eBay - Staying Online - Always

Background Note Contd...

eBay started as a free website and quickly attracted so much traffic that Omidyar needed additional infrastructure to keep pace with the growing business. The company started charging a nominal fee of 10 cents for listing an item and also collected a percentage of the final sale value from the sellers. In September 1996, Omidyar brought in Jeff Skoll, a Stanford graduate, to manage the business, while he concentrated on the technological aspects. As the interaction among individual buyers and sellers increased, complaints from buyers and sellers began to mount. Omidyar urged them to work things out amicably among themselves.

He said, "If traders are going to complain about people they do not like, they should be willing to say something nice about people they do." In February 1996, Omidyar started a virtual 'feedback forum' where customers could share their trading experiences. In February 1998, Meg Whitman³, a Harvard MBA, joined eBay as its President and CEO. Whitman initiated efforts to arrange an Initial Public Offering (IPO) for eBay. In September 1998, eBay offered 4.025 million shares to the public at $18 per share. It received a tremendous response and the stock closed at $47 on the first day of its listing. eBay's main product categories were automobiles, antiques & art, books, movies, music, coins & stamps, collectibles, computers, dolls, doll houses, jewelry, photo & electronics, pottery & glass, sports, toys, premium arts & collectibles and miscellaneous items.

Its operations included registration of users, facilitating the auction and maintaining relevant databases (see Exhibit I). The company provided seven days availability with a few hours maintenance period each week. Members were notified by e-mail when they registered on the site. The company notified them when they were either outbid or had won an auction. The company also sent daily status reports to active sellers and bidders regarding their current auctions. It also maintained a database regarding member registration information, billing accounts, current auctions and historical listings.

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3] Whitman had earlier been the General Manager, Pre School division of Hasbro Inc., a toy company (1997-98); President and CEO at Florist's Transworld Delivery, a floral products company (1995-96); worked in various capacities at The Strite Rite Corporation (1992-95) and had been Senior VP for Walt Disney Consumer Products division (1989-92).

Case Details

Case Code : ITSY015
Themes: Internet Companies
Case Length : 08 Pages
Period : 1995-2001
Organization : eBay
Pub Date : 2002
Teaching Note : Available
Countries : USA
Industry : Information Technology

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