History and Science of eBayBy

Alfred Gutierrez Jr.

How eBay was founded within Pierre M. Omidyar

Omidyar’s History Accomplishments

Omidyar taught himself how to program in BASIC, in the 7th grade.

He graduated high school knowing how to program in PASCAL, a step up from BASIC. He was your typical high school genius.

Omidyar went to Tufts University in the mid-1980, where he majored in computer science and with his passion for Apple programming.

Omidyar’s History AccomplishmentsHis internship landed him a job with Silicon Valley and Innovative Data

Design.His internship led to a full-time job where he fit in perfectly in Silicon Valley programming sub subculture.

Omidyar finished up his undergraduate program at the University of California-Berkeley and received a Bachelors Degree in Computer Science in 1988.

Omidyar’s History Accomplishments

Omidyar and his partners founded a startup company called Ink Developed Corporation in 1991, but a year and half later Omidyar and his partners realized that Ink Developed was not doing as well as expected.

Omidyar re-launched eShop, while moving in the general direction of the internet, but not fast enough for him, so while retaining sizable equity of the company he helped found, he bought out the company along with stocks that made him a millionaire.

Omidyar’s History AccomplishmentsIn 1994, Omidyar wanted to put himself in more direct contact with people around the world using the internet.

Omidyar decided to auction off a broken laser pointer for testing out Auction Web.

Auction Web soon took over Omidyar’s entire domain—www.ebay.com—short for Echo Bay.With exponential growth and strong branding, eBay thrived, and led the direction of many other upstart online auction companies.By the time eBay gone public, Omidyar and Skoll were billionaires; the rest is history!

eBay headquarters in San Jose PayPal headquarters in San Jose

Skype headquarter in Luxembourg

How eBay Works

Using the internet relied on facts:• That most people are basically honest•eBay provides advise on scams and phony items•eBay provides feedback profile in online trading reputation•PayPal, made it safer for recipients to get their money without seeing sensitive financial details like your credit card or bank account numbers.

How eBay Works

Using the internet relied on facts:•The Price Is Right - is choosing a starting price by doing your research•Skype – software that allows people everywhere to make unlimited voice and video communication for free•Shopping.com – pioneered online comparison shopping•Online Classifieds - Designed to help people meet, share ideas, and trade on a local level.

How eBay Works

Using the internet relied on facts:•Note that bidding on your own is a big no-no, and grounds for suspension.•eBay offers a number of “listing upgrades”.•eBay also offers a research tool that teaches you how to be an affective buyer and seller.•By doing research on that item, you can be sure of getting a good deal.

eBay Science and Technologies

•eBay network is committed to protecting your privacy and the security of the information you provide to us.

•Secure Sockets Layer is a network industry-standard encryption protocol that is used to transmit users' personal or credit card information securely and privately over the internet. eBay uses this technology to keep your information safe.

•Secure Servers can be identified by the first part of the Web address. By convention, the addresses for web pages that use a secure server and SSL connection always start with https: instead of http:.

•Web Server is a computer program that is responsible for accepting HTTP requests from clients (user agents such as web browsers), and serving them HTTP responses along with optional data contents, which usually are web pages such as HTML documents and linked objects images.

eBay Science and Technologies•Auction software is application software that can either be deployed on a Web Server for online auctions, or as stand-alone software for commercial and/or charity live and silent auctions. This handles all aspects of conducting an auction. It also provides the ability for users to post items for sale in an auction format as well as the ability to bid on those items.

The inside/front of a Dell Server

A 19’’ rack seen with multiple servers

Sources•Cohen, A. (2002). The Perfect Store - Inside eBay. New York: Back Bay Books/Little Brown and Company.

•Layton, J. (1998 – 2009). How eBay works. (n.d.). Retrieved June 6, 2009, How eBay works: http://computer.howstuffworks.com/ebay9.htm

•Ebay Auction watcher. (n.d.). Retrieved June 6, 2009, from Auction watch: http://www.auctionswatch.info/

•Computer programming. (n.d.). Retrieved June 6,2009, from eHow.com: http://.ehow.com/information_1219-computer-programming.html

•Onyszko, T.2002, July 19). Secure C=Socket Layer. Retrieved June 6, 2009, from Window Security.com: http://www.windowsecurity.com/articles/Secure_Socket_Layer.html

•What are Web Server? (n.d.). Retrieved June 6, 2009, form Exforsys Inc.: http://www.exforsys.com/tutorials/clients-server/what are-web-servers.html

ECONOMICSSOCIOLOGY

LAW ON

EBAY

By Joseph Jaworski

Stumble!,

eBay Economics

eBay dramatically changed how people see and buy goods

Anyone on the network can buy or sell to anyone else with minimal barriers to entry or exit

eBay Economics

eBay participants now critical mass of consumers located on different continents

Simply a click of your mouse, and the product can be yours along with a feeling of excitement that comes from “winning”

eBay’s business model has made them one of the few profitable consumer-oriented auction web sites with gross margins ~80%

eBay Economics

eBay’s founder, Omidyar, believed that financial markets were suppose to be free and open, but everywhere he looked he saw well-connected insiders

eBay’s vision was to solve this problem by creating something that had never existed outside the realm of an economic textbook: a perfect market! Also known as Perfect Competition:

eBay EconomicsPerfect Competition:

Buyers and sellers are too numerous and too small to have any degree of individual control over prices

All buyers and sellers seek to maximize their profit

Buyers and sellers can freely enter or leave the market

All buyers and sellers have access to information regarding availability, prices, and quality of goods being traded

All goods of a particular nature are homogeneous, hence substitutable for one another.

SubstituteExample

eBay EconomicsPerfect Competition Demand Curve

The perfect competitor faces a graphically horizontal demand curve, perfectly elastic; meaning price sensitive to demand

What determines market price?

Supply and Demand

When supply and demand cross on the supply/demand curve, market price is determined

Market Price

eBay EconomicseBay’s Attempt Perfect Competition

In the eBay perfect competition scenario, a firm can sell as much as it wants to sell, at the market price

What if the seller raises the price? Seller gets killed by the competition offering the market priced substitute product

Can the seller lower the price? Seller can, but the seller can sell as much as he or she wants at the market price. However, money would be left on the table

eBay pure auction

seller starts with no minimum starting price and allows all similar auctions to compete (supply).

Bidders (demand) dictate the final price (market price) when the auction ends.

eBay EconomicsPerfect Competition or Maybe not?

Creating a Monopoly Through Collectables

eBay did achieve perfect competition in many cases Always exceptions

In the collectors market, eBay added more variety and quantities towards perfect competition Due to the human psychology factor, monopolies

were created as well

How?

eBay EconomicsPerfect Competition or Maybe not?

Creating a Monopoly Through Collectables

“THE MUST HAVE ONE OF A KIND ITEM” How many authentic game used Lebron James shoes

worn his rookie year are out there in the market?

eBay Economics

eBay’s CEO is estimating total company revenues expected to reach $10 billion to $12 billion in 2011

Up from $8.5 billion in 2008 Some led by strong PayPal growth, Skype and

other ecommerce formats

eBay EconomicsShopping

Thanksgiving-Christmas shopping season big for online retail and auctions over the years Best day- 2nd Monday in December coined by eBay as

“Green Monday” (green as in cash)

Green Monday in 2007 all time record $881M

Other notable 2007 online retail & auction days: "Black Friday": $430 million "Cyber Monday": $610 million "Green Monday": $881 million

eBay SociologyMotives and Social Effect

Auction participants relieved of social awkwardness and time consuming nature of face-to-face negotiating

Little formal attention has been given to categorizing bidder motives and studying the social effects of bidding

Studies suggest that buyers may participate in auctions to be a part of the “show,” and to communally decide the value of the product

Sellers may use auctions to arrive at a socially determined “fair” price for a product

eBay Sociology

Emotional motivations for the online auction society include:

Addiction to excitement Competing against rivals for a good deal Need for friendship and community

Rational reasons include: Getting good bargains and paying prices lower

than those at retailers Paying a “fair” market-determined price, and

obtaining information about prices

eBay Law- Fraud -

Auction fraud involves the misrepresentation of a product advertised for sale through an internet auction site or the non-delivery of products purchased through an internet auction site

eBay Law- Fraud -

The Fed’s are strongly cautioning online auction consumers against:

The seller posts auction as if he resides in the United States, then responds outside the United States

The subject requests funds to be wired directly to him/her via Western Union, Money Gram, or bank-to-bank wire transfer.

Sellers acting as authorized dealers or factory representatives in countries where there would be no such dealers

Buyers who ask for the purchase to be shipped using a certain method to avoid customs or taxes

Address of the card holder does not match the shipping address.

eBay Law- Fraud -

Online auction customers lodged more than 275,000 fraud complaints in 2008, a 33% increase from 2007

Total dollar loss $264.6 million/median dollar loss of $931.00 per complaint.

Up from $239.1 million total losses 2007

eBay LawCounterfeit Goods Online

Sources say counterfeit goods change hands through online auctions estimated at $2.8 billion per year

Companies stepping up their efforts to protect their brands. Firms are: Hiring attorneys and private investigators Buying software programs to patrol eBay and

other sites for fraudulent listings

Some investigations have led to arrests, and many have led to lawsuits.

eBay LawCounterfeit Goods eBay

eBay user agreements do not permit listing of counterfeits and unauthorized replicas

Violators of this rule are subject to punishments varying from listing cancellations to account suspension or seller-status demotion.

Sources Cohen, A. (2002). The Perfect Store. Ney York: Back Bay Books.

Comscore Measurements. (n.d.). Retrieved June 4, 2009, from comscore.com: http://www.comscore.com/Press_Events/Press_Releases/2007/12/Holiday_Retail_Green_Monday/(language)/eng-US

Consumer Reporting. (n.d.). Retrieved June 4, 2009, from ConsumerFraudReporting.com: http://www.consumerfraudreporting.org/internet_scam_statistics.htm

Ebay Announcements. (2009, March 11). Retrieved June 4, 2009, from Ebay Inc.: http://investor.ebay.com/releasedetail.cfm?ReleaseID=370291

FBI Crime Stat. (n.d.). Retrieved June 4, 2009, from The Internet Crime Complaint Center (IC3): http://www.ic3.gov/media/annualreports.aspx

Perfect Competition, Economics. (n.d.). Retrieved June 4, 2009, from Tutor2U: http://tutor2u.net/economics/content/topics/competition/competition.htm

ETHICS OF EBAY

By James Jackson

Extortion on eBay

Extortion exists on eBay

Buyers use extortion to get refunds through posting negative feedback messages

Demand a percentage of the purchase price to remove the negative message

Unethical

Sniper Software

Using software to grab the final bid

A form of cheating

Gives eBay a negative image

Unethical

Twitter for Sale on eBay

Unethical to sell a personal and private page from Twitter or MySpace on eBay

Might as well give away personal information to anyone.

Desperate need of money

EBAY PSYCHOLOGY

By James Jackson

Compulsive Shoppers on eBay

Three types of compulsive shoppers

Bargain hunter

Image shopper

Collector

Bargain Hunter

Always looking for sales

Always uses coupons

Purchases things not needed

Flea Market

Image Shopper

Look at me, see what I have

High priced jewelry

High priced clothes

Expensive vehicles

Collector

Collects stuff in order to fit into a collection

Out of control

Beyond ability to pay

eBay Gambling

Auctions are similar to gambling

eBay is an online auction

Risk of winning and losing

Sources

Cohen, A. (2002). The Perfect Store - Inside eBay. New York: Back Bay Books/Little Brown and Company.

  Debra Schepp, B. S. (2004). EBay Powerseller Secrets: Insider

Tips From EBay's Most Successful Sellers . New York: McGraw-Hill Professional.

  Donaldson-Evans, C. (2006, March 30). EBay Shopping: A Hard

Habit to Break. Retrieved May 20, 2009, from FOXNews.com: http://www.foxnews.com/story/ 0,2933,189365,00.html

  Green, H. (2008). Twitter: Friends for Sale. Business Week

Online , 7.

Sally Palaian, P. D. (2009). Spent. Center City: Hazelden.