What eBay IsAnd How It Came To Be

What is eBay? I think the site's official mission statement does a good job of summing up what eBay is all about:

eBay's mission is to provide a global trading platform where practically anyone can trade practically anything.

What eBay does is simple: It facilitates the buying and selling of merchandise between users, over the Internet. Most (but not all) of eBay's transactions take place using a type of online auction, where interested buyers bid on items that sellers have for sale. eBay itself doesn't buy or sell anything; it carries no inventory and collects no payments. eBay is just the middleman in the selling process, hooking up buyers and sellers around the worldand collecting fees for doing so.

The eBay Story

eBay was one of the first online auction sites on the Internet, launched way back on Labor Day of 1995. It almost single-handedly pioneered the concept of online auctions and, in doing so, carved out the dominant market share. (It also made a lot of money for those who invested in the firmespecially in the early years.)

As the official story goes, founder Pierre Omidyar launched eBay as the result of a conversation with his then-girlfriend (now wife), who was an avid collector of PEZ dispensers. She supposedly commented to Pierre about how great it would be if she were able to collect PEZ dispensers using the Internet. Pierre did her a favor and developed a small PEZ-dispenser trading site, originally called Auction Web.

This small site quickly became a big site. Pierre started charging users a small fee to list items, to help pay his expenses. The day that Pierre opened his mailbox and saw $10,000 worth of fees was the day he quit his day job and made eBay a full-time proposition.

Because of its fee-based model, eBay is that rare website that made money from day one. That made eBay an attractive candidate for venture capital investment and eventual IPO; the company did, in fact, go public in 1998, and it made a lot of people (including Pierre) a lot of money.

Today eBay is one of the most successful Internet businesses in the world, making a little bit of money on each of the millions of transactions that take place every day. It truly is the number-one place to buy and sell any type of item online.

How Big Is eBay?

How big is eBay? Just look at these statistics:

• On any given day, eBay has more than 36 million items listed for auction.

• As of the end of 2005, eBay had more than 180 million registered usersalmost 72 million of whom are "active" users (having bid, bought, or sold something in the last twelve months).

• During the entire year of 2005, $44.3 billion worth of merchandise was traded over eBay30% more than in the previous year.

All this activity makes eBay not only the biggest shopping site on the Internet, but also the largest online community of any typebigger than Yahoo!, Google, or America Online.

And that's not small potatoes.