eBay Business Model – How Does eBay Make Money?

Key Takeaways:

eBay is an American online e-commerce marketplace founded by Pierre Omidyar on September 3, 1995. The platform allows its users to list items for sales and other users to bid on them in online auctions. The platform operates in 180 countries through a mobile app for Android and Apple and their desktop sites. eBay has tons of different items for sale. It also has promotions called the best offers that can save your money.

The revenue generated by the eBay company comes from the fees the platform charges on each item that sellers when exchanging with the buyers.  In the third quarter of the year 2020, the net worth of eBay was $604 million. The net revenue of the eBay marketplace has increased from the past year 2019 by 27.7%.

Company Profile:

Company NameeBay Inc. ©
WebsiteEbay.com
Founded- In:1995
Headquarters:San Jose, California, USA
FoundersPierre Omidyar
Key PeopleJamie lannone, thomas J. Tierney
Business ModelOnline deal marketplace, Electronic commerce
Product/ServicesStubhub, Skype Buttons, eBay pop, eBay deal finder, eBay Maplt, eBay deal finder
Competitive AdvantageBrand Recognition, International Presence (Global)
RevenueNet revenue in the year 2020 is $10,271
CompetitorsAlibaba, Walmart, Amazon, JD, Zalando, Flipkart, Shpify sites, Letgo, Offerup, OLX, Rakuten, Groupon, Etsy, Facebook Marketplace

What is eBay?

eBay is an online business platform that furnishes an opportunity to trade on a local and international level. eBay serves the purpose of online trade daily for millions of entrepreneurs. Merchants use it as a Sale channel and for auctions.

eBay is accessible worldwide, and one can easily create a free account for dealing with business and trade. On September 3, 1995, eBay was laid by a French—American entrepreneur and soft engineer. Its main headquarter is in California. He is the prime mover, where he served as a chairman from 1998 to 2015.

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SWOT Analysis  Of eBay Business model:

1) Strengths of eBay

  • Strong brands:

The mouthpiece of eBay succession is the strong brand that makes it recognizable across the globe. The brand name is easily identifiable among the trader and consumers. eBay is the globe’s best and enormous marketplace.

The company has more than one hundred fifty million on board and more than one hundred five million active purchasers globally in thirty-seven countries. That particular stamp makes the globe enormous and a great online place for marketing and accedes over other online business platforms.

  • Different unsegregated facilities:

eBay provides all the facilities under one roof, such as online ticketing, online business facility, online payments, online transfer of money, and countless other services.

  • Extensive diversity of Products:

eBay has an extensive assortment of products, which will feed to all the categories. Along with this stamp, many customers are attracted by that online platform, watching for many products to buy.

  • Remittance system:

PayPal is the system used by eBay to move almost all of the payments from the eBays’ mart. From this online platform outlook. This kind of solid combination has the advantage of gathering many dues and a stronghold over the client’s buying experience. The buyer wants to favor this system because the buyers intend to pay online.

2) eBay Weaknesses:

  • Exceptional competition:

The threat for eBay is the emergence of many other online platforms for trading. eBay has a deficiency in the physical marketplace.

  • Soaring dues:

Every year, eBay increases its dues for the vendor. It receives privileges on register products, sold goods, and other dues, including transaction dues and PayPal.

  • Lack of innovation:

eBays majorly concentrate on feedback generated from the product sold, but the company lacks to introduce innovative ideas in this field, which could raise its economic position sky high. The absence of innovation halts the emergence of eBay in top-rated electronic businesses.

  • Undefined growth strategies:

The success of a business depends upon its pre-defined strategic policies; unfortunately, eBay is crawling at a snail’s pace in this regard bay has not revealed any of its fore coming strategies to give its business a new direction and plans to cope up with undulating market challenges.

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3) Opportunities for eBay:

Opportunities are the external factors that a company can rely on to elevate its services and marketplace.

  • Service diversification and new acquisition:

eBay has its roots widespread in every corner, but it can successfully diversify its business by acquiring access to other companies and offering them its services. This way, it can upgrade its service portfolios to have a better trading experience for buyers and traders.

  • More marketplaces:

eBay has an opportunity to access the other markets of its online operations. The United States of America and few European countries are creating ticket exchange revenue and marketplace presently. The exterior strategic element can hike the income, and this can open out more different e-commerce markets.

  • Position of the marketplace:

Enough measures are taken by eBay to adapt itself from Amazon and many more enormous contestants when it becomes public goods. 2020 was the year when eBay revisited the famous farmer categories. Luxury watches containing sneakers used goods and client-to-client business. This may also stem from the growth in niche marketplaces that are now competing directly with eBay.

4) eBay Threats :

  • Strong competition:

The vital threat to eBay is the enormous competition. For instance, eBay is facing rivalry with e-commerce company amazon and other small companies. This outer element is the fundamental element of hindrance in the industry environment.

  • Taxation problems from the government:

Taxation procedures that the government adopts sometimes make a barrier for eBay, which not only causes the poor and less production but also causes the deficiency in the margins and operations.

The 2021 viewpoint for eBay is promising, given the natural development, the organization accomplished a year ago. With its hearty deals development, rising productivity, and solid capital, eBay finished the year on an especially high note in 2020.

What is the Business Model of eBay?

Ebay uses a commission from the sellers to generate revenue. The business model of ebay is based on the market penetration. Ebay sales its times through fixed or the auction prices.

How Does eBay Make Money?

eBay is one of the best American-based eCommerce platforms. eBay provides a link between customers and businesses or merchants in the online eCommerce market. eBay act as a middleman between sellers and buyers, the source of its revenue is from the purchase that the buyers make. It cuts a few percentage amounts from the original merchandise price.

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Most of the eBay revenue comes from PayPal; 41% of the payment is generated from Paypal. eBay makes money from people who use it to transfer money or from the transaction fees.

In other words, the revenue that eBay generates is based on Marketplace, StubHub, and local classified platforms. eBay makes money by applying fees to its sellers for listing their products on eBay. eBay charges commissions on the sale that the seller creates with the name of final value free. On every category of items and also products the eBay charge different commission on it.

The biggest moneymaker for eBay is its marketplaces where we go and buy things. eBay cuts the transaction fees, which are applied to the sellers. The market of eBay is divided into two categories which are fixed price Listings and auction style. It has 124 million marketplace users, which provides it 51% of the total revenue. eBay cuts 10% of the fees from the general category, books, DVDs, and Movies. It cuts 12% from the sellers on parts, accessories, tools, and supplies. 2% is cut from Business and industrial things, including Heavy equipment, food truck, trailer, and commercial printer.

Enterprise is an eBay company specializing in mortar retailers, which helps create eBay for online shopping sites for their brands. It also allows eBay to generate revenue. Enterprise helps eBay to make money on merchandise sales through its commerce technology of the services.

Ebay also makes money from advertising in which it sells advertising and product listing ads. Aftermarket ticket sales such as TicketBis, Stubhub and ticketUtil also generataes revenue for eBay as it owns it.

eBay Funding, Valuation & Revenue:

The vanguard group, Inc, BlackRock Fund Advisor, The Baupost Group LLC are the investors of eBay.  One of the most notorious investors of eBay is The Vanguard group which acquired a stake of 6.97% in eBay.

The revenue of eBay is generated through the transaction fee of the marketplace. As of the year 2020, the revenue generated by eBay is $10,271million.

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