VIRTUAL RESELLING: EBAY

eBay is similar to Amazon in many ways. Amazon is recognized for retailing books
and is diversifying into music, electronics, movies, etc. in both the new and resale
market. Once the name recognition and systems for fulfillment are in place, it is a
matter of Web page creation and product acquisition to expand into other markets.
But whereas Amazon uses the industry standard for retail establishments (35%) as
a pass-through markup for timely delivery of new books, eBay takes a different
approach.
eBay is a matchmaker for buyer and seller, usually for used goods.13 Responsibility
for listing the goods, and for their quality and delivery, is the seller’s. For
providing this virtual meeting place and the bid arbitration between the seller and
multiple buyers, eBay receives a small listing fee and a sales commission of about
5%. By listing over 1 billion items in 2004 for its 135 million registered users, the
company reported gross revenues in excess of $3.2 billion. The company employs
about 8,100 people averaging over 123,000 sales transactions per employee in
2004. Without technology, this number of transactions per employee would be
impossible. But with technological magnification, this number becomes entirely
possible and very profitable. In 2004, eBay’s net income was nearly $400,000 per
employee.
As eBay’s infrastructure, methods, and customer base grow, the number of
transactions per employee facilitated by technology will continue to increase. A
possible techonomic metric for monitoring the techonomic performance of eBay is
the transaction efficiency metric.