A blogazine for all things Internet, e-marketing, business, media & software

Electronic commerce or e-commerce is defined as the transmission, buying, and selling of goods, services and information over computer networks, particularly via the Internet. The foremost location on the Internet for e-commerce is eBay.  Founded in 1995, eBay is an auction site that boasts more than 100 million registered users and has local websites that serve more than 30 countries.  In the fourth quarter of 2007 (Q4-07), the e-commerce company posted revenue of $2.18 billion, representing a $461 million year-over-year increase (click here to view a PDF of eBay’s earnings).  eBay is such a flexible marketplace that it is simultaneously a commerce platform for both individual buyers and sellers and profit making juggernauts such as Sears.  Although the company is misbehaving very badly right now, I just want to take the time to quickly recap some of the ways that eBay has redefined the way we all do business.

The eBay marketplace and other e-commerce sites have changed many of the traditional paradigms of management.  For example, managers of brick and mortar retail stores must now consider the pricing of eBay merchants who are headquartered hundreds of miles away.  Also,  thanks to eBay, there has been a retooling of the knowledge base of traditional supply and demand constructs for information goods.  Additionally, managers of many storefront companies have created intrepreneurial arms to sell merchandise on eBay with not just the goal of increasing sales, but to market their physical storefronts. In doing so, a number of these same innovative companies have begun to recognize the challenges of managing in an e-commerce arena dominated by eBay and have established the position of “Manager of eBay Sales” to oversee company functions on the site.

eBay has also served to spread the entrepreneurial wildfire which is a current marker of today’s economy. Originating from the French term entreprendre, meaning “to undertake”, the successful endeavors of entrepreneurs represents symbols of tenacity and innovation. The decade span of 1990-2000 has witnessed the powerful emergence of entrepreneurial activity within the United States. Small businesses (defined by the Small Business Administration as those companies having fewer than 500 employees) employ 53% of the private workforce and account for 51% of the private sector’s gross domestic product (GDP), proving the vitality of entrepreneurship to the US economy. This phenomenon is helped by the arrival of low-cost computer technology, high-speed Internet access, and the advent of e-commerce.

What eBay has done so effectively to aid entrepreneurs in starting a business is to design an easy-to-use system that allows users to optimize both their time and return on investment. Many factors support this assertion:

• Overhead and infrastructure costs are drastically reduced on eBay because only a few dollars can effectively buy a cyber “storefront”.
• An eBayer’s merchandise can simply be items around the home.
• The technology of the platform makes it easy to create an auction and upload it to the eBay system.
• PayPal, a subsidiary company of eBay, provides low cost payment processing once an item the sold.

Unlike opening a traditional shop, the cost of doing business on eBay’s auction system is so minimal that a number of single welfare mothers have become successful entrepreneurs on the site. It seems that eBay and entrepreneurialism exist in a reciprocal relationship because it was entrepreneurs that first helped to seed eBay in its early days, and it is arguably the entrepreneurial home-based business that benefits most from the auction site.