eBay Business Model – How does eBay make money?

How many hours do you spend on browsing the internet? 2 hours or 3 hours.

If you’re a shopaholic you might surely know that power of eBay. For most people, eBay is the destination for buying products at reasonable prices. And for a few people, the marketplace is the go-to destination for running their business. Creating a seller account or buying a product on eBay is well worth.

What is eBay?

eBay is the best online marketplace that let sellers and buyers connect with each other without hassles. eBay is popular for online merchants to promote their products or services. Simply put, many businesses are creating a seller account and using eBay as a “Sales Channel”. As international sellers are selling their products or services, customers can buy them from many countries. However, customers can easily search for the available local products by entering the zip code. Also, customers can search for products that are available internationally.

Anybody can create an eBay account for free!!! Whether you’re planning to buy or sell the products, it’s absolutely your choice. When you create a seller account on eBay, there are listing and commission fee are associated with it. The charges may vary from one product to another product.

eBay Stats and Facts

  • Pierre Omidyar is the founder
  • Founded on September 3, 1995
  • Headquarters located at San Jose, California, United States of America
  • Over 185 million active buyers around the world
  • Net worth – 770 Billion U.S Dollars (as of September 2020) 

eBay business model

According to the analysis, eBay is the 2nd most influence marketplace in the United States. eBay is the popularly known for a massive range of products. It’s no surprise websites like eBay such as Amazon and Flipkart and performing well but eBay revenue generation model. eBay doesn’t store the inventory of bulk projects rather than handle-over the purchases to the sellers directly.

At the end of Sep 2020, eBay posted a net worth of $770 billion. This could be great news for eBay investors. As mentioned earlier, creating an account is free on eBay. But the million-dollar question is how does it make money. If you want to know the answer, continue reading…

How does eBay make money?

eBay is performing strongly in the market right from the beginning of its launch. There are multiple business segments that are introduced by eBay. It includes fees, advertising services, StubHub, PayPal and more. Let’s dive into the topic…

No charges are applied for customers

Customer is King!!! eBay doesn’t charge a single penny when customers purchase a product on its platform. If you’re planning to purchase something on eBay, you don’t need to bother about charges or fees.

Fees to sellers

As discussed earlier, sellers need to pay a portion of the fee for the listing and selling their products on eBay. It’s no secret that eBay generates a good amount of revenue through fees. The charges are applied according to the product. For example, when customers purchase a laptop the fee will be more. On the other hand, if the customer purchases an earphone, the fee will be less. Simply put, the fee may range from 3.5% to 10% of the total sale. With more than 88.4 billion dollars worth of sales are conducted on eBay. Here the seller’s fee is generated 1/3rd to 3/4th of eBay net revenue.

Don’t let the fees will put off from selling your products on eBay. It’s a good place to increase your sales. Because there are millions of monthly visitors similar to Amazon and Walmart. Also, the fees are lower when compared to other marketplaces such as Amazon and Flipkart.

Advertising

eBay is a profitable company. Apart from selling fees, eBay is making good income by offering advertising services to its sellers. Yes, you’ve heard it right!!! If you’re a seller and looking to make better profits, advertising your products on services on eBay home page is the best way for you. This way many sellers are selling their products without hassles. Also, eBay has earned more than $333 million in the Q2 of 2020. As millions of sellers are planning to advertise their products for better conversions, therefore we can expect that advertising services will become a primary source of income in the upcoming years.

StubHub

If you’re the one who loves watching a movie or attending a sporting event then you must be aware of the resale company – StubHub. It is a popular ticket exchange company. Users can buy or sell sports, concerts or movie tickets on StubHub.

The online ticket agency StubHub was acquired by eBay on Jan 2007. According to analysis, StubHub is the 2nd largest ticket platform in the United States. StubHub is the best place for the sellers who are planning to list movie or concert tickets. Because there is no listing charges are encouraged on StubHub. Sounds amazing right!!! You might be wondering how does eBay make money through StubHub. Sellers will be charged 15% when the ticket gets sold out and buyers will be charged 10% on their purchase.

PayPal

PayPal is the most preferred to pay online. Sending and receiving global payments is simple and easy. Did you know eBay is earning good revenue through transaction charges on PayPal? Yes!!! More than 1/3rd of PayPal revenue was generated via PayPal. eBay has generated $3.9 billion net worth in the last year. It means 41% of revenue is generated from PayPal.

Attractive features of online marketplace eBay

  • eBay is the best place to buy and sell products online.
  • Customers always look for return policy. eBay is offering return product with a 100% money-back guarantee.
  • The authentication policy and product verification are handled and managed by professionals.
  • eBay offers multiple payment options such as net banking, PayPal, Paytm and more. Customers can choose their preferred payment method according to their convenience.
  • EMI option is also available. Customers can buy their favourite products through monthly instalments.
  • Customers can wishlist their favourite product. Write feedback or review through the catalogue on eBay.

Why eBay is successful?

eBay is the leading marketplace. It means the website has good competition. With the attractive features and benefits, eBay stood as a good e-commerce platform across the globe. The website is facing a large list of competitors. eBay is the one-stop destination to offer an auction of products. The auction feature is setting a large audience base around the world. There is no platform that is offering the auction feature on their website. eBay is presenting with unique and rare collectable products. Also, the auction feature is making it more appealing to all the customers on eBay.

Let’s discuss eBay user interface. eBay is offering a unique and attractive user interface. Users can search for local and international products with effective search functionality. The eBay interface is setting the eBay unique from the competitors in the marketplace. The number of products and services, price and other features are the key aspects for the eBay that is letting it’s successful.

As mentioned earlier, eBay is the one-stop destination to buy or sell products across the globe. The e-commerce platform eBay is pretty different when compared to other key players. The ultimate goal of eBay is to offer good services for both sellers and buyers. The auction feature is allowing sellers and buyers to engage effectively on eBay.

Wrapping up

Whether you’re planning to buy the latest mobile phone or fashion accessories, eBay is the perfect destination for you. The platform is offering free shipping on millions of products. Customers and sellers are taking good advantage of eBay. Since eBay has earned trust from millions of buyers and sellers, the marketplace is making a good income. eBay has earned $770 billion in 2020. The major income is generated by commission fees, advertising and StubHub. With an effective user interface and the auction is letting the eBay stand unique from the huge competition. Also, eBay will earn more and more profits in the future as well.

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