RenewAmerica). Other controversies of eBay include its policy of requiring sellers to use PayPal and concerns over forgeries in auction items. These problems are really hurting eBay because these angry sellers are going to a different website similar to eBay known as Shopify.com.
Earlier noted, there were different ways of auctioning off items that sellers could choose from. One of these options was having the item sell for a fixed price, known as Buy it Now. This is becoming more popular because people are getting sick of auctioning. Even though people can purchase items at a cheaper price, it can be time consuming. According to an article on Businessweek, a user named Dave Dribin talked about how he no longer wants to spend hours tracking an auction, especially if he does not win what he wants. Instead, he just buys things online in retail. People are becoming more interested in buying products quickly online at a set price. One of the main reasons people are not participating in auctions is because they have no time and are just too busy. Buyers are not the only ones who are getting tired; sellers are too now that no one is bidding on their items. According to an article in Businessweek, a member of eBay that has been selling posters and memorabilia for a decade has to stop due to the fact that people are using Buy it Now, rather than bidding for a couple of days.
Another problem with eBay is the fact that they have raised their fees. This has caused people to be hesitant of selling their items on eBay and causing them to find somewhere cheaper. According to the article, “Threatening eBay's Dominance, More Online Sellers Go It Alone,” more people are choosing not to use eBay anymore and start their own sites. Technology has helped people out a lot but the main reason is because of the disadvantages of paying higher fees and the dissatisfaction people are receiving from eBay.
In conclusion, eBay has endured a lot of success as the world’s largest online marketplace. Even though right now it is struggling with user dissatisfaction and implications, it is still prospering and servicing millions of users all around the world. Many people cannot live without eBay, whether they rely on it for income or do it as a hobby. Even though there is a decline of online auctioning shopping, the Buy it Now feature of eBay will help these people still come to this website and buy items. eBay revolutionized the online market place and forever will be a place that people can buy whatever they want because there are always people that are willing to see anything.
Economist.How to Obey on eBay ; 6/11/2005, Vol. 375 Issue 8430, p66-66, 1/4p
Karp, David A. "Secrets of Selling On eBay." PC Magazine 25 (2006): 72-75. 2 Feb. 2006. EBSCOHost. SUNY Albany, Albany.
Mangalindan, Mylene. "Threatening eBay's Dominance, More Online Sellers Go It
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