eBay is the primary online auction website in the world (which has also since expanded into “buy it now” shopping as well), that continues to grow and thrive. In fact, eBay is one of the largest buying and selling networks on the internet, where customers can buy and sell just about anything. As the 20th anniversary of this website approaches in 2015, take a look at how this company got its start and how far it has come today.
eBay was started in San Jose, California in early September of 1995 by a French-born Iranian computer programmer named Pierre Omidyar who was at the time in his late twenties. The site was meant to be a marketplace for the sale of goods and services for individuals. Omidyar’s idea for this kind of site came from his realization that IPOs were becoming more tilted toward certain investors, and he felt that it would be fairer if everyone could compete on price when shopping online. His idea was to create a site where anyone could buy and sell items for market price. He didn’t know anything about auctions, but he decided it would be an ideal way to have a free and open market. So on September 3rd when Omidyar completed his programming (he had been coding all weekend) and eBay launched, it was a website that allowed users to list items, view items and place bids. At the time he called the website AuctionWeb.
One of the first items sold on the site was a broker laser pointer for $14.83, which he had actually just put up on the site to test out the auction system. Omidyar, surprised that someone would pay so much for a broken laser pointer, contacted the winner to make sure he understood that it was broken. The customer explained to him that he was a collector or broken laser pointers. Omidyar realized that he was on to something big.
Omidyar didn’t actually use the site to make a profit at first. He saw his new website as more of a side hobby. It was when his internet service provider told him they were going to have to charge him more for the high volume of traffic to the website that he realized he was going to have to have some kind of profit. So, because of the increase in cost for the server, Omidyar decided to start charging eBay users, and as a result he hired his first employee, Chris Agarpao, to handle the checks that were coming in. Soon after, Jeffrey Skoll was brought on as Omidyar’s business partner.
The site hosted about 250,000 auctions during 1996. But then in late 1996, eBay made a key decision; it entered into its first third-party licensing deal with Electronic Travel Auction to use their technology to sell plane tickets and other travel products. This was a huge turning point for the site because during the month of January 1997, the site hosted about 2 million auctions, which was multiple times more than the amount it had hosted in the entire previous year. In September of that year the name was officially changed to eBay when it received 6.7 million dollars from Benchmark Capital (a venture capital firm). The name actually comes from the name of Omidyar’s consulting firm, Echo Bay Technology Group, but since the domain name echobay.com was already taken, he shortened it to eBay.
Growth and Profit
By early 1998 the company had 30 employees, half a million users and revenues of almost 5 million dollars in the United States, and a new president by the name of Meg Whitman. In September of that year when eBay went public, target share prices on the stock exchange started at $18 put rose to $53,50 on that first day of trading. Both Skoll and Omidyar became billionaires overnight.
By 1999, eBay had gone global, launching sites all over Europe, and in 2001 the record for the highest eBay sale price yet (to this day) was set when a jet plane was sold for $4.9 million dollars.
In 2002 eBay purchased PayPal, and in 2005 it purchased Skype. eBay acquired other websites in 2005, including shopping.com (an online shopping site), and rent.com which was used for apartment listings in the United States. In 2007 eBay purchased StubHub.
By 2008 the company had gone global, had hundreds of millions of registered users, more than 15,000 employees and revenues of close to 8 billion dollars. That same year Whitman decided to step down as president in order to enter politics, and John Donahoe was selected as the new president and CEO of the company. In November 2008, Jack Sheng became the first eBay seller to receive a feedback score of one million. In 2009 eBay sold Skype, but retained 30% equity in the company.
Today, eBay is still the top website for online auctions and the sale of used items online. Amazon is a top competitor these days for selling used items, and other auction websites have started (and even more have shut down), but eBay remains at the front of the pack.
eBay has been criticized for support issues, and has since instituted telephone support in response. eBay continues to keep up with the times and the demands of customers in other ways as well, like for example their new mobile applications, which allow their customers to list, buy and sell items on mobile devices. Other new features of eBay include eBay Express (where select eBay items are mirrored and customers can use a shopping cart to buy from more than one seller), eBay Blogs and eBay Community Wiki, where sellers and buyers can participate on discussion boards, write reviews and guides, and more.
Although eBay had humble, and in some ways, accidental beginnings, there is no question about the amazing success that the company has had since it started in 1995. Today eBay continues to dominate not only online shopping for new and used items, but also online auctions.