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Ebay page.png
eBay Logo [5]
Type E-commerce
Launch Date 1995
Status Active
Product Line Consumer Goods
Platform iOS App
Website [site http://www.ebay.com/]
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is an online auction and shopping environment where people can buy and sell a variety of items worldwide. It was founded in 1995 with the intention of connecting a diverse and passionate community of individual buyers, sellers, and small business owners. Both new and used items are available for purchase through auction or more directly with the "Buy it now" feature. A wide variety of items are available in many different categories including fashion, motors, and electronics. Because of eBay's relatively hands-off approach moderating auctions, there have been several instances of copyright infringement as well as trademark infringement violations, adding a new dimension to the ethical debate on copyright. As of May 2015, eBay was valued at about $68.9 billion. [1]
eBay's homepage.


eBay was founded in San Jose, in Pierre Omidyar's living room in September 1995. Omidyar wanted to create a marketplace for the sale of goods and services for individuals. He created a site called "AuctionWeb", on his home computer. The first item ever sold was Omidyar's broken laser pointer, which sold for $14.83. [2]This sale confirmed Omidyar's belief that he could create a successful auction site. Later in the year, he hired Chris Agarpao as his first employee to manage the site's operations. By forging partnerships with name brands such as GM, Disney and Sun, eBay has managed to continue growing and being successful. [3] As of 2010 the total value of goods sold on eBay was $62 Billion or about $2000 every second.

In 1996, Omidyar hired Jeff Skoll and quit his job at General Magic. By the end of 1996, the site had approximately 41,000 users and had a gross merchandise volume of $7.2 million.

In 1997, AuctionWeb officially became eBay and held more than 200,000 monthly auctions. Also in this year, feedback stars are created in order to give sellers a rating that buyers can use to judge whether they trust the seller or not. By the end of this year, the site had approximately 341,000 users and had a gross merchandise volume of $95 million.

In 1998, Pierre and his cofounder Jeff Skoll brought in Meg Whitman to sustain the success. Meg had studied at the Harvard Business School and had learned the importance of branding at companies such as Hasbro. Meg culled her senior staff from companies such as Pepsico and Disney, created an experienced management team with an average of 20 years of business experience and built a strong vision for the company -- that eBay is a company that is in the business of connecting people, not selling them things. They quickly shed the image of only auctioning collectibles and moved into an array of upscale markets. Also in this year, eBay created the eBay Foundation in order to help several national charities. In September, eBay listed shares on NASDAQ, showing the decision for the company to go public. By the end of 1998, customers now had access to the "My eBay" page and the company had 2.1 million users and a gross merchandise volume of $700 million.

In 1999, the first international eBay sites hit the internet in Australia, United Kingdom, and Germany.

By 2000, eBay became the top e-commerce site in the world and introduced more international sites in Taiwan, Austria, Canada, and France.

In 2008, eBay released their iPhone app to allow users to have an efficient way of using their site while using their mobile phone.

In 2009, eBay retains 30% of Skype after selling it to investors.

In 2010, Garden is debuted allow proactive users to try out new site innovations before they are published.

In 2011, Ethisphere Institure considered eBay one of the the most ethical companies in the world. eBay also introduces X.commerce, the world’s first open commerce ecosystem.[4]


In 2002, 33% of China's e-commerce site EachNet was acquired by eBay. In 2004, eBay acquired the Netherlands's Marktplaats.nl, India's Baazee.com, and Germany's mobile.de. In 2005, eBay acquired advertising site, Gumtree, communications company, Skype, and Shopping.com. eBay acquire's Sweden's Tradera. In 2007, eBay aquires StubHub. In 2008, eBay aquires Bill Me Later, Den Bla Avis, and BilBasen. In 2009, eBay creates dailydeal and acquires Korea's Gmarket. In 2010, eBay acquires Milo.com and Critical Path. In 2011, Germany's brands4friends is aqcuired along with gsi commerce, Magneto and Hunch. It also acquired most of the shares of GittiGidyor.[5]

Types of Listings

There are a few main types of auctions that are available to buyers and sellers:

  • Auction-style listings: The seller sets the starting price, and potential buyers are able to bid up until the end of the auction. The bidder with the highest bid will win the item, paying the second highest bid (eBay uses a Second Price auction system). Sellers are also able to impose a reserve price, which is a price that needs to be reached in order for the item to sell.
  • Fixed-price listings: A seller may choose to make a "Buy it Now" price, in which the buyer pays the fixed price and the auction ends immediately.
  • Auction-style with fixed-price option: Auctions typically run for several days. This option allows a buyer to "Buy it Now" in order to immediately end the auction, this option is taken away when the first bid is placed, however. Once the first bid is placed, it continues for the duration of the auction period in the auction style.
  • Fixed-price listings with best offer: A seller may choose to add a "Best Offer" option along with the "Buy it Now" price. The seller has the opportunity to review potential buyers' offers before selling the item and ending the auction.

Prohibited and Restricted Items

Under the Rules & Policies section on ebay's website, they have a tab entitled Prohibited and Restricted Items. Amongst the fifty-plus types of items named, each item is linked to a page describing the particular reasoning for why it cannot be sold and/or if there are particular specifications of how it can be sold. Some examples of the prohibited items are drugs and drug paraphernalia, firearms, weapons, knives, human remains and body parts, and prescription medications. Less evident items are also listed, such as used clothing, use cosmetics, and gift cards. However, upon clicking on these items ebay goes on to explain that only certain forms of these items are prohibited and explains which types and why. Under the Prohibited and Restricted Items tab, ebay also leaves instructions for users who believe they have identified an item that violates ebay's policies to notify ebay. This is done by clicking on the Report Item link on the listing. [6]

eBay Companies

eBay Classifieds

In June 2007, Kijiji.com, meaning "villiage" in Swahili, was created to serve as an online classifieds site. The name was later changed to eBay Classifieds to associate it with the success of eBay. In 2004, the site went international. Today, the site team is based in San Jose, California and is available in 272 areas in the United States. The site draws in unique site visits in the millions, monthly and has had over a billion views since the site's debut. Each month, more than 150,000 classifieds are posted by users across the world.[7]


Shopping.com Logo

Started with the name DealTime.com in 1998, eBay created Shopping.com in order to provide a price-comparison service for consumers. The site offers an abundant amount of products from top brands and online stores. In order to give users the best experience as possible, the site allows users to find the products they are looking for by using usable, time efficient, and engaging search tools. The site also features seller and product reviews by real customers of Shopping.com [8]


In 1999, Josh Kopelman and Sunny Balijepali created Half.com . In December 1999, in order to gain more notoriety for the site, the site paid $100,000 and 20 brand new computers to the town of Halfway, Oregon to change its name for a year to Half.com, Oregon. In 2000, eBay bought the company for approximately $350 million. At one time, eBay wanted to mesh Half.com into eBay.com, but ultimately decided against it.

Half.com sells books, movies, games, and music at a fixed priced, rather than at auction. If a posted item is sold, the seller must give a percentage commission to Half.com: 15%, 12.5%, 10%, 7.5% or 5% if the price is less than or equal to $50, $50 to $100, $100 to $250, $250 to $500, or $500+, respectively. The seller is solely responsible for the shipping of his/her item and must ship the item within three business days of the sale.


Paypal provide internet users a safe and fast platform to pay, transfer, get paid, and sell online. Founded in December 1998, PayPal.com gained its popularity through increasing trust by their customers and slowly became the international leading online payment company. With around 117 million active accounts in 190 markets and 25 currencies, PayPal made it possible for people to transfer money internationally without paying a huge amount of transaction fees. As one of the companies under eBay, PayPal acts as the main online payment website allowing online vendors and small business to process orders and other online transactions.


Founded in 2000, StubHub is a eBay company providing internet users to sell and buy a wide varieties of sport, theater, and concert tickets. With an additional Fan Service page, StubHub offers exclusive services for its customers including Fan Rewards, Price Alerts, Event Packages, Last Minute Services, Deals, and Friends Invite.


Customer Ratings

eBay feedback for sellers is shown here through detailed seller ratings. Sellers are graded based on their performance.

To determine the reliability of a seller, the buyer looks at the seller's rating, an indication of the reputation of a particular seller. Seller ratings are based on feedback provided by the buyer of an item based on several criteria. Starting price, communication skills, shipping cost, and handling time are a few factors that get taken into account when calculating seller ratings. Buyers leave feedback after transaction, on the basis of a positive, neutral, or negative experience. Furthermore, each individual category can get ranked from zero to five stars, five being the best and zero being the worst. Sellers can get different colored stars based on the number of positive ratings they have received, which shows potential buyers how reputable they are. You are able to be termed a "Power Seller" when you have a certain number of positive ratings, all above 4.5 stars. Buyers also receive ratings from sellers based on the quickness of payment, number of retracted bids, etc. While buyer ratings do not prevent sellers from selling a user their items, the feedback is calculated into one average rating, independent of whether a user was a buyer or a seller. Buyers typically are extremely cautious about purchasing an item from a seller with a low rating because of lack of consistency. It is in this way that eBay creates a sense of collective knowledge and community. Members receive +1 point for each positive rating, 0 points for each neutral rating, -1 point for each negative rating. eBay has implemented a star-rating system representing total points ranging from a yellow star (for a feedback score between 10-49) to a silver shooting star for a rating over 1,000,000.[9]


PayPal is the leading payment processor on the internet.

PayPal is a system that allows for electronic transfers of money and payments across the Internet. In 2002, eBay acquired PayPal for $1.5 billion dollars. For most transactions on eBay, PayPal acts as a third party between the buyer and seller that holds the payment from the buyer until the buyer receives the merchandise from the seller. PayPal has quickly become the payment method of choice among eBay users because of the security it offers. With the help of PayPal, eBay has implemented a number of payment safety features to ensure that customers on eBay are not taken advantage of. Using their proprietary fraud technology, PayPal automatically flags transactions that it thinks are suspicious. If a buyer on eBay pays with PayPal and is scammed or taken advantage by another user, PayPal often reimburses the buyer.

Ethical Implications

Counterfeit Products

Some of the ethical issues on eBay include the buying and selling of counterfeit and pirated items, online identity theft, buyers not paying for items that they win, and sellers not sending items that a buyer has paid for. "The selling of pirated and counterfeit items is a big problem on eBay, particularly regarding computer products, collectibles, and designer watches, jewelry and clothing." [10] It is very difficult for a buyer to gain insights on a seller's background information when it comes to trusting whether they will provide them with good service. A rating can be easily manipulated and a buyer can be screwed over if the seller creates a profile that is an inaccurate depiction of who they are. In recent years, eBay has implemented rules and a solution system to solve many of these problems, but it is impossible to control the exchange of counterfeit goods, especially when some buyers are unaware of particularities of brands that make them legitimate product. Sellers of fake product usually sell the items at slightly under normal retail value to move the product but also create immense profit. Some Internet users do not feel comfortable buying or selling on eBay because of the aforementioned reasons.

False Item Description

Often times sellers on eBay will falsify or embellish item descriptions. Common examples include stating an item is brand new when it is in fact used, or selling counterfeit products as real. Furthermore pictures may not be representative of the actual item. In recent years, eBay has tried to crack down on false items descriptions by allowing users to report sellers and by auditing auctions randomly. eBay provides a Help Center for its users which includes information on how to look out for fake items and false item descriptions by sellers. [3]


Registered users on eBay can create their own usernames and passwords. Credit card information, as well as bank account numbers are stored by eBay. When you purchase an item on eBay, you must provide a shipping address and agree to a payment method with the seller. In 2003, eBay experienced issues regarding privacy issues. The problem was eBay's "two-tiered" privacy system. When one looked deeper into the fine print surrounding the privacy policy, it was found that the policy states that eBay will turn over a user's private information at its own discretion and "without a warrant or subpoena." A warrant or subpoena would constitute as informational friction in the way Luciano Floridi defines it and, since informational friction is lacking, Ebay does not provide its users with true informational privacy or, "the freedom from informational interference or intrusion, achieved thanks to a restriction on facts about her that are unknown or unknowable" [11]. Ebay was also accused of not telling its customers that their e-mail addresses might be used by other websites to spam them. Ebay also admitted that "despite efforts to protect data online at the Web site, there is a substantial risk to any private and financial information registered on eBay."[12]


Another ethical issue in eBay environment is when users leave negative feedback for a seller and negatively affect a sellers rating. This is known as feedback abuse and brings about an issue that is created because of the online anonymity which eBay as a store provides. Feedback is a key tool in creating a positive name for a user in the online environment. When that reputation is tarnished by negative feedback, buyers will often refrain from purchasing items from that seller. Leaving negative or neutral feedback is a large issue as eBay may actually restrict a seller's ability to sell items. Also, eBay users have sued for libel and defamation due to comments left when leaving feedback. eBay suggests using factual information when leaving feedback to avoid these issues. [13]

Some users threaten sellers with negative feedback to force them to offer discounts, payment for taxes/duties or free items. Sellers have to comply or suffer negative feedback. Although feedback extortion is against eBay's policies and it can be reported, there have been many cases where eBay still sides with the buyer. [14] [15] Sellers also can no longer retaliate and leave buyers negative feedback; they only have the option of leaving positive feedback or no feedback.[16]

While on the other hand, there exist issues about sellers threatening customers to cancel their negative feedbacks. Sometimes when the buyers gave fairly negative feedbacks due to the inferior condition of the goods or the misleading descriptions provided, to hide the facts and to avoid further unfavorable impacts, the sellers would threaten and force the buyers to remove their feedbacks by different ways such as repeatedly sending harassing calls, threatening to leak out their personal information, or intentionally reporting the buyers to the website. Oftentimes, the customers had no options but bend to the sellers to remove their feedbacks because they didn’t want their personal lives to be interrupted any more due to this one-time shopping experience and removing negative feedbacks actually would not hurt their interests. This became an inevitable issue for eBay and other shopping websites since it was difficult for the staff to figure out which side was believable solely based on the reports.

Shill bidding

Shill Bidding is major concern for buyers and against eBay's policies. Shill bidding is defined as when someone, usually someone the seller knows or the seller himself/herself, "bids on an item with the intent to artificially increase its price or desirability" [17] Sellers shill bid for a couple reasons. The most common reason is to raise the price in order to increase one's profit. Shill bidders argue that buyers are not harmed with shill bidding since it is their own decision whether or not to bid on the item at the price it is at. Another reason why sellers shill bid is to avoid eBay fees for setting reserves. Shill bidding is strictly prohibited at eBay.com[18], but they have recently criticized for not doing enough to stop the problem. Ebay themselves claim that they are doing what they can to combat the fraudulent bidding process. Brian Burke, senior director on eBay's trust and safety team, claims "We have a lot of back-end algorithms that look for account linking... It's pretty high risk for an [established] seller to shill bid because it's one strike and your out. As you can imagine, it's not something we tolerate."[19]


Sniping is a commonly practiced bidding tactic on eBay. Snipers, users who practice sniping, wait until the last minute or even couple seconds to place their maximum bid. Bidding extremely late is beneficial to buyers, as early bids are beneficial to sellers as they generate interest in the item. However sniping can unfavorably affect both the seller and buyers. For the seller, the item often sold at a lower price since there are less bids and usually less interest. Buyers do not appreciate sniping because it is not in the spirit of auctions. Also, bids placed by snipers often cannot be evaluated and countered by other buyers since little time left in remains in the auction. Sniping is not against eBay's policies and it actually recognized as "part of the eBay experience" [20] To counter sniping, auction time is often extended when a bid is placed. This system is common to many online auction sites.[21]


eBay Vigilantes have tried to take matters into there own hands by coming up with their own ways to fight against eBay criminals. "The most common tactics used by vigilantes are sending warning messages to bidders in what they believe is a scam auction, placing and then retracting a bid so they can warn others with a message that becomes part of the auction about why they retracted their bid, and creating a throw-away account so they can place winning bids and leave negative feedback without getting hurt by receiving negative feedback in return." [10]

Tiffany & Co. Lawsuit

Fake Tiffany jewelry being sold on eBay.

eBay has been in a number of legal battles but one of the more prevalent ones involved the sale of counterfeit Tiffany & Co. products on eBay. It has been a major issue of concern for Tiffany & Co, so they decided to take action. "Earlier this year, the famous jeweler secretly purchased about 200 items from eBay and inspected them for authenticity. Three-quarters were obvious fakes, Tiffany said. That's an erosion of brand equity that Tiffany just couldn't stomach. The jeweler filed suit." [22] This is a major legal battle for many online companies similarly handling merchandise from users, because the companies could use the precedence of this case to make a case for themselves. eBay has always used a "hands off" approach in governing their site, often arguing that "We are a marketplace. We are not a retailer. We don't own any of these products. We don't take possession of them." [22]

Automatic Bidding

There is an option on eBay to have the system bid for you. The program, aptly called Automatic Bidding, allows you to enter the highest amount you would want to pay for an item. Then, as others bid against you, the program will incrementally outbid them until the maximum price entered by the user is reached.[23] Many users have found the system to be unfair as they thought they had entered a winning bid but only moments later found out a computer program had raised the bid even higher. The feature takes away the auction aspect of eBay and becomes more of a silent auction system.

2014 Hack

In May of 2014, 145 million eBay accounts were hacked. Users personal data was accessed including names, addresses, account passwords, email addresses, phone numbers and birthdates. Millions of users changed their passwords in response to the hack but some were too little too late. Luckily PayPay, which includes payment information, was untouched by the hack because it is kept on a separate network.

Following Through

When the bidding is over and the winner has been decided upon the next step for the winner is to pay the seller for the product. For whatever reason sometimes the winner will never pay and the seller is forced to re-list the item. Sometimes the winning bidder will do this to see if the seller will accidentally send the item thinking the buyer will pay during the shipping process. It is hard for the buyer not to catch when their product is not being paid for, but it still happens occasionally on eBay. This leaves the seller in a bad place because the bids may have been really high the first time they list their product, but the next time there wont be a false buyer in the running to inflate the price of the product they don't have intentions to really pay for.

The Decline in Online Auctions & eBay

eBay brings millions of local buyers and sellers together online using second price auctions, where the highest bidder wins and pays the second-highest bid. However, with the rise of a greater number of specific, accessible online marketplaces, buyers now often express a dislike for haggling and negotiating. A 2014 survey of Edmunds.com found that 90% of survey respondents dislike haggling and prefer to arrive at a comparable price through posted price comparison. Ever since eBay introduced the 'Buy-it-now" feature in 2002, the increase in share of Buy-In-Now transaction volumes from 2005-2009 grew 33% while consumer's share for negotiating has dwindled.

External Links


  1. [1]
  2. [2]
  3. Gomes-Casseres,Ben (2001). “The History of eBay”
  4. http://www.ebayinc.com/history
  5. http://www.ebayinc.com/history
  6. Prohibited and Restricted Items
  7. [3]
  8. [4]
  9. Feedback scores, stars, and your reputation
  10. 10.0 10.1 Goldsborough, Reid (2003). “Fighting Back Against Online Auction Fraud - Personal Computing”
  11. Floridi, Luciano. The 4th Revolution: How the Infosphere Is Reshaping Human Reality. Oxford University Press, 2016
  12. http://www.computerworld.com/s/article/80571/Update_EBay_Amazon_hit_with_complaints_from_privacy_groups
  13. http://reviews.ebay.com/Removing-Negative-Feedback-on-Ebay?ugid=10000000012401440
  14. Steiner, Ina. eBay Allows Feedback Extortion. eCommerce Bytes. 2010-03-28. Retrieved 2011-12-18.
  15. Steiner, Ina. eBay Feedback Extortion Policy Redefines Extortion. eCommerce Bytes. 2010-08-28. Retrieved 2011-12-18.
  16. Hansell, Saul. "Sellers Give Negative Feedback on eBay Changes." The New York Times. 2008-01-29. Retrieved 2011-12-18.
  17. Shill bidding policy eBay Policy. Retrieved 2011-12-18.
  18. http://pages.ebay.com/help/policies/seller-shill-bidding.html
  19. http://www.theregister.co.uk/2009/07/10/ebay_and_shill_bidding/
  20. Getting outbid. eBay Policies. Retrieved 2011-12-18.
  21. https://support.flippa.com/entries/21899131-why-are-auctions-extended-near-the-end
  22. 22.0 22.1 Sullivan, Bob (2004). “EBay fights its toughest legal battle: Tiffany lawsuit puts 'hands off' approach to the test”. http://www.msnbc.msn.com/id/6030048/ns/technology_and_science-security/t/ebay-fights-its-toughest-legal-battle/#.Tu4rOiPuZ4U
  23. http://pages.ebay.com/help/buy/automatic-bidding.html