HOW DOES EBAY GENERATE REVENUE?

Introduction For Movies, Music, DVDs, Video Games and Books, the price is fixed for 5 cents. For any other category, it can range up to 30
Having more than 180 million active users, eBay is considered as the world’s second-largest retailer. Many business owners cents per listing.
have already sought to capitalize on eBay’s effective marketplace in order to expand their customer base.
It provides the perfect platform for business owners to sell their products and ensure that it receives ample exposure. This drives Final Value Fee (FVF):
the sales value of the product and ensures its purchase. It’s the money that eBay charges sellers when their product is sold.
Customers are usually wary of online purchasing and for a good reason. Many turn out to be inauthentic, and eBay stands out If a seller makes a sale on its platform, eBay will charge a commission for it. The commission
as an exception. It has a mechanism in place where customers enjoy protection from poor services and scams. Their safety and ranges from 2% to 12% of the total sales price and is charged by the name of Final Value Fee.
security is a topmost priority for eBay which is why it is such a trusted entity worldwide. The commission can vary depending on the category of the item or products. Also, there could
EBay’s best benefit by far is how its sellers have access to its shipping savings procedure. Their lowering of shipping costs be optional upgrade fees and more based on the different categories.
makes their services all the more appealing to buyers and sellers alike.

How does eBay make money? Category Insertion Fees Final Value Fees (% of sales)
General – Books, DVDs & Movies 10% (maximum fees of $750)
EBay Inc. is a global commerce company. Its revenue model is based on three main divisions: Motors – Parts, Accessories, Tools &
First 50 listings free per month, then
$0.35 per listing 12% (maximum fees of $750)
 Marketplace – it’s e-commerce platform that primarily makes money through fees. Supplies
 StubHub – it’s an online platform that sells sports/ event tickets and its primary source of revenue is through fees. Business & Industrial – Heavy
 Local classified platform – the primary source of revenue is through advertisements. Equipment, Commercial Printer, Food $20 2% (maximum fees of $300)
In today's information society, there is such a large amount of available information about any given good or service that Truck, Trailer etc.
consumers are unable to make an informed choice. Internet comparison sites (ICSs) could provide a solution to this problem Music Instruments & Gears – Guitars
Free 3.5% (maximum fees of $350)
by comparing markets for consumers and making a comprehensive recommendation. However, currently, they are not fully and basses
effective for consumers. Consumers do not trust ICSs because of concerns about commission biases and lack of full market
coverage. To be fully effective, ICSs also ought to cover non-price dimensions such as product quality and after-sales
service. Changing the economic model from the current two-sided platform to a one-sided platform could solve these Final Word
problems. In order for this to occur, changes or clarifications to existing EU consumer laws might need to be made (Gamper,
It is clear that eBay will continue to make strides in the online business hemisphere. Although it is not a giant like Amazon in
2012).
terms of dominance, it still remains as one of the most popular online retailers available.
Marketers know what a brand is in the physical world: the sum, in the consumer's mind, of the personality, presence, and
All it needs to do is makes itself more accessible to a broader demographic and enter different markets in terms of the continent,
performance of a given product or service. These "3 Ps" are also essential on the World Wide Web. In addition, digital brand
and it can catch up to Amazon in no time.
builders must manage the consumer's on-line experience of the product, from first encounter through purchase to delivery and
beyond. Digital brand builders should care about the consumer's on-line experiences for the simple reason that all of them--
good, bad, or indifferent--influence consumer perceptions of a product's brand. To put it differently, on the Web, the experience Bibliography
is the brand (Dayal, 2000). Clark, J. M. (2008). Consumer behavior in online auctions: An examination of partitioned prices on eBay. Journal of Marketing
EBay is one of the most successful consumer-related online auction sites. This paper describes a field study to determine the Theory and Practice, 16(1), 57-66.
effects of partitioned prices—that is, separate item costs and shipping charges—on the winning bids submitted by consumers Dayal, S. L. (2000). Building digital brands. The McKinsey Quarterly, 42-42.
on this site. Consumers appear to be subject to an anchoring and adjustment heuristic that leads many to ignore the less-salient
Gamper, H. C. (2012). How can internet comparison sites work optimally for consumers? Journal of Consumer Policy, 35(3),
shipping costs when bidding. Even experienced bidders exhibit these effects. This behavior is particularly striking in an
333-353.
environment where sellers set variable shipping costs. The results have implications for consumers and sellers on eBay and
similar online auction sites that allow sellers to set their own prices for shipping and other ancillary costs. Retailers conducting
auctions on other Web sites should find the results useful as well (Clark, 2008).

Insertion Fee:
It’s the money that eBay charges to the sellers for listing their products on its platform.
If a seller lists their article on eBay, he will be charged an insertion fee. The fee varies according to the item category and is
charged per listing.
Zero Insertion fees listings – Every seller on eBay is given at least 50 free listings per month. The platform then charges sellers
for every additional listing after providing them with the first free 50 listings.

LARAIB NISAR – 1947235 BSAF – 1D 25-Sep-19 2:32 AM