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In Our Words / Article

eBay 101: Using the World’s Largest Auction House for Fun and Profit

Part 1: About eBay

By Justin Laby, Co-founder, Mouko, LLC

On Labor Day, 1994, Pierre Omidyar launched the first version of eBay, which was originally called AuctionWeb [1]. In just the few years since then, eBay (short for “Echo Bay,” the founder’s company) has evolved into something much more than a simple online auction house: it is a phenomenon.

The founder refers to eBay as, “a grand experiment in Internet Commerce” on the company’s introductory web site [2]. Even this is an understatement, as almost 200 million people around the world are counted among its members [3], of whom more than 750 thousand make a full- or part-time living selling items on its pages [4].

At the turn of the millenium, when so many information technology companies (particularly web-based companies) were throwing in the towel, eBay not only weathered the storm, but steadily increased profits [5]. In 2001, eBay acquired three Latin American auction houses, Mercado Libre, Lokau and iBazar and over the past few years has further pursued the global expansion of its business, either buying or working toward the acquisition of several Chinese, Korean, Indian, and European auction houses [1].

In 2002, eBay acquired PayPal, Inc., enabling members to pay for items easily; it acquired internet telephony company Skype in 2005, enabling buyers and sellers to communicate over the internet using both audio and video. Among all these acquisitions, eBay generated more than $4.55 billion in revenue in 2005 [1] and is listed by Standard & Poors as a “Strong Buy” as of December 2006.

Why is eBay so popular? Why is it so profitable? I will explain more in the next article.

Reference

  1. Wikipedia

  2. Letter from eBay’s Founder

  3. eBay Inc. Announces

  4. “You Know You Have an eBay Business When…”

  5. Standard & Poor’s Stock Report, December 15, 2006 (Available at Ameritrade.com)