A quarter of a century ago eBay was launched. As an e-commerce pioneer, the U.S. company revolutionized Internet trading and developed into one of the most valuable, leading online trading companies in the 00s. The stock market reacted euphorically, profits increased and the boom lasted for a long time. In 2020 the situation for eBay looks completely different. Behind web giants such as Amazon and Alibaba, eBay has long since lagged behind and continues to radically streamline its operations. To mark the anniversary, we look back on the turbulent history of eBay.
eBay – this is the former pure internet auction company that shaped web trading in the late 90s and early 00s like no other company. A company that already at the turn of the millennium, only five years after its foundation, had sales in the billions. With the establishment of the buy-it-now option (from 2011 for mobile phones and electrical appliances), eBay developed more and more into a classic e-commerce sales platform. However, over the years, an ever stronger, innovative digital (marketplace) competition emerged – and gradually the sparkling eBay star in the e-commerce sky began to sink.
Today the situation for the auction house is different. Even if eBay is in a better financial position than it was recently due to the increase in online purchases caused by the Corona pandemic (in June, sales grew by almost 20 percent and revenues increased by more than 85 percent compared to 2019): On the occasion of its 25th anniversary, the mood among investors and analysts is not exactly rosy.
E-Commerce: Brutal competition
After all, eBay has been looking at brutal competition in the online trading business and global e-commerce. Tech giants like Amazon or Alibaba have long since left eBay behind. For comparison see the figures from 2018:
- Amazon’s profit in 2018 was 11.2 billion dollars
- Alibaba’s net profit for the same year was over $10 billion
- In comparison, eBay is far behind: the worldwide profit of the San José-based company, which is based in San José, California, is 2.5 billion dollars
And the market capitalization also speaks a clear language. The eBay stock market value of almost 40 billion dollars seems almost puny in comparison to Amazon with 1.6 trillion. In 2015 eBay still had a market value of 73 billion dollars.
25 years of eBay: Eventful company history
eBay can look back on an eventful 25 years with successes, scandals, questionable decisions and last but not least the countless bizarre, curious auctions, some of which are an integral part of the history of the Internet: from operational filling station in the best Düsseldorf city centre location, a halved Opel Corsathe most expensive Gulf of history (Pope Gulf), a complete US-American village (incl. its inhabitants) up to the annoyed wife, who Man for sale offered.
We use the anniversary to look back and summarize the most important stages of the company’s history.
- September 1995: The history of eBay begins with a defective laser pointer – the first item released for auction on the AuctionWebsite, eBay’s precursor. Pierre Omidyar (then 28), French-American entrepreneur and founder of AuctionWeb/ebay, hired him. His current assets amount to around 18 billion US dollars
- 1998: A formative year in the company’s history. eBay goes public, exactly three years after its foundation. The issue price is 18 dollars, and at the end of the first day the stock shoots up to almost 50 dollars. Omidyar, which is now owned by a world-famous, listed company, becomes a billionaire within a very short time. eBay suddenly has a company value of almost 1.9 billion dollars
1999 to 2010: Growth and expansion
- From 1999: eBay expands, opens more and more branches in other countries and goes on a big shopping spree: First, Omidyar acquires the German web auction house alando (an exact replica, or rather a copy of eBay) of the Samwer brothers for over 40 million US dollars. In 2002, eBay acquires the South Korean auction house Auction, followed the following year by the payment service PayPal and the Chinese Internet auction platform Eachnet for 180 million dollars
- 2001: An African charter company buys a Gulfstream jet on eBay for 4.9 million dollars Until then, the most expensive purchase made through the auction platform
- 2003: Opening of the new European headquarters in Bern, Switzerland. In the same year, eBay reports that the number of registered/active members is now 85 million (in 1999 there were “only” 10 million users). In the early/mid 00s, especially in the years 2002 to 2005, eBay is also the website with the widest reach in Germany – with regularly almost 17 million visitors.
- 2006: A luxurious luxury motor yacht changes hands for millions of dollars It is still the most expensive item ever sold on eBay. Buyer is the Russian billionaire Roman Abramowitsch
New appearance
- Autumn 2012: eBay gets a makeover and presents a visually overhauled, modern website in addition to a redesigned logo in Univers Extedended font (which has remained unchanged since 1999)
(Source: http://pc-pedia.de/2012/09/ebay-nach-17-jahren-ein-neues-logo/)
In the course of the “relaunch”, a new feature on the website, which is important for customer loyalty, will be added shortly afterwards: ebay.de now contains feeds with which customers/buyers can follow dealers, manufacturers and product categories. For the first time ever, users will receive the latest, most suitable offers fully automatically.
Paypal, Amazon, competitive pressure: gradual decline
- 2014: eBay announces the separation from its lucrative “means of payment” Paypal (the payment service recently accounted for almost half of eBay’s business), the separation takes place in the summer of the following year. Nevertheless, the two companies, now independent and acting separately, continue to work together. At first.
- Since the late 00s, ONE e-commerce competitor in particular has been growing continuously and unstoppably since then, outstripping eBay in terms of growth and sales: Amazon.
- In 2013 and 2014, Amazon can record sales growth of sometimes well over 20 percent, while eBay only achieves 14 to 12 percent. 2015 sees the biggest drop in profits in the company’s history. Compared to the previous year, net income in the fourth quarter of 2015 falls by more than half to 477 million dollars.
“Compared to the previous year, the surplus in the fourth quarter of 2015 will be more than halved to 477 million dollars.”
- 2018: the online trading platform declares that its cooperation with Paypal will be further restricted and reduced and at the same time announces its future main payment service provider: the Dutch payment platform Adyen. After 15 years the end of the highly successful, profitable eBay-Paypal cooperation
By 2020 eBay is no longer playing in the top league of the big, all-powerful tech companies. On the contrary: the company continues to cut costs, divests itself of divisions and radically streamlines itself. A few months ago eBay sold its advertising business (consisting of eBay classified ads & mobile.de) for 9.2 billion dollars to the Norwegian online marketplace operator Adevinta.