The Ebay Effect: Inside a Worldwide Obsession

At the beginning of 21st century, eBay was referred as one of the fastest growing markets in the world and moreover classified as the world's hottest company. Essentially, eBay is the first global online market place that connects buyers and sellers 24/7 across the globe and has fundamentally change the way people think about trade. Indeed, this company presents 135 million customers as well as 1.8 billion items listing for sale on the website.

As a matter of fact, eBay is different virtually from any other company. What made eBay different from other online retailers such as Amazon is the fact that its business relies on the hard work of hundreds of thousands of people who sell on its website, and who do not get paid a dime. eBay actually refers to them as the eBay community. Although the company does not pay its community, it certainly understands its significance to the bottom line - Net income. In addition to this, another unique characteristic of eBay among major corporations is its ability to handle the risk of alienating the source of its revenue, in other words, eBay has a position of deciding which customers to believe and which buyers and sellers need to be suspended. Furthermore, eBay also must decide what can be sold on the website, and which items should be removed since some categories are not allowed for sale such as Nazi paraphernalia and guns.

One of the challenges that the Management department faces is to do what is right for the company without alienating the community that it relies on.

In spite of the company position stating the fraud and Internet scams are minimal among total transactions, it is believed by many that the eBay is underreporting the actual levels of fraud because of its focus on sales and revenues as well as a way to protect the firm's image. With regard to the question why there are so many complaints and frauds on eBay, one of the reasons is the increase of the fees charged by the company to its users. There are fees for listing upgrading, picture services and storing. The company takes 7 % of the price of the item sold, and at the same time collects fee from its online payment processing company PayPal. In total, all fees end up to about 4.2 billion dollars. In brief, the reason for the fee raise is that overall sales were decreasing, that's why eBay used the fees to encourage sellers to move items from store to the general