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Q: The eBay Business Model ( Answered 5 out of 5 stars,   0 Comments )
Subject: The eBay Business Model
Category: Business and Money > eCommerce
Asked by: iammar-ga
List Price: $35.70
Posted: 13 Apr 2005 04:03 PDT
Expires: 13 May 2005 04:03 PDT
Question ID: 508693
How does eBay gain profit and what security measures have they adopted
to keep their web site secure ?
Subject: Re: The eBay Business Model
Answered By: easterangel-ga on 13 Apr 2005 10:23 PDT
Rated:5 out of 5 stars
Hi! Thanks for the question.

I have found the following articles discussing the business model and
security measures taken by Ebay. I will provide small snippets from
the articles that directly answer your question but I highly recommend
that you read them in their entirety to get a better grasp of the


?eBay has both streamlined and globalized traditional person-to-person
trading, which has traditionally been conducted through such forms as
garage sales, collectibles shows, flea markets and more, with their
web interface. This facilitates easy exploration for buyers and
enables the sellers to immediately list an item for sale within
minutes of registering.?

?The History of eBay? 

?When an item is listed on eBay, a nonrefundable insertion fee is
charged based on the seller?s opening bid on the item.?

?Once the auction is completed, a final value fee is charged. This fee
generally ranges from 1.25 percent to 5 percent of the final sale

?The EBay Business Model?

?After eBay set up the system in which bids could be placed, items
could be put up for sale, transactions could be completed, seller fees
would be charged, and feedback could be left, eBay stayed in the
background. For example, at the end of an auction, eBay notifies the
buyer via e-mail that he or she has won. eBay also e-mails the seller
to report who won and at what price the auction finished. At that
point it?s up to the seller and buyer finish the transaction
independently of eBay.?

?eBay makes money by charging fees to sellers. Although it?s free to shop and
place bids, sellers place fees to list items for sale, add on
promotional features, and successfully complete transactions.?

?eBay?s Business Model?

?eBay has expanded and developed existing product categories by introducing
category-specific bulletin boards and chat rooms, integrating category-specific
content, advertising its service in targeted publications and
participating in targeted trade shows. eBay has also broadened the
range of products that it offers to facilitate trading on the site,
including payment services, shipping services, authentication,
appraisal, vehicle inspection and escrow services.?

?Specialty marketplaces have also been added to serve the specialized needs of
buyers and sellers. For example eBay Motors serves the automotive marketplace,
including vehicles, parts and accessories; and is focused on
providing a fixed-price trading environment, initially for books,
music, videos and video games.?

Datamonitor: EBay Report

?EBay uses a system called PayPal for sellers to receive online payments
securely and quickly. A traditional credit card is not required to use this site
because PayPal can be linked directly to you bank account. EBay has penetrated
several foreign markets and have strong sales in Germany and the U.K.
A branch of eBay, eBay Motors, is considered by some to be the largest
used car market in the world.?

Krause Fund Research: Ebay Report


Since this is a very touchy subject most of the contents of the answer
are general in nature. Plus since security concerns change overtime,
Ebay will have to battle different problems every year.

Our first article about Ebay security provides a good overview of what
Ebay has done to make the site secure.

?Visitors can browse through eBay?s website to view goods for sale.
Registration is required to submit bids or to sell goods. Registered
people can search through eBay?s listings by category labels or
keywords. A unique identifier assigned to each item helps users find
its description and auction location. Names of particular bidders or
sellers, what they offer for sale, and their feedback history are also
available. eBay encourages direct interaction between buyer and seller
and views it as a key advantage of the Internet and the eBay
experience. Bidders can access the seller?s email address and contact
seller for additional information about the merchandise.?
?eBay tracks the URL, browser software, and the IP address of
participants. It uses 'session' cookies and collects information about
bidding and selling behavior of individuals as well as feedback about
them from other users.?

?The company reserves the right to disclose information about a person to law
enforcement or other government officials, if necessary or appropriate for an
investigation of fraud, intellectual property infringements or other
illegal activities that may expose the company to liability. Similar
disclosures can be made to the Verified Rights Owner Program (VeRO)
run by eBay to assist investigations of suspected improper activity.?

?A feedback forum, an insurance program, and an escrow program are the
key mechanisms at eBay to deal with improper trading behavior. The
feedback forum is a distinctive feature of eBay. Upon completion of a
transaction, the successful buyer and seller are encouraged to record
feedback about their counter parties.?

?To protect its participants, eBay launched insurance (through Lloyds
of London) and escrow programs. The insurance program is designed to
protect buyers who send the money in good faith to the seller but do
not receive the goods or service.?

?Control and Assurance in E-Commerce: Privacy, Integrity, and Security at eBay?

Recently, Ebay has been battling a new kind of security problem.

?The online auction giant is working on a fix for the problem, and it
hopes to distribute that fix among its Web pages in the next several
days, a company representative said on Friday. The problem, described
by the company as a "software bug," could be exploited by criminals to
create an actual eBay link that redirects customers to a malicious
site, the representative said.?

?The company, based in San Jose, Calif., has repeatedly warned its
customers not to respond to such e-mails, and has even adopted a
messaging system to eliminate the need for most e-mail correspondence
with its registered members.?

?eBay scrambles to fix phishing bug? 

Search terms used: 
ebay ?business model? ?case study?security solutions filetype:pdf

I hope these links would help you in your research. Before rating this
answer, please ask for a clarification if you have a question or if
you would need further information.
Thanks for visiting us.                
Google Answers Researcher
iammar-ga rated this answer:5 out of 5 stars
i reall got to learn a lot frm this answer.

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