• Internet

eBay maintains a huge online marketplace, where millions of items are sold by auction or fixed price. Its customers carry the inventory, helping it keep costs low. Its network size gives it a competitive advantage, too, as sellers favor eBay because that’s where millions of buyers are, and vice versa. Better still, eBay owns PayPal, an electronic money-transfer business that has posted transaction volume growth of more than 20 percent year over year for 17 quarters in a row.

How Does eBay Make Money?

eBay core business is a platform business model that makes money from transaction fees happening through its marketplaces (eBay and StubHub). eBay also makes money through advertising on its classifieds marketplace and other services. The company primarily makes money by charging fees on successfully closed transactions.

Browsing and bidding on auctions is free, but sellers are charged transaction fees for the right to sell their goods on eBay. There are two kinds of transaction fees:

• When an item is listed on eBay, a nonrefundable insertion fee is charged based on the seller’s opening bid on the item.
• Once the auction is completed, a final value fee is charged. This fee generally ranges from 1.25 percent to 5 percent of the final sale price.

EBay also upsells its listing fees with enhanced auction features, including highlighted or bold listings, featured status, and other ways for sellers to increase the visibility of their items.

Once the auction is finished, eBay notifies the buyer and seller via email. Completing the transaction is then up to the seller and the buyer, and eBay collects its final value fee independent of payment and shipment.

What are the core value propositions of eBay?

As a platform business model eBay has two core players:

• Buyers
• And sellers

They both enable the platform to be successful. Indeed, to offer great value to the buyer the platform has offer great variety. And to be valuable to sellers it has to be able to attract a broad range of buyers willing to buy any sort of object on the platform.

The company is focusing in the coming years toward:

Evolving to a managed marketplace.

Building a foundational product catalog.

Managing the end-to-end payment process.

Offering great selection and value.

Great selection and value are at the core of the eBay business model, which includes “new, everyday items as well as rare and unique goods.”

What value does the platform drives for each of its key players?

eBay value propositions for buyers

For buyers eBay offers:

Wide inventory at a usually good value.

Multiple delivery options.

eBay’s 110% Best Price Guarantee (in the US for certain categories of products).

Offerings below $10.

Money-Back Guarantee and eBay Authenticate (a mechanism checking the authenticity of certain categories of products).

eBay value propositions for sellers

For sellers eBay offers:

The choice to list products and services through fixed-price listings or an auction-style format.

Ability to list items those are newly refurbished, used and rare.

Promoted Listings.

eBay’s Top-Rated Seller program.

Insights on optimal listing and pricing through the Seller Hub portal.

eBay makes money in three ways:

• Primarily through fees collected on successfully closed sales on eBay and StubHub.
• On its classifieds platform, through advertising.
• And other seller services offered on top of its marketplaces.

eBay made almost $8.5 billion in transaction revenues from marketplace fees. And over $2 billion from marketplace services and classified ads.

eBay Business Model

eBay is an auction house and the business entity directly facilitates the sale-purchase of products between sellers and third-party buyers. Online buyers search for the desired product and then make bids on them through discrete auctions. Highest bidder gets to win the product. On the other hand, someone wants to sell some undesired items in his house and places those for auction on eBay. When items sell well and the seller gets good money, he shows more interest in selling more things on eBay. When you have no more personal items to sell, you can choose from several eBay business models to find the source of other products to sell. Given below are eBay business models:

Yard Sales

Yard sales is a great way to make some quick cash by selling unwanted items in your home and removing some clutter in the process. Many people are making the maximum use of eBay as a giant yard sale. Make sure you know what items are prohibited from selling. For customers, yard sales are a great source to find some really good, rare deals at throwaway prices.

Consignment

The consignment business model brings products you and you decide whether to put them up for sale or not. If you think products can fetch a good price, you agree to pay a certain percentage of the auction price to the seller whenever the item is sold.

eBay stores

eBay stores are preferred by many eBay entrepreneurs as it allows them to set a profit amount for each product they will sell. You can set up an online store that sells products at pre-determined prices.

Drop shipping

This business model eliminates the need to store products in your location. Rather, you find a drop shipping partner who will handle the shipping and packaging. You pay a lower price to the drop shipping company, and the difference between your cost and customer’s paid price is your profit.

Bulk selling

Bulk selling is also known as lot sales or bulk sales. Products are sold in bulk usually to other eBay business owners. It’s fast, simple, and very cheap.

eBay Mobile App

The eBay app is available for both Android and iOS, enabling you to respond quickly to questions from bidders or buyers. To download the app for your device, select from:

• Android
• iPad
• iPhone           

 The eBay Android app is now available for free at the Android Market and can be downloaded by searching “eBay” from the Android Market on your handset. In addition to traditional type search, the eBay application – like most Android apps – comes enabled with speech-to-text voice search. Simply tap the microphone button near the search bar and say what you’re searching for. The app will then automatically search for that item…

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