U.S.-based eBay, which launched in 1995 during the earliest days of the first Internet boom, has become a world leader in e-commerce, thanks to its close-knit community of individual sellers. EBay currently conducts operations in 30 different countries (such as Canada, United Kingdom, Germany and Japan) of which one is unfortunately not China. However, knowing how you just never know which way things will end up, I did my research on this auction giant to play with the thought of them actually landing to the Chinese market. Enjoy.
Unlike other e-commerce platforms, eBay is unique for its focus on the small, individual seller who may be selling anything from small collectible items to concert tickets. In fact, a commonly told story about eBay is that the site was started to sell items like small Pez candy dispensers and laser pointers.
Given this emphasis on the individual seller rather than well-recognized merchants, and on quirky, highly individualized products, eBay enforces strict quality guidelines on its site and makes seller ratings a key part of any transaction. The idea, of course, is that the best eBay sellers will also make the most money. Meanwhile, eBay can avoid the problems of seller disputes and unhappy buyers while collecting transaction fees and listing fees along the way.
Currently, eBay offers goods in a number of traditional categories that are found on any e-commerce platform, including fashion, electronics, collectibles & art, home & garden, sporting goods, and toys & hobbies. Once you click through to the category, it’s possible to filter through specific items, by buyer, price point or other variable.
The auction sale format on eBay, in which sellers indicate the lowest price they are willing to sell an item and then set a timeframe for people to bid on their goods, was highly unique when it appeared at the time. For that reason, economists have studied eBay for insights into the ways that different bidding mechanisms can attract the highest price for an item.
One other competitive advantage of eBay from its early days was its unique relationship with online payment service PayPal, which evolved into the currency of choice for eBay sellers. That relationship formally ended in July 2015, when eBay and PayPal became separate, independent companies. While there are no services within the Chinese mainland, I had a close look at what eBay in Japan had to offer. With an English language interface, it was easy to get to grips on the offerings and my observations were proven to be true up to great lengths.
Going forward, look for eBay to diversify both the items for sale on the site as well as the payment mechanisms for buying and selling. For example, the online auction format now includes the highly popular Buy It Now feature, which enables sellers to establish a price that they’d be willing to sell an item without the need to wait for an auction to end.
Another goal will be the continued international diversification of eBay, especially to the world’s most popular consumer markets. There have been missteps along the way, however. For example, an initial foray into China (2002-2007) turned out to be unsuccessful due to the rise of rival Chinese platform TaoBao. Now that many Asian markets are creating their own homegrown e-commerce champions, it will become harder for eBay to look for growth in Asia.
In many ways, though, the future growth of eBay is only constrained by the creativity of sellers and the seemingly unlimited supply of goods that can be traded for in the secondary market. Just about everyone has his or her favorite eBay story, recounting a unique item that amazingly sold on the site in a matter of hours or days.