eBay.com is an online auction and shopping website in which people and businesses buy and sell goods and services worldwide. Launched in 1995, eBay started as a place to trade collectables and hard-to-find items. Today, eBay is a global marketplace where businesses and individuals can buy and sell practically anything. Apart from it's original website in USA, eBay also has established localized websites in several other countries such United Kingdom, Hong Kong and Singapore.
eBay brings together millions of people every day on a local, national and international basis through an array of websites that focus on commerce, payments and communications. eBay creates a powerful online platform for the sale of goods and services by a passionate community of individuals and small businesses. You can buy practically anything at great prices. Whether you're looking for the latest electronics, designer fashion, rare antiques, your favourite toy, furniture for your home or even a new car, eBay has something for you. Making money on eBay is simple. There are tons of reasons why millions of people just like you sell and buy on eBay everyday. With internet access and a few mouse clicks, one can shop, view, bid and make purchases on items worldwide, 24/7. In other words, ebay practically brings online shopping right to your home. Quoting from eBay's slogan, “what ever it is, you can get it on eBay, and shop victoriously.”
eBay uses online auction, consumer-to-consumer (C2C) business model, which involves electronically facilitating transactions between consumers. It allows a consumer to post an item for sale and other consumers to bid to purchase it. eBay provides intermediation to match consumers with different needs. On any given day, there are millions of items available through the auction website. eBay offers several types of auctions:
● Auction-style
● Fixed price
● Dutch auction
Auction-style listings allow the seller to offer one or more items for sale for a specified duration. The seller may also choose to set a reserve price. A reserve price is the minimum acceptable bid in an auction. If no bidder submits a bid above the reserve price, the auctioneer keeps the item offered for sale.
Fixed price format allows the seller to offer one or more items for sale at a 'Buy It Now' price. Buyers who agree to pay at the 'Buy It Now' price win the auction immediately without submitting a bid.
Dutch auctions allow the seller to offer two or more identical items in the same auction. Bidders can bid for any number from one item up to the total number offered.
There are many ways one can pay for purchases on eBay. Different sellers may offer different payment methods and some methods offer more purchase protection than others. eBay prohibits the use of instant cash transfer services such as Western Union or Moneygram.
Other various payment methods acceptable in eBay include:
● PayPal
● Bank Deposit
● Money Order
● Cheque
● Credit Card
● Cash On Delivery (COD)
● Cash Wire Transfer (not recommended)
PayPal, a subsidiary of eBay Inc. which also owns eBay.com, is an e-commerce business allowing payments and money transfers to be made through the Internet. It serves as an electronic alternative to traditional paper methods such as cheques and money orders. PayPal enables any individual or business with an email address to securely, easily and quickly send and receive payments online. PayPal's service builds on the existing financial infrastructure of bank accounts and credit cards and uses the world's most advanced proprietary fraud prevention systems to create a safe payment solution. A global leader in online payment solutions, PayPal has tens of millions of registered accounts and is accepted by millions of merchants worldwide, on and off eBay.To start buying, one has to register for free with eBay. An email account is required to complete the registration. Upon registration, buyer can start by browsing through the categories to see what eBay has to offer. If the buyer is looking for something specific, he/she can simply type keywords into the search box by providing the best description for the item. There is also an advanced search option. The eBay search engine allows the buyer to make an auction search locally or globally for international sellers.
Upon clicking on the search items, buyer can view descriptions and details of the item. Buyer are advised to take note of the accepted payments methods, postage costs and return policy specified by the seller. Should there any enquires, buyer can also submit questions directed to the seller.
Clicking on the numbers in brackets next to the seller ID allows the buyer to view the seller's eBay ratings & feedbacks. These are feedbacks from past transactions submitted by past buyers regarding the seller's reliability, product quality and level of service.
To bid, buyer simply enter the highest price he/she is prepared to pay for the item and eBay's proxy bidding system will bid on his/her behalf, only as much as is needed for him/her to stay the highest bidder. Another option is to 'Buy It Now', which allows the buyer to buy the item instantly at that price stated by the seller. The auction closes immediately and there's no bidding involved. After winning an item, the buyer is usually contacted by the seller regarding the payment details. The seller will only send out the item upon receiving the payment.
Once the buyer received the item, he/she is advised leave the seller a rating and feedbacks, be it positive or negative. Being truthful and honest on the ratings and feedbacks helps to build on a better feedback system on eBay, as these information will serve future potential buyers in assessing the credentials of the seller.
Likewise to a buyer, a seller has to register with eBay before commencing sales. Credit/debit card details are required for verification in this case. Next, the seller has to decide on the auction format, item category, title, item description, auction duration, item photos. Seller may do a search on similar item for reference on how other sellers list their items. The seller will then price the item and includes payments and postage details.
This online auction business model which eBay uses brings along great strengths and strategic advantages. Some of these strengths and advantages could include:
● No time constraint
Bids can be placed at any time, 24/7. Items are listed for a number of days, giving bidders time to search, decide, and bid. This convenience increases the number of bidders.
● No geographical constraints
Sellers and bidders can participate from anywhere that has internet access. This makes them more accessible and reduces the cost of "attending" an auction. This increases the number of listed items, and the number of bids for each item. The items do not need to be shipped to a central location, reducing costs, and reducing the seller's minimum acceptable price.
● Intensity of social interactions
The social interactions involved in the bidding process are very similar to gambling. The bidders wait in anticipation hoping they will 'win' (eBay calls the successful bidder the 'winner'). Much like gambling addiction, some bidders may bid primarily to 'play the game' rather than to obtain products or services. This creates a highly loyal customer segment for eBay.
● Large number of bidders
Because of the potential for a relatively low price, the broad scope of products and services available, the ease of access, and the social benefits of the auction process, there are a large numbers of bidders.
● Large number of sellers
Because of the large number of bidders, the potential for a relatively high price, reduced selling costs, and ease of access, there are a large number of sellers.
● Network economies
The large number of bidders will encourage more sellers, which, in turn, will encourage more bidders, which will encourage more sellers, etc., in a virtuous circle. The more the circle operates, the larger the system becomes, and the more valuable the business model becomes for all participants.
● Captures consumers' surplus
Auctions are a form of first degree price discrimination. As such, they attempt to convert part of the consumers' surplus (defined as the area above the market price line but below the firm's demand curve) into producers' surplus. Online auctions are efficient enough forms of price discrimination that they are able to do this.
Unlike conventional brick and mortar setups, buyer doesn't have a physical 'feel' of the item only until its arrival. Not everyone is willing to make purchases based on just looking at photos and pictures.
A commonly known weakness of eBay is in its feedback system. Published on its own policy pages, eBay acknowledges weaknesses in its feedback system noting several of the below points.
● Small and large transactions carry the same weight in the feedback summary. It is therefore easy for a dishonest user to initially build up a deceptive positive rating by buying or selling a number of very low value items, such as e-books, recipes, etc., then subsequently switching to fraud.
● A user may be reluctant to leave honest feedback out of fear of negative retaliatory feedback (including "negative" in retaliation for "neutral").
● Users and generators of feedback may have different ideas about what it means. eBay offers virtually no guidelines.
● Feedback and responses to feedback are allotted only 80 characters each. This can prevent users from being able to fully list valid complaints.
● Although eBay protects sellers from getting a negative feedback from a deadbeat buyer when the deadbeat buyer/bidder did not respond to 'Unpaid Item dispute', they do not offer the same protection for a buyer who gets a deadbeat seller.
When a user feels that a seller or buyer has been dishonest, he/she can however file a dispute with eBay. An eBay account (whether seller, buyer or both) may be suspended if there are too many complaints against the account holder.
Like many other electronic commerce companies, eBay also faces the problems of frauds. Many complaints have been made about eBay's system of dealing with fraud. The complaints are generally that eBay sometimes fails to respond when a claim is made. And since eBay makes its money on commissions from listings and sales it may not be in eBay's interest to take action against large sellers.
In the context of an auction, fraud actions may be carried out by either the sellers or the buyers.
Frauds that can be committed by sellers include:
● Receiving payment and not shipping merchandise
● Shipping items other than those described
● Giving a deliberately misleading description
● Knowingly and deliberately shipping faulty merchandise
● Counterfeit or bootleg merchandise
● Knowingly selling stolen goods
● Inflating total bid amounts by bidding on their own auction with 'shill' account(s), either the seller under an alternate account or another person in collusion with the seller. Shill bidding is prohibited by eBay.
Frauds committed by buyers include:
● PayPal fraud: Filing false shipping damage claim with the shipping company and with PayPal.
● Credit card fraud, in the form of both stolen credit cards and fraudulent chargebacks.
● Receiving merchandise and claiming otherwise
● Returning items other than received
● The buyer sends a forged payment-service e-mail which states that the buyer has made a payment to the seller's account. An unsuspecting seller may ship the item before realizing the e-mail was forged.
One way of combatting fraud is through engaging third party businesses, such as CheckMEND, who are compiling lists of stolen goods from local authorities and businesses so eBay consumers can check to see whether the goods they are buying are stolen.
With the success of eBay, many new auction websites were seen popping up, hoping to grab a piece of the pie. There are many eBay competitors, we have listed down some:
● uBid
● Bidz.com
● Yahoo! Auctions
● Amazon Auctions
● Auction Addict
● Auction - Warehouse
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