EBay
eBay Inc. is an American multinational e-commerce company based in San Jose, California, that allows users to buy or view items via retail sales through online marketplaces and websites in 190 markets worldwide. Sales occur either via online auctions or "buy it now" instant sales, and the company charges commissions to sellers upon sales. eBay was founded by Pierre Omidyar in September 1995. It has 132 million yearly active buyers worldwide and handled $73 billion in transactions in 2023, 48% of which were in the United States. In 2023, the company had a take rate of 13.81%. The company is listed on the Nasdaq Global Select Market and is a component of the S&P 500 and formerly the Nasdaq-100.
eBay can be used by individuals, companies and governments to purchase and sell almost any legal, non-controversial item. Buyers and sellers may rate and review each other after each transaction, resulting in a reputation system. The eBay service is accessible via websites and mobile apps. Software developers can create applications that integrate with eBay through the eBay API. Merchants can also earn commissions from affiliate marketing programs by eBay.
History
1990s
eBay was founded as AuctionWeb in California on September 3, 1995, by French-born Iranian-American computer programmer Pierre Omidyar as a hobby to make some extra money. One of the first items sold on AuctionWeb was a broken laser pointer for $14.83. Omidyar contacted the winning bidder to ask if he understood that the laser pointer was broken; the buyer explained: "I'm a collector of broken laser pointers."In February 1996, Omidyar's internet service provider informed him that he would need to upgrade to a business account due to the high web traffic of his website. The monthly price increase from $30 to $250 prompted Omidyar to obtain support from his mother's family. The website made $1,000 in its first month, which was more than it cost to run, and $2,500 in its second month. Chris Agarpao was eBay's first employee; he processed mailed check payments.
Jeffrey Skoll was hired as the first president of the company in early 1996. In November 1996, the company launched online auctions for airline seats, hotel rooms, cruise berths and other travel-related products in partnership with Electronic Travel Auctions. By that time, the company had hosted more than 200,000 online auctions since its founding 14 months earlier.
The company changed the name of its service from AuctionWeb to eBay in September 1997, after Echo Bay Technology Group, Omidyar's consulting firm. The echobay.com domain name was already registered by Echo Bay Mines, a gold mining company, so Omidyar shortened it to eBay.com. In 1997, the company received $6.7 million in venture capital funding from Benchmark.
The most purchased and sold items on the website were Beanie Babies, the most difficult toys to find in retail stores, accounting for 10% of all listings in 1997. Ty, the manufacturer, had set up a website whereby people could trade used Beanie Babies, but there was no way to sort the listings. Listing and purchasing from eBay became more popular with collectors.
Meg Whitman was appointed president and CEO in March 1998. At the time, the company had 30 employees, 500,000 users, and revenues of $4.7 million in the United States. In July 1998, eBay acquired Jump, the developer and operator of Up4Sale, an advertising-supported auction website which at the time had 27,000 separate auctions and 50,000 registered members.
In September 1998, during the dot-com bubble, eBay became a public company via an initial public offering led by CFO Gary F. Bengier, opening on NASDAQ at a price of $18 per share and closing on its first day at $53 per share. Upon the initial public offering, the company's market cap reached nearly $1.9 billion. In the risk factors section of the annual report filed with the U.S. Securities and Exchange Commission in 1998, Omidyar noted eBay's dependence on the continued strength of the Beanie Babies market.
2000s
In June 2000, eBay acquired Half.com for $312 million in stock. In 2000, eBay partnered with Escrow.com to handle escrow for purchases and sales of motor vehicles, later expanded to other transaction types. By year-end, it had 22.5 million registered users and 79.4 million auctions per quarter.In January 2001, eBay acquired a majority stake in Internet Auction Co. Ltd, operator of the largest internet auction website in South Korea. In February 2002, eBay acquired iBazar, a French online auction site founded in 1998, for approximately $112 million in stock.
eBay entered the Chinese market in 2002, and in February, exited Japan due to competition from Yahoo! Japan. eBay began operations in Taiwan with the acquisition of NeoCom Technology for $9.5 million. In June 2006, eBay turned over its operations in Taiwan to a joint venture partner.
eBay acquired PayPal on October 3, 2002, for $1.4 billion. It phased out its Billpoint payment service in January 2003.
On May 28, 2003, in the case of eBay Inc. v. MercExchange, L.L.C., which had implications for the treatment of business method patents, a United States district court jury found eBay guilty of willful patent infringement and ordered the company to pay $35 million in damages after MercExchange accused eBay of infringing on three patents, one of which is used in eBay's "Buy It Now" feature. The decision was appealed to the United States Court of Appeals for the Federal Circuit. The CAFC affirmed the judgment of willful infringement, and reversed the lower court and granted a permanent injunction. eBay appealed the permanent injunction to the Supreme Court of the United States, which on May 15, 2006, found an injunction is not required nor automatic in this or any patent case where guilt has been established. The case was sent back to the Virginia district court for consideration of the injunction and a trial on another MercExchange patent.
In 2003, eBay sought to develop its e-commerce business in China, acquiring the country's leading online auction platform and reaching an 85% market share. Within four years, the development of Alibaba's Taobao resulted in eBay's market share in China decreasing to 7.7%. eBay shut down its Chinese site in 2007.
In August 2004, eBay acquired 25% of the classified advertising website Craigslist from former Craigslist executive Phillip Knowlton for $32 million. In December 2004, eBay acquired Rent.com for $415 million.
In March 2005, eBay launched Kijiji, a classified advertising website, in international markets. It launched in the United States in July 2007. In May 2005, eBay acquired Gumtree, a classified advertising website in the United Kingdom. In October 2005, eBay Inc. acquired Skype Technologies for $2.6 billion.
ProStores, formerly known as Kurant StoreSense, was acquired and renamed by eBay Inc. by the end of 2005. ProStores offered users simple wizard-driven websites, e-commerce capabilities, site design tools and e-business management. Smaller merchants could also manage the process of posting and selling products on eBay using the ProStores interface. It also offered inventory management, supplier communication and integration with Quickbooks and Dreamweaver. eBay announced on July 1, 2014, that support for the platform would end February 1, 2015.
In February 2006, Intuit launched a web-based version of ItsDeductible, a donation tracking service, using data from eBay to help users assign a market value to the items they donate.
In April 2006, eBay launched , a site that was designed to work like a standard Internet shopping site, with fixed prices and no bidding involved. The website had 10 million items listed upon its launch. The site was shut down in October 2008.
In January 2007, eBay acquired StubHub, an online marketplace for ticket resale, for $310 million.
In January 2008, Meg Whitman resigned as president and CEO of eBay to enter politics, and was replaced with John Donahoe. Whitman remained on the board of directors and continued to advise Donahoe through 2008.
In April 2008, eBay sued Craigslist, claiming that in January 2008, Craigslist took actions that "unfairly diluted eBay's economic interest by more than 10%", causing eBay to lose its seat on the board of directors of Craigslist. Craigslist countersued in May 2008 alleging that eBay used its board seat to gain insider information about Craigslist that was used to compete against the company. In September 2010, Delaware Judge William B. Chandler III ruled that the actions of Craigslist were unlawful and that the actions taken by Craigslist founders Jim Buckmaster and Craig Newmark had "breached their fiduciary duty of loyalty", and restored eBay's stake in the company to 28.4% from a diluted level of 24.85%. However, the judge dismissed eBay's objection to a staggered board provision, citing that Craigslist has the right to protect its own trade secrets.
In May 2008, eBay announced the opening of a building on the company's North Campus in San Jose, California. The building, the first the company had built in its 13-year existence, used an array of 3,248 solar panels, spanning, and providing 650 kilowatts of power, 15–18% of the company's total energy requirements at the time, reportedly reducing carbon dioxide usage by 37 million pounds over 30 years. The building also had an energy-efficient lighting and water system, and most waste was recycled.
In April 2009, eBay agreed to acquire a controlling stake in G-Market, a South Korean online retailer, for $413 million. In May 2009, eBay launched the Selling Manager Applications program. The program allows approved developers to integrate their applications directly into the eBay.com interface.
In November 2009, eBay sold a 70% stake in Skype to a consortium led by Silver Lake Partners and Marc Andreessen at a $2.75 billion valuation, while retaining a 30% minority ownership interest in Skype, after failing to integrate Skype into the company's online marketplace. Microsoft acquired the entire company for $8.5 billion in May 2011.