How does ebay make money?
Discussion
Hi all,
A very quick question about ebay. I have used them on probably ten occasions now but never stopped too much to think about how their business really operates. They seem to be a profitable organisation in facilitating transactions on a consumer-2-consumer (C2C) basis. So how do they make so much money? Do they take a cut of the selling price? Is it a cut of PayPal payments? Are there other ways that make turnover - or is it a combination of the above?
I'd be interested to know as I have project coming up and need to choose a company that have really done well out of the internet and have developed a successful business model. It seems to me that Amazon are successful when you consider how many books (etc) they turnover, but as yet their costs far outsrip their profits.
All information and opinions would be welcomed.
A very quick question about ebay. I have used them on probably ten occasions now but never stopped too much to think about how their business really operates. They seem to be a profitable organisation in facilitating transactions on a consumer-2-consumer (C2C) basis. So how do they make so much money? Do they take a cut of the selling price? Is it a cut of PayPal payments? Are there other ways that make turnover - or is it a combination of the above?
I'd be interested to know as I have project coming up and need to choose a company that have really done well out of the internet and have developed a successful business model. It seems to me that Amazon are successful when you consider how many books (etc) they turnover, but as yet their costs far outsrip their profits.
All information and opinions would be welcomed.
Intresting story about Tesco.com here [url]www.theregister.co.uk/2004/04/20/tesco_ecommerce/[/url]
TUS 373 said:
Do they take a cut of the selling price? Is it a cut of PayPal payments? Are there other ways that make turnover - or is it a combination of the above?
It is all of the above. As mentioned they charge you when you make a listing and the higher the start price and the more 'extras' (such as a bold listing, more photos used) then the more they charge. They also charge you to use 'reserves' and 'buy-it-now' when selling items.
When an item sells eBay will take a small percentage of the final selling price too. And now that they have bought out PayPal they also get a cut (up to 6% I believe) of millions of transactions.
eBay used to be a VERY cheap way of selling but isn't so great anymore. I just wish I'd thought of it - image taking a cut of thousands of deals every single minute!
Ebay has become expensive to use compared to a few years ago but this is offset by the popularity of it and that you are more or less gauranteed to sell your item if listed realistically.
Ebay take a cut at just about every turn, listing/buy it now, scheduled starts, pictures, gallery pics, featured items, bold wording, sub heading (50p - shocking!) final value fee, paypal (ebay owned) blah blah blah.....but you've got the biggest market place at your disposal so they can get away with it.
Ebid for example is more or less a clone of ebay and they've done a cracking job on it but if you want to sell something at a good price you're always gonna choose ebay, they've got you by the danglies and they know it.
John
Ebay take a cut at just about every turn, listing/buy it now, scheduled starts, pictures, gallery pics, featured items, bold wording, sub heading (50p - shocking!) final value fee, paypal (ebay owned) blah blah blah.....but you've got the biggest market place at your disposal so they can get away with it.
Ebid for example is more or less a clone of ebay and they've done a cracking job on it but if you want to sell something at a good price you're always gonna choose ebay, they've got you by the danglies and they know it.
John
Yup, I'd imagine they probably make about 5% per transaction, and they don't even have to deal with the product at any stage, which is obviously a massive plus that few other companies can boast of.
They are also clever when it comes to advertising, every week theres a thread in general gassing about another funny item posted. All knocking that brand name into the conscious. I think its fair to say that ebay is a byword for online auction. A lot of their advertising is through affiliate schemes whereby they only pay for the advertising if someone signs up via it.
Something to bear in mind though is that I'd think its near impossible to build another ebay, there have been many attempts but the important thing about ebay is it has the critical mass of users, people don't want to advertise where no one will see the ad, and no one wants to view a site that doesn't have many adverts.
Of course buying paypal was the iceing on the cake for ebay.
They are also clever when it comes to advertising, every week theres a thread in general gassing about another funny item posted. All knocking that brand name into the conscious. I think its fair to say that ebay is a byword for online auction. A lot of their advertising is through affiliate schemes whereby they only pay for the advertising if someone signs up via it.
Something to bear in mind though is that I'd think its near impossible to build another ebay, there have been many attempts but the important thing about ebay is it has the critical mass of users, people don't want to advertise where no one will see the ad, and no one wants to view a site that doesn't have many adverts.
Of course buying paypal was the iceing on the cake for ebay.
Yep. I'd agree with everything mentioned.
My wife sells a lot of stuff on eBay. It is her primary outlet at the moment, although she is trying to increase direct sales via her website.
She pays eBay literally HUNDREDS of pounds every month in listing fees, final valuation fees, PayPal charges, etc.
Multiply what she pays by the large number of other regular sellers and you can see that eBay are raking it in.
My wife sells a lot of stuff on eBay. It is her primary outlet at the moment, although she is trying to increase direct sales via her website.
She pays eBay literally HUNDREDS of pounds every month in listing fees, final valuation fees, PayPal charges, etc.
Multiply what she pays by the large number of other regular sellers and you can see that eBay are raking it in.
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