eBay, Inc.: The Online Auction Industry

Abstract

In 1997, Pierre Omindyar, online auction house eBays founder, drove into Silicon Valley without a business plan, laptop, presentation or even a functional website. However, his concept of a worldwide flea market was so attractive that Benchmark Capital could not resist. In early 2002, eBay, one of the few Internet businesses that has been profitable during the economic slowdown of 2000/2001, had total sales approaching $1 billion; however, CEO Meg Whitman has promised to increase revenues by more than three times to $3 billion by 2005. A question for eBay was how to continue to increase revenues in an increasingly competitive market. Expansion was limited outside of new geographic territories, and every market participant was striving for a piece of the industry. The main question to be resolved was how to differentiate eBay from its competition and achieve a competitive advantage within both a short and long-term time frame.