eBay business model and operations

EBay is an online auction website, and pioneered this business model. eBay runs its website, in multiple countries, and acts as an intermediary for buyers and sellers. The company earns its revenue by charging for listings and taking a profit on transactions. eBay has 128 million active users around the world. It also owns PayPal, which is a leading online payment site. eBay was founded in 1995 and has remained the leader in its industry since then (eBay, 2014). eBay has long been a technological follower, however, as other e-commerce sites leapfrogged eBay. The popularity of the eBay brand, however, and the efficiency of its marketplace, have helped it to succeed over time, and it has recently begun to update its technology to be more competitive going forward.

Business Model

eBay operates its business entirely online. The company's flagship brand is a set of websites that act as intermediaries for buyers and sellers, with eBay earning revenue from this activity. In that way, eBay has differed from many other 1990s e-commerce ventures in that it always had cash flow, and a viable business model. eBay has expanded into a number of other areas since then. With its acquisition of PayPal, eBay has been able to move into the online cash flow business, where it takes a cut of money movements around the world, as people send funds to each other for business transactions. eBay has also expanded into conventional sales, leveraging its existing sales architecture to move goods for retailers and in that way compete more directly with e-commerce behemoth Amazon.

Current Trends and Issues

eBay has been a financial success for its entire existence. While this success pales against companies like Amazon and Google, eBay remains one of the bigger online success stories. It made over $16 billion in revenue last year, which is almost double 2009. There were $2.8 billion in profits, and the company has had steady profits at a high level (MSN Moneycentral, 2014). Thus, eBay is considered to be a financial success and its early shareholders have made incredible returns.

There are new business opportunities for eBay. In the online business, companies need to be innovative and act quickly when new market opportunities present themselves. Reports show that eBay is currently moving to acquire more cash in order to invest more into the smartphone payment business. There are new apps that are going to compete with PayPal and that are geared towards mobile devices, so this is a threat to eBay but it is also a bit opportunity because PayPal is the best brand in that online payment industry (Seetharaman, 2014).

Another emerging issue for the company is eBay has faced legal action from the Department of Justice about agreements between tech companies not to poach each other's employees. There were anticompetitive agreements that employees were made to sign and this inhibited their ability to earn a living by restricting the number of companies that they could work for in the industry. Such deals came under government fire. eBay only settled on this one recently, paying $3.75 million in a settlement to the States of California (Streitfeld, 2014).

Technology and Competitive Advantage

eBay's information systems provide an opportunity for competitive advantage. Customer relationship management is an important aspect of online selling, and this is something that eBay is starting to improve. The site uses software to not only to help track bids and auctions for its customers, but to alert them when auctions are started for products that they might be interested in (eBay, 2014). This is important, because it makes for a better market. When the market is better, there are more sellers, and this attracts more buyers as well. The overall result is that by flowing information from eBay's data center to the website, providing a push to buyers to look at other bids, eBay is going to build its business.