A Little eBay History

You might have heard the story that eBay began as an act of love, invented by Pierre Omidyar as a way for his fianc e, Pam (now his wife), to trade Pez dispensers with other collectors. It's a nice story, and there's some truth to it, but things didn't happen in quite that way.

In 1995, Tufts University graduate Omidyar was working as a software engineer at General Magic, a Silicon Valley mobile-communications company. In his spare time, Omidyar developed Auction Web, an online auction platform. He was interested in the potential for an auction format to create a fair and open marketplace , where the market truly sets an item's value. In an auction, anyone can bid until the price reaches the highest amount someone's willing to pay. The market price changes from day to day, depending on demand and who's bidding.

While Omidyar was experimenting with Auction Web, he did consulting work under the name Echo Bay Technology Group. When he wanted to register a Web site for his company, Echo Bay was the name he planned to use. But when he filled out the paperwork, he learned that echobay.com was already taken. Faced with the need for a unique name , he decided to abbreviateand eBay was the result.

Why It Works

When Omidyar developed Auction Web (soon to become eBay), he had a full-time job, and he wanted to enjoy life on the weekends. He didn't want his hobbyAuction Webto steal every waking minute outside work. And he wasn't trying to build a system that could handle traffic from 40 million buyers and sellers every day. He simply designed the site to keep itself going when he couldn't be there tinkering with it. And he deliberately kept Auction Web simple so that it could handle unexpected challenges as it grew.

Beyond the technology, Omidyar envisioned the site as a community, based on five main values:

People are basically good.
Everyone has something to contribute.
An honest, open environment can bring out the best in people.
Everyone deserves recognition and respect as a unique individual.
You should treat others the way you want to be treated.

These "community values" remain key to the site. They're why eBayers are willing to send money to a stranger across the country, trusting that the item they bought will arrive in next week's mail. The values are the underpinning of feedback (Section 2.1), which eBayers use to rate a completed transaction; feedback works because it's open and (usually) honest. You can learn a little about a trading partner before you decide to do business, and your own reputation, good or bad, is out there for anyone to see.

Note: The Feedback Forum began in February, 1996. Originally, Omidyar handled disputes between buyers and sellers via email; when someone sent him a complaint, he'd put the disputing parties in touch with each other and ask them to work it out themselves . Eventually, he realized that one way to get people to trust each other was to bring their opinions about each othernot just the complaints but also the praiseinto the open.

The combination of adaptable technology and a strong sense of community has probably contributed more than anything else to eBay's success.

Note: eBay faced some growing painsin the early years , its business rocketed skyward faster than its servers could handle, causing frequent crashes. In the summer of 1999, eBay was offline for 22 hoursan eternity in the world of online auctions. After that crash, eBay staffers called eBayers to apologize. It was the kind of gesture that gains customer loyalty. And, despite the inevitable complaints, eBayers are loyal.

eBay Now

What began as a small site for individuals to trade collectibles has exploded into an international marketplace where everyone, from the lady down the street to large corporations, sells millions of items in thousands of categories. Two of eBay's fastest -growing categories are cars (eBay Motors, Section 4.2.3) and real estate (Section 4.2.4). eBay has spawned hundreds of imitators, but not one even comes close to being a true competitor.

eBay continues to grow; it's expanded to more than 25 countries , including Argentina, Australia, Brazil, Canada, China, Germany, India, Korea, the Netherlands, Poland, Singapore, Taiwan, and the United Kingdom, to name just a sampling. It's bought or invested in a variety of other Web sites: Half.com, a fixed-price media marketplace; Craigslist.com, a network of online communities featuring classified ads and discussion forums; Rent.com, a site to post and search listings for rental property; and Shopping.com, a price-comparison site. As this book was going to press, eBay announced the creation of www.ebaybusiness.com, a new marketplace where businesses can buy and sell products.

As eBay grows, it changes. Sometimes you'll notice that the home page looks a little different or a procedure you've done a hundred times has suddenly gained or lost a step. eBay tweaks the site constantly, adding new categories, upgrading sellers' tools, changing the look and feel of its pages. For this reason, some of the figures in this book might look a little different from what you see on your computer screen. Don't panic. You can always find your way from the navigation bar at the top of every page, shown in Figure I-1.

Figure I-1. The eBay navigation bar gets you where you want to go, quickly. Buy takes you to the Search page to shop for items. Click Sell to register as a seller or, if you've already registered, list an item and get selling tips. My eBay keeps track of all your eBay activity. Community takes you to discussion forums, and Help lets you get answers to your questions.