Topic 8 – Online Auctions

1) eBay is one of the major internet ‘pure play’s to consistently make a profit from its inception. What is eBAy’s business model? Why has it been so successful?

The business model of eBay is an online, person-to-person (buyer-seller) trading centre. eBay has been continually successful as there is a large market that can be accessed for both buyers and sellers. eBay is free and has become increasingly easy to use, meaning essentially if you have an eBay account, you can buy or sell anything.

2) Other major web sites, like and Yahoo!, entered the auction marketplace with far less success than eBay. Are they still offering auctions? How has eBay been able to maintain its dominant position?Amazon is still offering online auctions, however Yahoo are not as they struggled to compete with eBay’s dominance. eBay has remained as online auction leaders as their expenses are minimal compared to who hold stock and then have to package and post the stock themselves whereas with eBay, all postage and handling related costs are paid for by users. Also, there is no doubt that due to the popularity of eBay, people will continually go back to what they have successfully used before, meaning that using Amazon and Yahoo was not necessary.

3)What method does eBay use to reduce the potential for fraud among traders on its site? What kinds of fraud, if any, are eBay users most susceptible?

On each seller’s information, people could see the trust percentage for each seller. This is given by feedback from customers who have previously brought items off the seller. If customer feels unhappy with the product that they received, they could also put bad reviews,. In serious cases, they could ask to refund, an lodge a compliant to eBay customer service. The most common type of fraud on eBay would be buying items that are actually different to they appear on the photos. Personally, I have experienced this in which i purchased a product and when I received it, it was something completely different.


4) eBay makes every effort to conceptualize its users as a community (as opposed to, say “customers” or “clients”). What is the purpose of this conceptual twist and does eBay gain something by doing it?

Categorising eBay’s users as a ‘community’ makes users feel was though they are more involved. Once you have an eBay account, you can buy or sell, not just one or the other. This encourages uses to feel more accepted as they are not set in one category. They have the opportunity to (within reason) use eBay for what they please. eBay gains something out of this conceptualization as they feel more involved with the business.

5) eBay has long been a marketplace for used goods and collectibles. Today, it is increasingly a place where major businesses come to auction their wares. Why would a brand name vendor set-up shop on eBay?


eBay is arguable the biggest and most well known online store so using eBay is a perfect opportunity for business’ to utilise their services to increase their sales. eBay allows major businesses to market their business making it more known as well as sell products that may struggle. eBay is a free service and therefore there is a larger market to target.


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