The Evolution of eBay

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Origins of eBay

Originally registered as AuctionWeb, eBay was founded by Pierre Omidyar in 1995 as a site that was dedicated to linking buyers and sellers in an open and honest marketplace. The company made its first sale in 1995 when a Canadian named Mark Fraser bought the first product that the founder had listed – a broken laser pointer. The company’s founder hired Chris Agarpao as its first employee on June 1996 to assist in coordinating the rapidly expanding organization's online operations. During the same month, the firm sold goods worth $7.2 million. During the first quarter of 1997, eBay sold $500 million worth of Beanie Babies, a line of stuffed animals and by October the same year the company sold its millionth item. The company also introduced Feedback Forum, a platform that allowed sellers and buyers an opportunity to rate eBay's transactions and created a virtual community of confidence and openness. AuctionWeb was officially renamed eBay on September 1997.

eBay Goes Public

eBay went public on September 1998 after issuing a successful IPO and listed shared on NASDAQ under the icon EBAY. Initially, the company's shares were projected to trade for around $18, but they shattered expectations to reach $53.50 within a day. On December 1998, eBay foundation was established and it became the first corporate foundation to be awarded pre-IPO stock. Since its inception, the foundation has donated more than $30 million to non-profit organizations across different parts of the world. The company started expanding to other countries in 1999 by launching sites in the U.K., Germany, and Australia. Currently, it is available in 180 countries. Over the years, the company has continued to expand in many forms by launching customizable applications for sellers and making several acquisitions of related sites.

Acquisition of PayPal

One of the notable acquisitions that eBay made is the purchase of PayPal in 2002. The acquisition of PayPal, an innovative system for secured and hassle-free online payments, unified the internet's largest marketplace. As part of eBay for more than a decade, PayPal was able to achieve strong growth and worldwide leadership place in digital payments. The two companies forged strong synergies that benefited both companies for several years. As an online company, eBay relies greatly on computing technologies to grow into the giant online retailer that it has become. The company achieved this growth by implementing strategically virtualized business operations to boost efficiency. Additionally, eBay uses machine intelligence to enhance the customer's retail experience as well as to generate new revenue streams. The skill with which eBay has harnessed machine and mind in its strategic decisions since its establishment suggests that the company is well-positioned to adapt to the highly dynamic online retail context of the coming machine age.

Virtualization and Pattern Recognition

From its establishment, eBay built its business model on the basis of virtualizing specific aspects of the business processes relating to buying and selling. While the procedure of buying and selling previously usually required the items, the buyers, and the sellers to be physically present at a certain location, eBay's business model demonstrated that the physical movement of buyers, sellers, and products was not necessary for the buying and selling process to be successful. According to McAfee and Brynjolfsson, the virtualization process involves changing physical processes into procedures that move and convert bits on a computer's screen (4). The authors further noted that virtualization accelerates "when networks and convenient digital devices are present everywhere" (5). As computers and digital devices became more widely available, eBay extended the scope of its virtualization by introducing a systematic process for placing an item for sale, ordering an item, making payments, and shipping or delivery (McAfee & Brynjolfsson 5).

Nevertheless, eBay's strategic separation between human-centric processes and processes that can be virtualized does not encompass the company's use of robots for picking and packaging processes when delivering customer orders. This is not possible because eBay does not have warehouses to store inventory. Consequently, the company does not find the need to use robotics in the buying and selling process. Instead, customers and sellers only transact using eBay as a platform and it is upon the trading parties to arrange for pick-up and delivery.

Lastly, it is important to note the role that pattern recognition machine intelligence systems play during the selling and shopping process. At eBay, pattern recognition systems are configured to detect patterns in shopping and selling preferences or behavior and offer recommendations to members on the eBay platform. For instance, eBay bought in 2000 in order to simplify the process of selling movies, games, books, and music after realizing that sellers were experiencing problems when it came to selling such items on eBay. The company also introduced a "new fixed-price feature" called "Buy It Now" that allows eBay users to purchase items instantly at a fixed price. The other example where eBay makes use of pattern recognition systems to detect patterns in selling is the introduction of its Application Programming Interface (API), which enables developers across the world to tap into the power of eBay by creating customized interfaces with distinct functionality. McAfee and Brynjolfsson noted that contrary to symbolic systems that depend on hard-coded sets of rules to underwrite an AI system, pattern recognition systems use automated algorithms to locate related items (17).

Works Cited

McAfee, Andrew and Brynjolfosson, Erik. Machine, Platform, Crowd: Harnessing Our Digital Future. New York: W.W. Norton & Company, 2017.

January 19, 2024


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