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20 years of eBay: Where does it go from here?

On September 3rd, 1995 a small auction site called AuctionWeb went live as a sub-page on a site for a business called Echo Bay. Two years later it renamed as eBay. The rest is history.

When Pierre Omidyar, a French-born Iranian immigrant living in San Jose started eBay, it was, he claims, a hobby and an experiment to see if people would use the internet to create a market. It’s now worth over $68bn and is considered one of the world’s biggest brands.

Last month, eBay’s payment tool PayPal split away from its parent to form a separate business, interestingly valued at around $44bn. Clearly Omidyar’s experiment worked and has made him a very rich man but was eBay just in the right place at the right time? And what influence has it had on the growth of the internet since?

Perhaps one of the most consistent words that is used to describe eBay is democratisation. It was after all the first site to truly create a platform for anyone to buy and sell stuff.  According to eBay the first thing ever sold on the site was Omidyar's broken laser pointer, which went for $14 but today there are over 25m sellers across the world.

Alongside Amazon, eBay is surely the largest virtual department store in the world but its influence has been felt across the retail industry. The impact on retail is unquestionable.

“It’s no longer a website just for people to auction second-hand items, it has evolved into a thriving online marketplace where everyone from large businesses to sole traders can sell their wares, and has even become a place where start-ups can find their footing amongst giant retailers,” notes Robert Mead, marketing manager at delivery firm Parcel2Go.com.

Data driven

Certainly eBay has pioneered the idea of marketplaces and rating buyers and sellers. Barbara Marino, EMEA Commercial Director at Datalicious claims that this use of customer and seller data to improve platform experience has been key to its early success but also its ongoing development.

“eBay is only getting better at contextualising its data sources,” she says. “It might be 20 years old but its lesson to the internet has been that success comes from continual data innovation.”

She has a point, although one with a bit of vested interest. Nevertheless data-driven retail experiences are all the rage and eBay will no doubt be one to watch, especially now it no longer has PayPal within its ranks to boost its profits. The pressure to innovate and grow will only increase.

Its work in tackling delivery costs through the eBay+ membership scheme (currently on trial in Germany), through to developing mobile tools such as RedLaser have revealed its thinking. It has to look after the sellers in terms of administration while aggressively tackling the ongoing competitive pressures of retail, particularly in mobile.

Two years ago the company also started trialling Connected Glass, a widely reported project for large touchscreen shopping ‘windows’ to create an interactive shopping experience. Given that 92% of transactions are still happening offline, at least according to one report, bridging the offline and online retail worlds has always been a challenge.

Growth and acquisition

Interestingly a lot of innovation is being driven by problems and ideas raised by its user base. David Mills, CEO at Ricoh Europe believes it’s a good listener, at least when it comes to business development.

“Once known as an online auction house, it has now developed technology partnerships with big retailers like Home Depot and Toys ‘‘R’’ Us and expanded its online marketplace to include reliable, returnable goods at fixed prices,” says Mills. “Businesses should learn from this agility and evolution – it’s what kept eBay at the top of its game, still regarded as the king of online sales channels.”

Big praise and no doubt Amazon would argue for that title. So what next for eBay?

According to Nenad Cetkovic, COO at ecommerce company Lengow, eBay needs to “re-invent itself” against the likes of Amazon, Rakuten and Vente-Privée.

“What will its role be in the East?” asks Cetkovic. “Many people believe that the new eBay –smaller from its separation from Paypal – could serve as a partner to Alibaba, which wants to expand in the West. Will the relationship be partnership, competition or acquisition? The scenarios are endless for the US marketplace that would provide an ideal partner in the West to the Chinese ecommerce giant.”

Looking back eBay has had some unusual moments. Someone selling Britney Spears used chewing gum in 2004, a jar of Brad Pitt and Angelina Jolie’s breath in 2010, and someone nearly got away with auctioning off New Zealand for $3000 in 2006 – all have added to the site’s zeitgeist. It’s difficult to see it not developing further, building through acquisition, probably from technology developed through one of its incubation programmes in Israel and Bangalore.

Or perhaps Cetkovic is right. Without PayPal, eBay is now leaner and a tasty acquisition target. Whichever way it goes, online auctions are here to stay and we can thank a well-timed, perhaps even lucky experiment for that.

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Marc Ambasna-Jones

Marc Ambasna-Jones is a UK-based freelance writer and media consultant and has been writing about business and technology since 1989.

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