E-commerce: Going, going, gone

A new book explains how eBay transformed itself from a successful online venture into a household name. Mark Lewis got a sneak...

A new book explains how eBay transformed itself from a successful online venture into a household name. Mark Lewis got a sneak preview

Given the tough time dotcoms have had over the past nine months, it's easy to think cyberspace is bereft of success stories. Not true. The publication of David Bunnell's The eBay Phenomenon (John Wiley, ISBN 0471 384909 £16.95 hardback) last week gave the business world the opportunity to glean tips from one of the most successful companies in the brief history of the Internet.

Ebay is the world's largest online trading company, boasting 10 million registered users and facilitating more than a million auctions daily. Subtitled Business Secrets behind the World's Hottest Internet Company, Bunnell's book lifts the lid on the decisions and strategies that have underpinned its success.

It's one thing to take an existing business model and cast it on to the Internet; but entirely another to conjure a wholly innovative business paradigm and make it reality. That eBay has done this so successfully makes it a company worth following - and this book worth reading. Anyone with even a passing interest in the economics of turning a profit on the Internet has much to learn from eBay. Of course, eBay is not alone in having a good e-idea. What is unusual is that its idea is paying its way, and has turned the company into a household name.

The eBay story is one of opportunism, innovation, imagination and good fortune. As Bunnell states in his introduction, "The remarkable thing about this story is the extent to which the company and its people have managed these feats without a formal script."

The fact the person-to-person online auction market was non-existent when the company kicked off in 1995 meant there was no blueprint to follow.

Bunnell is no Dickens, but he tells his tale clearly and engagingly. A context-setting r‚sum‚ of the online marketplace, and a potted history of the company get the ball rolling, but the chapters focusing on eBay's strategy are where the book really delivers. This may be a story of a particular kind of online venture, but there are lessons here for any kind of company - large or small - looking to capitalise upon opportunities afforded by the Web.

Bunnell on e-community

The frequency with which Bunnell refers to eBayers, "ebaysian community and culture" and "the eBay Nation" is telling. The firm's community ranges from occasional browser sellers, to individual dealers and small businesses which view it as an additional distribution channel. For eBay, as for any venture, ensuring loyalty of all these visitors has been crucial to eBay's success - so crucial Bunnell gives the issue an entire chapter.

"The Feedback Forum is eBay's most powerful mechanism for raising levels of trust and confidence among users. The forum encourages users to register their comments about other users (both buyers and sellers) with whom they have conducted transactions. More important, the company provides a positive-neutral-negative rating format that is both public and cumulative. Thanks to this forum, participants can build public reputations, just as traditional merchants and customers have always done in their communities. According to Shirley Bryant, the rare-book seller from Oklahoma, 'Feedback is the greatest thing that's happened to selling online'.

"É The Cafe chat room is one of the cornerstones of eBay's community-building effort. It is the online analog of the traditional small-town coffee shop where people stop to relax, catch up on official news and hearsay, and exchange information. For example, eBay's Cafe posts a daily mix of remarks, user tips, sociable banter, and even advice for the lovelorn - whatever people have on their mindsÉ

"Discount the useful technical advice from the eBay Cafe and what remains is mostly social chatter - not unlike the banter exchanged in traditional shops and offices. This appears to serve the same need for social connectivity. The Cafe brings thousands of people back to the site every day, and many carry their connections outside the walls of Cafe, communicating directly with each other through e-m

This was last published in December 2000

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