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eBay is a successful online auction website, at which people from all around the world buy and sell goods and services.

Millions of knickknacks, doodads, appliances, computers, furniture, equipment, vehicles and etceteras are listed, bought and sold daily. Many of these dusty gizmos would have been discarded if not for the thousands of eager bidders worldwide, who seemingly collect everything. A recent search of eBay uncovered thousands of passe beanie babies[?] and hundreds of vintage Kewpie Dolls. Large, international companies, such as IBM, sell their newest products and offer services on eBay using competitive auctions and fixed-priced storefronts.

eBay generates revenue from sellers, who pay a two to seven percent premium on each item, and from advertising. It does not handle the goods, nor does it transact the buyer-seller payment, except through its subsidiary PayPal. Instead, much like newspaper want-ads, sellers rely on the buyer's good faith to make payment, and buyers rely on the sellers' good faith to actually deliver the goods intact. To encourage fidelity, eBay maintains, rates and publicly displays the post-transaction feedback from all users, whether they buy or sell. This way, the buyer is encouraged to examine the sellers' feedback profile before bidding to rate their trustworthiness. Sellers with high ratings generally have more bids and garner higher bids.

Caveat Emptor

eBay has its share of controversy, ranging from its privacy policy (eBay typically turns over user information to law enforcement without a subpoena) to well-publicized seller fraud, though statistically fewer than 1 in 200 transactions fail.

On 28 May 2003 a US District Court[?] federal jury[?] found eBay guilty of patent infringement and ordered the company to pay US$35 million in damages. The jury found for plaintiff MercExchange, which had accused eBay in 2001 of infringing on three patents (two of which are used in eBay's "Buy It Now" feature for fixed-price sales) held by MercExchange founder Tom Woolston.

Further Reading

  • The Perfect Store: Inside eBay, Adam Cohen, Little, Brown & Company, 2002, Hardcover, 336 pages, ISBN 0316150487.

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