eBay is an American multinational eCommerce platform founded in 1995 by Pierre Omidyar. The company is best known for its online auction marketplace where individuals and businesses can buy and sell a diverse range of products and services around the world.
Sellers must first register for an eBay account if they do not already have one. They must also have a verifiable address in any of the countries, regions, or territories eBay operates in.
To process the registration, eBay will need to verify the identity, bank account details, and any applicable business details of the seller.
Listing items for sale
Once verification is complete, the seller can list their first item for sale with an accurate description of the item and accompanying photos. It is important to list the item’s features and be honest about its condition. In other words, is it new, refurbished, used, or somewhere in between? Furthermore, does it come with documentation, tags, or accessory products?
The seller must also choose whether to sell the item as an auction listing with a reserve or a fixed price format. After which, the seller needs to clarify how the item will be posted and how they want to be paid. Return policies, if applicable, should also be detailed.
Sellers should also familiarise themselves with the list of prohibited or restricted items. These include (but are not limited to) adult items, alcohol, animal products, art, drugs and drug paraphernalia, event ticket resale, firearms, vouchers, and healthcare products.
Seller fees
Seller fees vary by country and sales volume. With that in mind, we will detail the seller fees for the United States platform below.
Insertion fees
Casual eBay sellers can list their items for free. But if they list more than 250 items per month, the company collects a $0.35 insertion fee per listing.
Final value fees
Final values fees are charged only when the item sells and are calculated as a percentage of the total sale amount plus $0.30 per order.
Fees vary according to product category. Vinyl record sales, for example, incur a 12.55% fee while other categories include books and magazines (14.55%), coins, bullion, and paper money (12.35%), NFTs (5%), and musical instruments and related equipment (5.85%).
After the sale
Sellers can choose to send an invoice to the buyer after a sale has been made. However, many buyers will pay before the seller has had a chance to do so.
At this point, it is important to leave feedback on the experience of dealing with the buyer and encourage them to do likewise after they have received the product. Sellers can receive beneficial feedback by ensuring the item was delivered as described and in a timely fashion.
For disputes that cannot be resolved between the two parties, the seller can contact eBay directly for assistance.
Expansion
Sellers who sell items frequently or in bulk can use eBay’s business tool which offers increased functionality such as postage discounts, subtitles, visitor counters, and buyer requirements.
They can also design their listings without needing to be proficient in HTML and can offer multiple products under one listing to a single buyer.
Key takeaways:
eBay sellers need to first register for an account if they do not already have one. They must also reside in an eBay-approved country, territory, or region and be able to verify their identity and bank account details.
Once verification is complete, the seller can list items for sale with a product description, photographs, and an accurate assessment of product condition, among other things. The seller must also choose between a fixed price and an auction with a reserve price.
Casual eBay sellers are charged an insertion fee if they list more than 250 items per month and a final value fee that depends on the product category. Like any marketplace, the seller needs to conduct themselves in a way that encourages positive feedback from the buyer.
eBay’s main shareholder is its founder, the billionaire Omidyar, who stepped down from the board of eBay. By 2020, he owned (and might still own 4.69% of the company’s stock) followed by other institutional investors, such as Vanguard (11.41%) and Blackrock (8.51%).
eBay’s core business is a platform business model that makes money from transaction fees through its marketplaces. In short, eBay primarily makes money by charging fees on successfully closed transactions. For instance, in 2021, on an $87 billion worth of gross merchandise value sold on eBay, the company generated $9.77 billion in transaction revenues at an 11.19% take rate (fee).
eBay reported $73.2 billion in gross merchandise volume in 2023, compared to $73.9 billion in gross merchandise volume in 2022 and $87.36 billion in 2021.
eBay was profitable in 2023, as it reported a profit of $2.77 billion. Compared to a net loss of $1.27 billion in 2022, a net income of $13.6 billion in 2021, and a net income of $5.67 billion in 2020.
eBay bidding is a way for buyers to bid on a product whose sale price is decided by auction. The bidding process itself is automated, with eBay acting on the buyer’s behalf.
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.
In 2023, eBay generated $10.11 billion in revenue, compared to nearly $574.78 billion from Amazon in the same period. Whereas in 2022, Amazon generated $513.98 billion in revenue, vs. eBay’s over $9.79 billion. In comparison, looking at revenues, Amazon was over 57 times larger than eBay in 2023.
Amazon has a diversified business model. In 2023, Amazon generated nearly $575 billion in revenues while it posted a net profit of over $30 billion. Online stores contributed over 40% of Amazon revenues. Third-party Seller Services and Physical Stores generated the remaining. Amazon AWS, Subscription Services, and Advertising revenues play a significant role within Amazon as fast-growing segments.
Amazon’s mission statement is to “serve consumers through online and physical stores and focus on selection, price, and convenience.” Amazon’s vision statement is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.”
In the Amazon Shareholders’ Letter for 2018, Jeff Bezos analyzed the Amazon business model, and it also focused on a few key lessons that Amazon as a company has learned over the years. These lessons are fundamental for any entrepreneur, of small or large organization to understand the pitfalls to avoid to run a successful company!
With 64,588,418 shares, Jeff Bezos is the primary individual investor. Owning 12.7% of the company. Other top individual investors include Amazon’s CEO Andy Jessy, who has 94,729 shares. Top institutional investors include mutual funds like The Vanguard Group (6.6% ownership) and BlackRock (5.7% ownership).
Amazon generated over half a trillion dollars in revenue in 2023, of which $231.87B from online stores, over $140.05B from third-party seller services, $90.76B from AWS, $46.9B from advertising, $40.21B from subscription services, $20.03B billion in physical stores, and $4.96B from other sources.
Amazon was profitable in 2023. On nearly $575 billion in revenue for 2023, Amazon generated a net profit of over $30 billion. Since 2014, Amazon hasn’t recorded a net loss, but it did record a net loss of over $2.7 billion in 2022, while it recouped that in 2023. Indeed, in 2014, Amazon reported a net loss of $241 million, and it would be profitable until 2021. In 2022, Amazon turned unprofitable again and highly profitable again in 2023.
Amazon AWS follows a platform business model that gains traction by tapping into network effects. Born as an infrastructure built on top of Amazon’s infrastructure, AWS has become a company offering cloud services to thousands of clients from the enterprise level, to startups. And its marketplace enables companies to connect to other service providers to build integrated solutions for their organizations.
Amazon subscription revenue in 2023 was over $40 billion, compared to over $35 billion in 2022 and nearly $32 billion in 2021. Amazon Prime grew from a $4.5 billion revenue segment in 2015 to an over $40 billion segment in 2023.
The Amazon Working Backwards Method is a product development methodology that advocates building a product based on customer needs. The Amazon Working Backwards Method gained traction after notable Amazon employee Ian McAllister shared the company’s product development approach on Quora. McAllister noted that the method seeks “to work backwards from the customer, rather than starting with an idea for a product and trying to bolt customers onto it.”
The Amazon Flywheel or Amazon Virtuous Cycle is a strategy that leverages on customer experience to drive traffic to the platform and third-party sellers. That improves the selections of goods, and Amazon further improves its cost structure so it can decrease prices which spins the flywheel.
In the letter to shareholders in 2016, Jeff Bezos addressed a topic he had been thinking quite profoundly in the last decades as he led Amazon: Day 1. As Jeff Bezos put it “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”
A regret minimization framework is a business heuristic that enables you to make a decision, by projecting yourself in the future, at an old age, and visualize whether the regrets of missing an opportunity would hunt you down, vs. having taken the opportunity and failed. In short, if taking action and failing feels much better than regretting it, in the long run, that is when you’re ready to go!
A network effect is a phenomenon in which as more people or users join a platform, the more the value of the service offered by the platform improves for those joining afterward.
A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model’s success.
Jeff Bezos was best known for founding eCommerce giant Amazon in 1994. However, the entrepreneur owns companies in several industries, including health care, retail, robotics, real estate, and media. Many of these companies have been acquired by Amazon over the years, but some have been the result of direct investment from Bezos himself (through his investment arm is called Bezos Expeditions).
Amazon is a consumer e-commerce platform with a diversified business model spanning across e-commerce, cloud, advertising, streaming, and more. Over the years Amazon acquired several companies. Among its 12 subsidiaries, Amazon has AbeBooks.com, Audible, CamiXology, Fabric.com, IMDb, PillPack, Shopbop, Souq.com, Twitch, Whole Foods Market, Woot! and Zappos.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
