Ebay

EBay is the world's largest trading community where millions of people buy and sell millions of items every day. Because communication is key to ecommerce the acquisition of Skype (a global internet communications company) will strengthen eBay's global marketplace. It will also open up other new lines of business. With a communication company alongside eBay buyers and sellers will be able to communicate much easier which is important when selling items such as automobiles which might require some verbal communication about the details of the car. In regards to their competitors this will help eBay get ahead of competitors such as Amazon or Yahoo auctions because they are combining a marketplace with a payment platform (Paypal) and a communication company.

When one thinks of online auctions they typically think of eBay, the largest online auction site. The online auction, specifically eBay, is changing the way we buy and sell merchandise. An online auction is one where buyers bid for items, put up for sale by sellers, on the internet. EBay is the leading online marketplace for the sale of goods and services. EBay's has over one million registered users and is the most popular shopping site on the internet (http://pages.ebay.com/aboutebay/ thecompany/companyoverview.html). Their mission is to provide a global trading platform where practically anyone can trade practically anything on earth. (http://pages.ebay.com/aboutebay /thecompany/companyoverview.html). eBay enables trade on a local, national and international basis. It has many different international sites, specialty sites, categories and services that aim to provide users with the tools they require for successful online trading. eBay generates revenue from their sellers. The sellers pay a fee based on the selling price of each item, & a fee based on the starting price, and from the different options sellers choose to advertise their product (http://en.wikipedia.org/wiki/EBay), Transactions are based on good faith and eBay uses a feedback system where buyers and sellers leave a negative or positive feedback based on their transaction. Feedback can be viewed by anyone visiting your auction to determine if they should buy or sell to someone. eBay was launched in September 1995 by Pierre Omidyar after a conversation with his fiance about her pez collection (Cohen, 2003). She said she wanted a place where she could interact and trade with other collectors. Pierre created eBay so people would have a central location to buy and sell their items as well as interact with people with similar interests.

EBay has enhanced its company by acquiring many other companies. They originally acquired Billpoint as an online payment form but that was shortly shutdown after the acquisition of Paypal (another payment platform). They acquired the auction house Alando which they changed into eBay Germany as well as other countries auction sites to make up their many international sites. Perhaps their biggest acquisition to date is their purchase of Skype, an internet communications company, for $2.6 billion in stock and cash. Skype provides the ability to talk easily and semi-spontaneously between buyers and sellers. This could make the experience of shopping on eBay even more comparable to offline purchasing, which could attract more buyers. Only one eighth of Skype's users are North American, so this acquisition is providing eBay with a broader user base. It also provides a real-time communications network to let its users contact each other to agree on deals or settle disputes. "The combination of Skype, eBay and PayPal will create an unparalleled ecommerce and communications engine for buyers and sellers around the world" (http://www.skype.com/company/news/2005/skype_ebay.html, ¶ 1). eBay's president and CEO Meg Whitman said "communications is at the heart of ecommerce and community. By combining the two leading ecommerce franchises, eBay and PayPal, with the leader in Internet voice communications, we will create an extraordinarily powerful environment for business on the Net." (http://www.skype.com/company/news/ 2005/skype_ebay.html, ¶ 2). Skype will improve communications between buyers and sellers. Buyers will gain an easy way to talk to sellers quickly and get the information they need to buy, and sellers can more easily build relationships with customers and close sales. Meg Whitman has also been quoted as saying that "eBay and Paypal are the best e-commerce franchises in the world." (http://www.washingtonpost.com/wp-dyn/articles/A4660-2005Apr20.html, ¶ 10). Since more people buy and sell on eBay than any other online auction site, it continues to explode in growth everyday because people want to go where the buyers are to sell their items. Buyers can also find anything they are interested in on eBay due to the vast selection of items. eBay has an edge over other auction sites because it worked hard to build a community. Buyers and sellers are easily able to communicate with each other and share ratings and opinions and the recent acquisition of Skype has made that even easier.

Online business is the next logical step for businesses in today's economy. Thousands of businesses are going online as a way of increasing sales and profits. Online auctions provide exposure to new markets and new opportunities to gain the attention of buyers. This really helps small companies to get on an even playing field with larger companies. Online auctions can also be a powerful tool for customer acquisition and customer retention. The acquistion costs of these customers is very minimal which is a huge cost saving benefit to companies. Also, all of the bidders in the auction are potential future customers. They can provide a significant amount of marketing data such as their demographics, willingness to pay, and their interest in a particular product. eBay also requires no marketing or advertising costs. Online auctions can also be a promotional tool for any business. People viewing the website will most likely return again another time to purchase something else. Online auctions also help new customers from around the world access your products. Since eBay is the worlds largest online marketplace and there are millions of people online at any given time companies are gaining a huge client base at very low acquisition costs. It has been estimated that 90% of eBay users are buyers, rather than sellers. Another benefit is that you can reach these products from virtually anywhere you can find a computer. Buyers are not required to leave the comfort of their own homes in order to buy something. So even in a snowstorm when most people wouldn't leave their house to go to the store to buy something, businesses can still be profitable because people don't have