eBay is one of the most popular online marketplaces around the world. In 1995, Pierre Omidyar launched AuctionWeb which was later renamed as eBay in 1997. eBay has been constantly growing since its inception and is now expected to make up to 23.6% of total online retail sales as compared to 19% in the year 2019.
Isn’t this amazing? Well, it certainly is and this growth is responsible for attracting entrepreneurs towards digging up about eBay business model and revenue model.
This brings me to today’s topic! This space is today dedicated to help you understand more about how eBay works, what is eBay business model and how eBay earns?
So, let’s begin!
eBay was first introduced as an online auction platform. However, it has come a long way and today eBay business model can be best described as a multi-vendor marketplace and auction platform for B2C and C2C sales.
The key customers of present eBay business model include sellers, buyers and global mass market.
Sellers: Sellers have the option to list their products with fixed retail price or under bidding category. In case of retail, the product is listed with complete description, product image, product condition and price. In case of bidding, the seller lists the product with minimum bidding price and bidding window instead of retail price. The buyer who makes the highest bid is allowed to keep the product.
Buyers: eBay is very simple for buyers. A buyer can signup or login to eBay via its website or mobile app. He can use the advanced search option to check all the sellers offering the product he needs to buy. This allows the buyer to compare the products and their price. eBay currently lists more than 19 categories of products making it easier for buyers to find what they are looking for.
In order to keep running, the online marketplace eBay performs four major set of activities:
· Facilitate B2C & C2C transactions
· Offer 24/7 customer support
· Web development & server maintenance
· Logistics
If you want to launch your own eBay clone, it is important for you to understand the cost structure of eBay business model. Major expenses when running an online marketplace like eBay include:
· Employee salaries
· Website & app maintenance
· Logistics cost
· Marketing & development cost
By now, we have discussed the key customer segments of eBay business model, cost structure and how eBay works. But before you move ahead with launching your ecommerce app like eBay, it is time to find answer to an important question-
How Does eBay Earn?
This can be understood by taking a look at the revenue model of eBay. eBay has three main revenue channels –
· Listing fee for any listing made after consuming free listings and final fee on every successful sale.
· Online ticket trading via StubHub.
· International trade.
In depth knowledge about eBay business model, revenue model and how to launch eBay clone is important before venturing into an online marketplace business like eBay. Check this blog for further details on eBay business model.
