What Makes EBay So Successful?
Here are some thoughts on eBay’s success. Perhaps some of you may find some of this helpful in terms of your own ecommerce and home business sucess.
EBay’s success is based on its ability to transform many fragmented, primarily local markets into global ones at a relatively low cost to its users. People have always had a need and an interest in buying and selling used, surplus, and collectible items. Traditionally, they have done so through garage sales, classified advertising in local newspapers, and flea markets. However, the number of people available to complete a transaction was limited because a face-to-face meeting was typically required.
I think there is potential gold in the sentence marked in bold (gold in the bold).
For a price comparable to advertising an item in the classifieds section of their local newspaper with three or four lines of text, users can post lengthy descriptions and pictures available to a worldwide audience. Concerns about fraud have been mitigated through a user feedback system escrow services. The company’s ability to bring a large number of buyers and sellers together is what has driven its growth. The more buyers there are, the more sellers want to participate. Conversely, the more sellers there are, the more items are to buy, and the greater the attraction of the service to buyers. EBay has allowed many people to become entrepreneurs with little upfront expense or overhead and provides a method for companies and even governments to dispose of unwanted items.
I think there is a lot to be said for building up from a local market. It is potentially easier to establish trust locally.
The recent downturn in the economy which crushed so many dot-coms ironically worked in eBay’s favor. People who were laid off started businesses selling on eBay, and many people were interested in getting a deal even if it meant purchasing a used item. Also, collectibles markets have thrived by making it easier for buyers and sellers to find one another. However, prices have sometimes been affected as items that were once thought to be rare have turned out not to be. Companies have also found it attractive to purchase industrial items online at steep discounts to conventional channels.
Well, this describes me to some extent. If the conventional economy is unreliabe, then let us take hold of the reins and pull us up off the grid by our own bootstraps, as it were. Here, however, we can actually undercut eBay, which has grown too expensive.
EBay makes money by charging listing fees and collecting a percentage of the selling price of items sold through the site. EBay also owns PayPal, which makes money through investing its clients’ assets and from transaction fees. EBay’s growth has been remarkable. “In 1998, its gross merchandise sales — the total value of all transactions — were $700,000. In 2000, at the height of dot-comm mania, they hit $5.4 billion. This year [2003]? The number should pass $20 billion.”Over 86 million people are eBay users.
There is a lot to learn here. If we run our own ecommerce businesses, or micro businesses out of the want ads, we do not pay the eBay fees. The bigger we become, the more we make, the more we save by not using eBay.
EBay appears to have significant growth potential. It has successfully introduced new markets, such as car sales, which many thought would not be adaptable to its business model. Also, only a small percentage of the world’s population currently uses eBay. Fundamentally, it is so successful because it meets its customer’s needs better than any competing service. No one else has accumulated such a large number of buyers and sellers in a single marketplace.
EBay is potentially great for research for those of us doing ecommerce and other micro business solutions.
take a video tour of another great online source for research and wholesale product sourcing!
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