eBay Inc. ( , styled as ebay) is an American multinational e-commerce company based in San Jose, California, that allows users to buy or view items via retail sales through online marketplaces and websites in 190 markets worldwide. Sales occur either via online auctions or "Buy It Now" instant sales, and the company charges commissions to sellers upon sale. eBay was founded by Pierre Omidyar in September 1995. In 2021, eBay had approximately 17 million global sellers; in 2023, it reported 132 million annual active buyers worldwide and handled $73 billion in transactions, 48% of which were in the United States. In 2023, the company had a take rate (revenue as a percentage of volume) of 13.81%.
eBay can be used by individuals, companies and governments to purchase and sell almost any legal, non-controversial item. Buyers and sellers may rate and review each other after each transaction, resulting in a reputation system. The eBay service is accessible via websites and mobile apps. Software developers can create applications that integrate with eBay through the eBay API. Merchants can also earn commissions from affiliate marketing programs by eBay.
History
1990s eBay was founded as AuctionWeb in California on September 3, 1995, by French-born Iranian-American computer programmer Pierre Omidyar as a hobby site to make some extra money. It started as a personal project, making its first sale when a broken laser pointer got auctioned for $14.83. Omidyar contacted the winning bidder to ask if he understood that the laser pointer was broken; the buyer explained: "I'm a collector of broken laser pointers."
In February 1996, Omidyar's internet service provider informed him that he would need to upgrade to a business account due to the high web traffic of his website. The monthly price increase from $30 to $250 prompted Omidyar to obtain support from his mother's family (his grandfather, General Mahmud Mir-Djalali was the "father" of Iran's Defense Industries, with close relationships with Skoda Works and Fabrique Nationale Herstal). The website made $1,000 in its first month, which was more than it cost to run, and $2,500 in its second month. Chris Agarpao was eBay's first employee; he processed mailed check payments.
Jeffrey Skoll was hired as the first president of the company in early 1996. In November 1996, the company launched online auctions for airline seats, hotel rooms, cruise berths and other travel-related products in partnership with Electronic Travel Auctions. By that time, the company had hosted more than 200,000 online auctions since its founding 14 months earlier.
The company changed the name of its service from AuctionWeb to eBay in September 1997, after Echo Bay Technology Group, Omidyar's consulting firm. However, the echobay.com domain name was already registered by Echo Bay Mines, a gold mining company, so Omidyar shortened it to eBay.com. In 1997, the company received $6.7 million in venture capital funding from Benchmark.
The most purchased and sold items on the website were Beanie Babies, the most difficult toys to find in retail stores, accounting for 10% of all listings in 1997. Ty, the manufacturer, had set up a website whereby people could trade used Beanie Babies, but there was no way to sort the listings. Listing and purchasing from eBay became more popular with collectors.
Meg Whitman was appointed president and CEO in March 1998. At the time, the company had 30 employees, 500,000 users, and revenues of $4.7 million in the United States. In July 1998, eBay acquired Jump, the developer and operator of Up4Sale, an advertising-supported auction website which at the time had 27,000 separate auctions and 50,000 registered members.
In September 1998, during the dot-com bubble, eBay became a public company via an initial public offering led by CFO Gary F. Bengier, opening on NASDAQ at a price of $18 per share and closing on its first day at $53 per share. Upon the initial public offering, the company's market cap reached nearly $1.9 billion. In the risk factors section of the annual report filed with the U.S. Securities and Exchange Commission in 1998, Omidyar noted eBay's dependence on the continued strength of the Beanie Babies market.
2000s In June 2000, eBay acquired Half.com for $312 million in stock. In 2000, eBay partnered with Escrow.com to handle escrow for purchases and sales of motor vehicles, later expanded to other transaction types. By year-end, it had 22.5 million registered users and 79.4 million auctions per quarter.
In January 2001, eBay acquired a majority stake in Internet Auction Co. Ltd, operator of the largest internet auction website in South Korea. In February 2002, eBay acquired iBazar, a French online auction site founded in 1998, for approximately $112 million in stock.
eBay entered the Chinese market in 2002, and in February, exited Japan due to competition from Yahoo! Japan. eBay began operations in Taiwan with the acquisition of NeoCom Technology for $9.5 million. In June 2006, eBay turned over its operations in Taiwan to a joint venture partner.
eBay acquired PayPal on October 3, 2002, for $1.4 billion. It phased out its Billpoint payment service in January 2003.
On May 28, 2003, in the case of eBay Inc. v. MercExchange, L.L.C., which had implications for the treatment of business method patents, a United States district court jury found eBay guilty of willful patent infringement and ordered the company to pay $35 million in damages after MercExchange accused eBay of infringing on three patents, one of which is used in eBay's "Buy It Now" feature. The decision was appealed to the United States Court of Appeals for the Federal Circuit (CAFC). The CAFC affirmed the judgment of willful infringement, and reversed the lower court and granted a permanent injunction. eBay appealed the permanent injunction to the Supreme Court of the United States, which on May 15, 2006, found an injunction is not required nor automatic in this or any patent case where guilt has been established. The case was sent back to the Virginia district court for consideration of the injunction and a trial on another MercExchange patent.
In 2003, eBay sought to develop its e-commerce business in China, acquiring the country's leading online auction platform (EachNet) and reaching an 85% market share. Within four years, the development of Alibaba's Taobao resulted in eBay's market share in China decreasing to 7.7%. eBay shut down its Chinese site in 2007. After pulling out of China in part due to Alibaba's Taobao and their auction site 11main.com, eBay announced that it would turn over control of the site to a Chinese-based auction site called Tom Online Inc. eBay contributed $40 million and owned 49% of the venture, while Tom Online contributed $20 million and owned 51 percent and had management control. Ebay did not see the departure as a failure but rather as an evolution of their strategy in China. They still faced stiff competition from Taobao.com which was considered the country's leading auction site at that time. In September, eBay tightened restrictions to reduce fraud among Chinese sellers, but this did not help in reducing listings of fraudulent vendors of pirated movies, books, and software. Reasons that contributed to eBay pulling out of China included the free-versus-paid model. eBay had a paid platform, which included platform fees and listing fees that did not appeal to Chinese customers. Another reason was the slow global tech stack, which led to a loss of trust when the site crashed multiple times or was very slow, resulting from moving the technology platform or migrating it from China to the US. Alibaba's e-commerce site Taobao also had chat features and instant messaging that were familiar to Chinese customers that eBay did not have. Other reasons include withdrawal from China which resulted in several strategic and operational problems that were beyond its paid fee model and technology issues. Because the company failed to localize its platform and copied its global approach rather than adapting to Chinese consumer behavior. Chinese users prefer direct buyer-seller communication and relationship-building, while Alibaba's Taobao offered integrated instant messaging which helped to build trust. eBay also relied heavily on auction-based transactions, whereas Chinese consumers favor fixed-price purchasing. eBay also weakened its own system EachNet by replacing local systems with global ones which decreased their ability to respond to local market demands.
In August 2004, eBay acquired 25% of the classified advertising website Craigslist from former Craigslist executive Phillip Knowlton for $32 million. In December 2004, eBay acquired Rent.com for $415 million.
In March 2005, eBay launched Kijiji, a classified advertising website, in international markets. It launched in the United States in July 2007. In May 2005, eBay acquired Gumtree, a classified advertising website in the United Kingdom. In October 2005, eBay Inc. acquired Skype Technologies for $2.6 billion.
ProStores, formerly known as Kurant StoreSense, was acquired and renamed by eBay Inc. by the end of 2005. ProStores offered users simple wizard-driven websites, e-commerce capabilities, site design tools and e-business management. Smaller merchants could also manage the process of posting and selling products on eBay using the ProStores interface. It also offered inventory management, supplier communication and integration with Quickbooks and Dreamweaver. eBay announced on July 1, 2014, that support for the platform would end February 1, 2015.
In February 2006, Intuit launched a web-based version of ItsDeductible, a donation tracking service, using data from eBay to help users assign a market value to the items they donate.
In April 2006, eBay launched eBay Express, a site that was designed to work like a standard Internet shopping site, with fixed prices and no bidding involved. The website had 10 million items listed upon its launch. The site was shut down in October 2008.
In January 2007, eBay acquired StubHub, an online marketplace for ticket resale, for $310 million.
In January 2008, Meg Whitman resigned as president and CEO of eBay to enter politics, and was replaced with John Donahoe. Whitman remained on the board of directors and continued to advise Donahoe through 2008.
In April 2008, eBay sued Craigslist, claiming that in January 2008, Craigslist took actions that "unfairly diluted eBay's economic interest by more than 10%", causing eBay to lose its seat on the board of directors of Craigslist. Craigslist countersued in May 2008 alleging that eBay used its board seat to gain insider information about Craigslist that was used to compete against the company. In September 2010, Delaware Judge William B. Chandler III ruled that the actions of Craigslist were unlawful and that the actions taken by Craigslist founders Jim Buckmaster and Craig Newmark had "breached their fiduciary duty of loyalty", and restored eBay's stake in the company to 28.4% from a diluted level of 24.85%. However, the judge dismissed eBay's objection to a staggered board provision, citing that Craigslist has the right to protect its own trade secrets.
In May 2008, eBay announced the opening of a building on the company's North Campus in San Jose, California. The building, the first the company had built in its 13-year existence, used an array of 3,248 solar panels, spanning , and providing 650 kilowatts of power, 15–18% of the company's total energy requirements at the time, reportedly reducing carbon dioxide usage by 37 million pounds over 30 years. The building also had an energy-efficient lighting and water system, and most waste was recycled.