The Birth of eBay
The founder of eBay, Pierre Omidyar, had interest in coming up with a platform that would give potential customers an equal opportunity when it comes to accessing information regarding a product. For this reason, eBay unlike other companies that have tried to run their operations offline would begin transactions without any trial. In 1995, Omidyar came up with eBay and had the company base its headquarters in San Jose (Ackley \ Aparo, 2016). It is important to note that after two years, the company managed to become the largest online market. Moreover, there was the need for more personnel to conduct the daily operations of the company. Therefore, in 1998, the company hired Meg Whitman as the Chief Executive Officer and president of eBay (Einav et al., 2014). The CEO hat the responsibility to ensure that eBay had long-term goals that would drive the growth and development of the organization.
The First Item on Sale
The first item to go on sale on eBay was a laser printer that Omidyar had specified was broken (Gomes-Casseres, 2001). Upon receiving a winning bidder, Omidyar contacted to confirm if the buyer was aware of the condition of the printer and he admitted. Therefore, the customer was satisfied with the services offered by the company which over time attracted more people. On the other hand, the availability of perfect information to the buyers has seen eBay benefit from the online platform.
Expansion and Acquisition
There was a big market for car auctions in the United States during the time and Meg Whitman considered this an opportunity for eBay to acquire a significant share in the auction industry. However, eBay did not have a financial muscle that would allow the company to acquire only fixed assets. In particular, eBay was valued at $8 million in 1998 that took the form of property, plant, and equipment (Comberg \ Velamuri, 2017). It is important to note that in a move to improve the profit margin of the company, there was the need to adopt a fixed cost structure. On the other hand, eBay was undergoing the rapid expansion that resulted in the business outgrowing itself. The available option was for the company carrying out acquisitions that would be financed by the sale of high-end commodities. Subsequently, the revenues earned would help fiancé capital projects being undertaken by eBay. Similarly, eBay could decide to look for investors that had interest in higher returns (Einav et al., 2014). Hence, Whitman sought both options as this would ensure there were no shortages as they were a huge cost to the company.
Diversification and Innovation
eBay over time expanded and had cell phones, travel services, consumer electronics, real estate, dolls, music equipment, and real estate services coming under its flagship (Splichal, 2015). The company gave the sellers the opportunity to offer fixed prices or opening bidding auctions to the potential buyers. Moreover, eBay saw the need to give tips on how sellers can make the most out of a sale. Apart from operating an online market, the company diversified to advertisements and classifieds, making payments, and communication services through voice and video channels. In 2002, eBay acquired PayPal which is a company that makes the transfer of payments easier and in a secure manner (Comberg \ Velamuri, 2017). For this reason, eBay managed to use its state of the art proprietary fraud-prevention systems to enable millions of online users to send and receive payments for the goods and services offered to them on and off their website.
Further Expansions and Achievements
In 2005, eBay made an acquisition of Shopping.com which is a website that sells a myriad of products to customers and merchants across the globe. In the same year, eBay finalized its purchase of an apartment advertising website that carried out its operations within the United States known as Rent.com. It is important to note that at the time of purchase of Rent.com, the website was advertising over 20,000 properties that were spread across the United States (Ackley \ Aparo, 2016). Therefore, eBay was in a position to venture into the market that dealt with apartment-related information such as roommate search, house availability, and rental rates. In a move to share market information in different regions, eBay has in the past years acquired classified websites such as Gumtree.com, mobile.de, and LoQUo.com among others. eBay also has a minority controlling interest in craiglist.com which has recently been one of the leading classified websites. The primary reason for eBay providing online services around the world is to allow the company to take advantage of the endless innovations and opportunities that exist. The latest service offered by eBay is eBay Express that allows specific items to be purchased from different sellers (Ackley \ Aparo, 2016). Similarly, there is eBay Community Wiki and eBay Blogs that are important resources when it comes to reviews and guides of previous purchases (Schiborr, 2016). Lastly, there is eBay Mobile that offers an online platform for text messages. Hence, the company has ventured into channels that will ensure it will remain competitive in the future.
Achievements and Future Prospects
In 2008, eBay managed to emerge the overall winner of the National Technology and Innovation Medal. The medal was to commemorate the evolution of technology and innovation in the company. In 2014, Devin Wenig became the Chief Executive Officer of PayPal. Despite the expansion that eBay had undergone through, the company decided that it would be a separate entity from PayPal in 2015. Since PayPal had served as the main payment processing channel for eBay, the company adopted other payment methods as there were countries that did not offer PayPal services (Schiborr, 2016). The company celebrated its 20th anniversary in 2015 as the leading online auction company. As a way to accommodate virtual reality in the organization, eBay purchased the ExpertMaker in 2016 as the firm was popular for its technological innovations (Comberg \ Velamuri, 2017). Therefore, with the ExpertMaker onboard, eBay saw this as the best opportunity to improve the online shopping experience for its customers.
Conclusion
In conclusion, the acquisitions made by eBay in the past have contributed to the company offering exemplary services to its customers. Moreover, it is through such investments that the company will be in a position to improve their financial statements and remain competitive in the market. On the other hand, the potential investors that have worked with eBay have seen the company undergo transformation and attract online users with a personal trading motive. Potential rivals such as Amazon have over the past years given eBay stiff competition. Equally, eBay has provided a number of opportunities to various businesses and individuals who consider selling on the website as their source of income. Unlike other businesses that fail in the process of setting up their customer base, eBay took advantage of company acquisitions that made it possible create a central location where individuals could sell their items. Besides, the company has over the years managed to successfully curb fraud and thereby achieving customer satisfaction.
References
Ackley, M., " Aparo, J. (2016). U.S. Patent No. 9,390,449. Washington, DC: U.S. Patent and Trademark Office.
Comberg, C., " Velamuri, V. K. (2017). The introduction of a competing business model: the case of eBay. International Journal of Technology Management, 73(1-3), 39-64.
Einav, L., Levin, J., Popov, I., " Sundaresan, N. (2014). Growth, adoption, and use of mobile E-commerce. American Economic Review, 104(5), 489-94.
Gomes-Casseres, B. (2001). The history of eBay. International Economics and Finance, 1(1), 1-2.
Schiborr, L. A. (2016). How to emerge as a digital platform leader?: Envelopment and business model innovation at eBay and Amazon (2006-2011) (Bachelor's thesis, University of Twente).
Splichal, C. S. (2015). Recent Development: Craigslist and the CFAA: The Untold Story. Fla. L. Rev., 67, 1845.
