The Business Model Of Ebay

Electronic commerce (ecommerce) refers to a type of business, or commercial transaction, that engages the transfer of information through the Internet (Boltzan, P. 2008). In other words, it is the buying and selling of goods and services including the transferring of data and funds over an electronic network, predominantly the Internet. The leading benefits of ecommerce include twenty-four seven access, and availability, international scope, larger range of goods and services and the speed of accessibility. Ecommerce utilises a variety of functionalities such as email, Web Services, Fax, Shopping Carts and Online catalogues. After a somewhat slow start ecommerce has developed into the largest retail growth area in the world (Kearney, A.T.

Its origins were developed from former newspaper classifieds such as the trading post. EBay was founded by Pierre Omidyar and launched in 1995 as a universal commerce platform connecting millions of buyers and sellers. EBay’s business model involves bringing people together to buy, sell and trade goods and services online. Utilising the brokerage e-business model to bring parties together to conduct business, EBay has now become the world’s largest online marketplace. Under the brokerage model EBay acts as a third party uniting sellers with buyers to a business transaction and charges fees for that service ‘insertion fee’ (Rappa, M. 2010). EBay makes its money by collecting a fee when an item listed is sold. According to the website http://www.ebay.com, eBay charges ‘insertion fees’ and ‘final value fees’ for their auction and fixed price category listings. The value of the insertion fees is dependent on the product category, reserve price or starting price. These are the fundamental costs of selling an item on EBay. They also offer, "upgrade options that are designed to boost sales" these include Reserve price fees, But it Now fees, Listing upgrade fees and Seller