George Mason University
INFS-640 (E-commerce)
Spring-2003

An Analysis of eBay


The eBay Infrastructure

5 The eBay Facility

5.1 eBay Business Model:

eBay is a C2C model which means individuals are able to do business with other individuals. And it also is called as market creator, which is made up of a variety of people such as individual buyers, sellers, small businesses and big businesses to create an online auction using the Internet. This is a business model that everyone has opportunities to participate in this online trading, so ordinary people can be either a seller or buyer. eBay’s auction business model is to create a digital electronic environment for sellers to post their merchandises into the online market, agree on a price, and transact. At eBay, the buyers and sellers are their own agents. eBay is not an auctioneer, in other words, it is not a seller or buyer. eBay is a trading assistant, eBay would make its money from a listing fee that is paid by the sellers. There are two fees for every item that post on eBay listing auction, the first is the initial listing fee and the second is the final value fee based on the winning bid. The purpose of eBay’s model is to create equal opportunities for buyers and sellers on the online world auction. Buyers can find a low price and variety of products at eBay, while sellers can sell their products for the best price that deserve. Buyers and sellers can exchange information, their aspect, and their knowledge to each other. eBay provides a place where sellers and buyers can meet and trade their products on-line at anytime and at anywhere. eBay has changed the way people do shopping and have auction by the fact that it has eliminated some traditional businesses’ functions. It has no inventory, no responsibility for the quality of goods, no payment collection services and deliveries, but it has been a great successful business model. (based on[13],[1])

5.2 eBay Partners and Suppliers

In today’s competition business, companies must create a flexible and scaleable model in order to have a place in market. Sometime it must be the best business model for its survival. A company’s managements have to find many different ways to get the best outcomes for the lowest cost, the fastest in delivering, and the best in quality. And that is what “today’s customers want some combination of faster, cheaper, and better, but few companies have either the know how or the resources to deliver on all three. If they break apart the value chain, however, and assign each link to whomever can do it best, fastest, and at the least cost”[7]. As the result, eBay model is created with the flexibility and the scalability. To build this kind of model, eBay cooperates with others companies and services for partnerships. While eBay’s infrastructure suppliers provide fee-based services directly to the revenue of company, eBay’s partners provider deal directly with site users. These services include shipping, payment transactions that are rich in options to provide many different kinds of services for various types of eBay’s users. These providers are the third-party providers that include e-stamp, I-ship, mailbox, iescrow, billpoint, and PayPal. And these partners can be replaced with others by eBay for the better services of eBay customers.

e-stamp:
eBay auction business must include a relationship with e-stamp, a Postal Service-approved service that allows people to buy and print postage online. “E-stamp allows people to ship packages via first-class, parcel post, priority, and express mail. More important, parcel with e-stamps are exempt from the Postal Service’s security regulation. Postal carries can pick them up, and packages weighing up to five pounds can be dropped into Postal Service mail boxes. For many sellers, this eliminates the daily trip to the post office. Packages too large for mail boxes or for postal carries can be dropped off in post office bins without having to wait in line.”[7]

Freightquote:
eBay develops a relationship with Freightquote to assist buyers estimate the cost of shipment. Most of the times, buyers usually pay shipping charges, and they generally like to know how much these charges will be. Avoiding surprises of the high cost of shipping. eBay has arranged with Freightquote to provide this needed service, Freightquote is a third-party provider to help buyers estimate shipping rates. [1]

Mailbox:
Naturally, eBay is capable ground for selling packaging materials. Consequently, users don’t have to look beyond eBay to find materials they need to package well at good prices. There are many package shippers provides custom packing and shipping arrangement for eBay users. eBay users are able to choose services upon their conveniences, options, favorites, and discounts. [7]

iEscrow:
eBay provides escrow service through iEscrow which eBay buyers and sellers can use at their option to protect themselves against fraud transactions. Ebay buyers can put the transaction in iEscrow service. They can send the check to the escrow agent, and the check is held by the iEscrow until the buyers have received the item. Then the check will be sent to the sellers.[7]

Figure 4.1: eBay’s Value network (derived from [7])

PayPall:
eBay is partnership with PayPal to provide the security online transaction services for buyers and sellers. This service is replied on credit card, so eBay buyers are required to have credit cards to use PayPal. It acts as the middle man, so PayPal keeps all the funds generated from the buyers’ credit cards until the sellers withdraw the funds. [13]

Billpoint:
Billpoint is an example of eBay changing partnership. “EBay teamed up with Wells Fargo Bank from 1995 to 1999 for providing one of the services most needed by both buyers and sellers for secured online credit-card transactions. Instead of paying with bank checks, or delaying shipment until their personal checks clear, buyers could pay with their credit cards and have their items shipped immediately.”[7] However, Billpoint is changed by PayPall, which provides better services to eBay customers. [13]

5.3 eBay Trading Operations
eBay Trading Activities : [1]
- In order to do business at eBay, users must register to be eBay members.
- Member must provide information such as email and credit card information.
- When users become members, they can sell or buy products from every category that is provided by eBay.
- Selling a product: a seller needs to list item, place item in a specific category, provide detailed description, add photograph of item, and set a minimum bid price and select the length of the auction.
- The auction is then posted for anyone who might be interested in buying.
- Buying a product: a buyer has 4 options to find to products either by categories, themes, regions, and stores.
- Once a buyer finds a product that he or she wants to buy, he or she is free to bid on that product.
- Once the bidding ends, the eBay will set the bidding winner for that product.
- EBay then notifies both buyer (bidding winner) and seller.
- From here the seller and buyer deal directly with each other. eBay is not involved.

As illustrate in figure 4.1 below. eBay is for everyone. When eBay sellers sign in, he or she will need to register for the item that he or she want to sell at eBay. When eBay buyers sign in, they can choose eBay’s search engine and various categories to find products. After the user places a bid on the product, the user will be notified of status via email every day. After the bid closes, the winner will be notified via email. Finally, the seller and buyer will contact each other. At this point eBay is no longer involved, but buyers and sellers can request each other information from eBay.

 

Figure 4.2 eBay trading operation diagram

5.4 Factors that Make eBay a Successful Model

Until now, eBay remains unchallenged as the king of the person to person auction market, with a market share of over 90 percent. And it bases on the factors:
· For auction sites:
“Buyers and sellers gravitate to the site with the greatest volume of participants, the network effects.” [7] eBay has created a network that links to high traffic sites, banner ads and links to supporting services such as payment options and transport companies to help their users have convenient transactions and auction at eBay by partnership with most services needed such as PayPal and e-stamp.

· Provide a large and interesting selection of goods:
“Product depth and variety attract buyers, which in turn will attract more sellers.” [7] Large selection of goods is primarily buyers come to eBay to look for the items listed for sale. In fact, eBay has everything for sale. Individual use eBay to buy and sell items in more than 4000 categories.

· Achieve system reliability:
“Outages are costly and undermine user loyalty”.[7] Unlike other websites that simply post information content, eBay's site has to process thousands of live
bids simultaneously, which is much more demanding on the system, increasing the risk of outages. eBay had a 'wake up call' when the website crashed for 8 hours, angering hundreds of thousands of eBay users, and since, they have continually invested in system capacity. Nevertheless, they continue to face challenges in scaling-up fast enough to accommodate their rapid growth.[7]
· Provide high-quality customer service:
eBay system is built with strong communication between users with users and users with eBay. For example, feedback is used to interact between users. eBay maintains close communication with its members. They encourage members to take active role in the site and to provide feedback and advise them of and problems through the Feedback Forum. Users need to have their questions answered and their problems resolved, otherwise they will stop trading or go elsewhere. [7]
· Assure the reliability of user deliveries and payments:
These are absolute requirements for site credibility, so eBay has invested in customer care and support to ensure people conduct safe transactions. As the result, eBay is partnership with UPS, Billpoint, iship, PayPal and others to provide the users these most needed services. [7]
· Enhance brand recognition:
With millions of net users coming onstream in the years ahead, brand recognition is the surest single mechanism for increasing new site users and increasing transaction volume. [7]
· Increase Web site convenience and accessibility:
eBay managers realize that most of software systems fail because people hate to use that system. If site is easy to access and navigate, more people will log on, stay longer, and make more transactions. They always enhance the eBay Web sites’ features. [7]
· Develop high-quality search tools:
eBay has studied the problem and understand that people will not buy what they cannot locate quickly on the site, so search tools of eBay must enhance their search tools to produce a quick, and an accuracy query results. [7]

5.5 eBay Infrastructure

“The eBay platform is composed of a scalable user interface and transaction processing system based on internally developed proprietary software. This platform supports the sale process, including notifying users via email when they initially register for the services, place a successful bid, are outbid, list an item for sale and when an auction ends. The platform also sends daily status updates to any active sellers and bidders. The platform maintains users registration information, billing accounts, current auctions and historical listings. All information is regularly archived for record-keeping and analysis purposes. The platform regularly updates for active items. The platform also updates the sellers’ billing account every time an item is listed, a feature is selected or an auction closes with a bid in excess of the seller-specified minimum bid. The platform sends electronic invoices to all sellers via email on a regular (at least monthly) basic. In addition to these features, the eBay service also supports a number of community bulletin board and chat areas where users and eBay customer support personnel can interact.”[7]

5.5.1 eBay Design Architecture

Logical Design:

Figure 4.3 illustrates that anyone visits the eBay Websites, it allows visitors to browse and view the items listed for sale. However, people must be members of eBay in order to access trading business. They must provide their identities that are stored in eBay member database. Items that post at eBay also must be registered and stored at merchandise database. And users must login to eBay every time for selling or bidding. All the bidding records must be kept at bidding database to keep track how many times the item has been bidden, and who leads in the bid. When the bid ends, eBay system will set the bidding winner. Then it will notify the seller and buyer (bidding winner).

Figure 4.3: eBay High Level Logical Diagram (based on[13])

Physical Design:

The figure 4.3 illustrates the eBay physical components. EBay has its own servers, and connected to high speed World Wide Network. EBay software includes a connected access to Oracle database, IBM WebSphere E-commerce Suite, Ad server, Mail Server, categories, bidding monitor database, search engine, feedback forum, and the safeharbor.

Figure 4.4 eBay High Level Physical Design (based on [13 ])

5.5.2 eBay System

This section provides an overview of the eBay design and method of online trading. The level of analyst in these part are sufficient to provide the reader with a comprehensive general understanding of the eBay detailed design.

Availability
eBay Websites are intentionally open and available for browsing and ordering 24x7. Moreover, eBay platform is designed around industry standard architectures to reduce downtime in the event of outages or catastrophic occurrences. it is able to use from any location where users have interest access, which makes the eBay online auction the convenience store. Maintenance of eBay system is carried out during one night each week, and any upgrading and maintaining will have minimum impact on the operation of the eBay system.[7]

Scalability
eBay system is a highly scaleable system. This system can be expanded to provide additional space for file system or additional hardware to improve performance. [7]

Reliability
EBay reliability, keeping the system on-line with minimal interruptions, has been carefully addressed in the design to meet on-line e-commerce system availability requirements. The key component to the reliability strategy is the use of the ServiceGuard and PVLinks software. PVLinks increases reliability by allowing the system to recover from a Fibre Channel failure, such as a failed cable or interface card on either an image storage or a server. ServiceGuard allows the system to recover from more serious failures, such as a server crash or network connection failure. [7]

Database
“eBay platform consists of Sun database servers running Oracle relational database management applications with a mix of Sun and Hitachi storage devices and a suite of Pentium-based Internet servers running the Windows NT and Linux operating systems. They use Resonate Inc.’s and F5 Inc.’s load balancing systems and their own redundant servers along with select software from Veritas Inc. to provide for fault tolerance.” [7]

Server Operation and Administration

Similar to most of big company, eBay system administration and network management are responsible for the hands-on configuration and administration of the hardware and foundation software that is compatible with the eBay hardware. [7]

5.6 eBay Web Features

One of the essential factors that has helped the successful of eBay is the eBay Web site. Ebay Web sites are highly professional design and highly readable Web pages that have several features including browse, search, bid, buy, community, and even chat. It is easy to access, simple and fast to find things, convenient to bid and buy items, and comfortable to spend time at the eBay. As eBay announces that they intend to continually update and enhance the features and functionality of eBay websites to ensure continuous improvements to the trading experience. During 2001, they added various new features and services to help buyers and sellers trade with greater ease, including eBay Stores which provides seller a merchandising showcase for multiple listings and buyers with a convenient single shopping destination with thousands of merchants, eBay Checkout which provides eBay users with a faster and easier way to complete transactions and payments, enhanced payment features and expanded search capabilities.[9] eBay managements have studied the tricks for making the eBay Web sites attractive and easy to read. Also they also ensure that eBay Web pages always appear as quickly as possible when users try to reach them.

Figure 4.5: the eBay’s Web features. [1]

Site map:
This feature provides users with a view of eBay world. Every main link available at eBay is listed here. If users are ever confused about finding a specific area, this Site map is the place that users should come.

Sign In:
This feature is place on the top of eBay Websites to remind the users.


Browse: [1]


The browse feature is most important part that eBay always intends to update and enhance. This browse has the ability of easy search, quick search, and quality information. The browse will guide users to the page that lists the eBay categories, and featured auctions. The browse link also provides sub-links that enable users to browse auctions via region, themes, and eBay stores.


· Categories
.
Antiques
. Books, Movies, Music
. Coins & Stamps
. Collectibles
. Computers
. Dolls, Figures
. Jewelry, Gemstones
. Photo & Electronics
. Pottery & glass
. Sports Memorabilia
. Toys & Beanies
. Miscellaneous

Sell: [1]


eBay offers convenient services to seller. Quick access is available at the sell page that sellers can easily re-list an item that didn’t sell. This Sell is linked directly to the sell item form that users fill out to start their auctions. It has the following functions:

· Sell Your Item Form
· Learn how to sell
· Turbo Lister
· Selling Manager
· Seller’s Assistant

Search: [1]

This search helps users finding the item. The search is handy because it provides users with a new search called Smart Search. This will help users do sophisticated searches without using the helping symbols. eBay provides three kinds of searches including:

· Search for Items
· Search for Members
· Favorite Searches


Help: [1]

Help feature is a popup window that includes all kind of information for users. This is special feature which eBay always enhance to guide the new members. The most helpful is the information buyers and sellers. The buyers guide link takes users to a substantial amount of information about bidding auctions on eBay. This is a place to start learning about eBay. It’s also a reference that user can use anytime they have questions as the following:
· Basics
· Buyer Guide
· Seller Guide
· eBay Education
· My Info
· Billing
· Rules & Safety
· User to User eBay Q&A Board
· Images/HTML Board
· Is my item allowed on eBay?
Prohibited, Questionable &
Infringing Items
· eBay Toolbar


Services: [1]


This features take users to the eBay services overview page. Here they can find links to pages that tell them all about buying and selling, registration pages, the eBay rules & safety overview. The my ebay page, and the about me page.

Here users will find the many services eBay offers to make your trading fun, safe, and successful
· Services Overview
· eBay Education: Learn all about eBay
· Registration

Register now
Confirm registration
I forgot my password

· Buying and Selling

· My eBay [1]
eBay provides My eBay that allows users to receive a report of their activities at eBay such as selling, bidding, account balances, favorite categories, and recent feedback . Also users are able to update their information from my eBay page. Moreover, My eBay page supplies users with the tools to keep track of items they are selling on eBay. It could help to save time and get organized with users personalized eBay transactions page. My eBay includes the following features:
- Change my User ID
- Change my password
- Change my registration information
- Change my email address
- Change of E-mail Address Confirmation
- Add/Change my wireless email address
- Change my notification preferences
- Create my Secret Question and Answer
- Change my Secret Question and Answer
- Change my Checkout preferences
- Change my shipping addresses
- Upgrade to Selling Manager

· About Me [1]
This feature gives the eBay’s members the opportunity to have their own personal homepage. Using step by step instructions, so it is easy to create Web page at About Me. There is no technical knowledge requirement .

· Feedback Forum
Feedback is a keystone of safe trading that is known as the track record of the person you're trading with. Each eBay user has his or her feedback profile consisting of comments left by other users. Feedback is displayed with users ID, so every users are able to read each other ‘s feedback. This feature includes:
- View a member’s feedback record.
- Leave feedback on a member.
- Review and follow up on feedback you have left about others.
- Review feedback others have left about you.
- Make feedback changes public or private.

· SafeHarbor (Rules & Safety)
The Safeharbor helps eBay track illegal trading activities on it’s web site. It has done this in an attempt to safeguard buyers and sellers.

Fraud Protection Program
Escrow services
Authentication
Investigations
ID Verify
Square Trade

· eBay Stores
Learn About eBay Stores
Open an eBay Store
Manage/Edit my eBay Store
Sell items within your store
Upgrade your Store subscription
Cross Sell your Store Inventory

Community: [1]


eBay creates the community section to provide access to news sources and bulletin boards. This feature allows users to have information about the newest devices and procedures on eBay, and they can get support, even live support. According to eBay “eBay represents more than just a place to buy and sell goods. It is a place where people can meet with similar interests, discuss topics they care about, and share information.” [1] eBay considers the community is essential feature to encourage users take the advantages of the community to learn more about the eBay society. This community offers its users with chat rooms, answer Center, bulletin boards, news, etc. Moreover, the community spirit and personal relationships also transcend the online experience, and there are several reports of eBay users working together and helping each other offline. eBay uses this community as their key create greater loyalty and repeat usage from eBay users.


· Community Overview
· News & Announcements
Latest buzz on new features Calendar
· Discussion, Help and Chat
· Community Chatter
· Newsletter


· Library
· eBay Foundation
· Charity
· Shop eBay-o-rama
· Suggestion Box
· About eBay.

5.7 eBay Data Flow Diagram:

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eBay | GMU | Feedback

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