While Ebay’s business model is based on 3 key monetization strategies – Fees collected on paid sales, payment processing and first-party advertising, let’s find out how it is being done.
eBay is trying to standardize item specifics so that search engines like Google can find content more easily, which may lead to more sales. However, some say that listing one size in the specifics can affect searches for people of other sizes. eBay recommends that sellers add details like measurements for clothing, but they can’t force sellers to do so.
What is Ebay?
eBay is an online marketplace that allows users to buy and sell a wide variety of items and services. It was founded in 1995 by Pierre Omidyar and has become the world’s largest online marketplace, with over 195 million active buyers worldwide.
eBay is one of the biggest online marketplaces with a vast global market share. It operates in 190 markets around the world and serves over 180 million worldwide buyers.
It is one of the largest online ecommerce marketplace that deals in new as well as used items for sale/purchase.
FYI – Alibaba is the world’s largest online marketplace by gross merchandise value (GMV). In 2021, Alibaba accounted for 24% of the global GMV, while Amazon only accounted for 13%. Alibaba also has the world’s largest user count, with over 900 million active users, including 100 million buyers.
While, Amazon is the world’s most visited online marketplace, with an average of 4.8 billion visits in April 2023. eBay is the second most visited online marketplace, with roughly 1.2 billion visits in April 2023. Amazon and eBay are also the world’s top online retailers in terms of mobile web traffic.
How does eBay work?
eBay connects buyers and sellers from all over the world to buy and sell new or used products through its website and app. It takes care of business to consumer (B2C) and consumer to consumer (C2C) transactions.
eBay doesn’t sell any items itself, instead it allows users to list items for sale, which other users can then bid on in auctions. eBay generates revenue through transactions across its platform, marketing services, and advertising.
How does Ebay make money?
eBay’s main business model revolves around providing marketplaces for third-party sellers and primarily business-to-consumer and consumer-to-consumer customers. eBay makes money from advertising, fees, and services it provides to customers. The amount eBay takes from a sale depends on the item’s final selling price, category, and any additional fees. On average, eBay takes between 10% and 15.55% of the final selling price in fees. This percentage can increase if you’re selling internationally or using promoted listings. eBay’s revenue model includes:
- Advertising: Revenue is derived from the sale of online advertisements, which are based on “impressions” or “clicks”.
- Fees: eBay deducts selling costs and fees related to your sales from your funds prior to payout. It charges sellers a listing fee to showcase their products on the platform, and a final value fee as a percentage of the final sale price. The final value fee ranges from 10–12% of the product’s selling price, including shipping costs. Sellers can also pay promotional listing fees to highlight their listings. Examples of eBay selling fees include final value fees, insertion fees, Promoted Listings, listing upgrades, and Store subscription fees.
- Services: eBay provides services to its customers, such as marketing services.
- Payment processing: eBay collects fees for payment processing.
- First-party advertising: eBay generates revenue through its advertising initiatives.
eBay Business Model: How does eBay work?
eBay is a global online marketplace that operates as an online auction and fixed-price sales business model, and targets both buyers and sellers. As of April 2024, eBay had a market cap of $26.52 billion and around 1.2 billion monthly visits. eBay’s business model includes:
Promoting eBay: Through email, IM, chat, text, and other electronic communications
Loyalty and incentive programs
Software: Applications and downloadable tools, mobile apps, sub-affiliate networks, and paid traffic
What are the top selling items on ebay?
eBay sells across categories like electronics, home and garden, fashion, health and beauty, sporting goods, crafts, jewellery, and watches.
Alternatives to Ebay
While some resources across the internet say that ebay is no more applicable, some website like eBay include: Amazon, Etsy, Walmart Marketplace, Mercari, Poshmark and Whatnot, The Real, Depop, StockX, FBMP, Craigslist, OfferUp, NextDoor, and AuctionZip.
Challenges with eBay
Ebay is facing challenges with individual sellers, part time sellers, hustlers. It is just ok if they are trying to sell Chinese knockoffs. Also, ebay still does not have a mobile app. selling on mobile devices: Customers can shop on eBay through mobile and tablet apps. There are shipping delays in case of international orders. Competitive online marketplaces like Amazon and Alibaba are leaving it behind. It still faces delivery issues which is becoming the reason for negative reviews.
Also, new sellers are limited to 10 product listings per month with a total value of $500. At times, Ebay has also faced security breach that caused buyers to avoid the site and slow down buying activity. Changes to Google algorithm affected search result rankings of eBay. Moreover, poor SEO management has also contributed to a decline in traffic. And, reduced trust in eBay sellers has driven buyers away from the site.
What is the mobile app development cost for developing a website like eBay in India?
The cost of developing a mobile app in India can vary from 2.5 lakhs to 20 lakhs, depending on the app’s features and complexity. This includes development cost, hosting and maintenance, payment gateway, marketing and advertising.
Key Learnings
eBay connects buyers and sellers in more than 190 countries globally. Its sustainability and success depends on factors like pricing strategy, product niche, and cost management. eBay’s revenue is driven by transaction volume, which they call Gross Merchandise Volume (GMV).
The cost of eCommerce mobile app development in India might vary based on several factors, including the app’s features, complexity, and the development team’s experience. Consider expertise, portfolio, tech stack security, data security, and app requirements while selecting mobile app development companies for ecommerce app development in India!