Team Name: 5IVE

Group Members: Katie Schiavon, Jessica Sea, Lianne Sherwin, Carolyn Richardson and James Senger.

Initial Project Statement:

In our project we will be exploring the detrimental economic issues that arise from the overuse of eBay. We will be addressing this topic by exploring the history and origins of eBay as well as its business model. We will also be looking at the economic advantages and disadvantages of the overuse of eBay. To further comprehend the impact that this technology has on society, we will explore the addictions to online shopping.

Argument

In today's society eBay usage is increasing and along with it are the negative side effects.

What is eBay?

eBay is a marketplace for consumers and sellers. It is a place to buy nearly anything you may want or need at lower prices better than you can find in traditional brick-and-mortar or even online stores. Sellers can virtually list any items on eBay for auction or to sell. With the vast amount of things that go for sale on eBay, it is no wonder that members have discovered that it is one of the best places to shop online. Photos, detailed descriptions and owner experiences are all invcluded in item listings which make is easy and accessible for anyone. Looking for rare, collectible or discontinued items? eBay is the largest marketplace for such things.

eBay is free to use with no hidden costs. The only exception is that the sellers are charged a minimal amount for the privilege to list items for sale and do not get a small percentage of the value when the item is sold. It doesnt cost anything to become a member and there are no monthly fees to worry about, nor are there any other hidden costs.

Because barriers to selling and buying are lowered, middlemen are ultimately eliminated with eBay, rural employees in such countries like Mexico and central Asia can and will then sell hand-made goods in a more direct manner and is inexpensive to the general public. eBay has suprisingly become on the the globe's most thrilling and interesting trans-national ambassadors.

The Origin of eBay

eBay was originally founded in San Jose, California by computer programmer Pierre Omidyar on September 3, 1995. On his spare time, he was working on developing a system single-handedly and the result was what we know now as eBay. It started off small and is now operated from several cities in the United States.

There have been many frequently told stories that stated the site was founded to help Omidyar's fiancee trade PE2 candy dispensers, but this was fabricated by the public relations manager in order to generate more interest in the media in 1997 (as revealed by Adam Cohen's book in 2002 and confirmed by eBay.)

In 1996, eBay entered into it's first third-party licensing deal with a company known as Electronic Travel Auction to use Smart Market Technology to sell plane tickets and other travel products that were designed for customers' convenience. As a part of AuctionWeb, in September of 1997, the company officially changed the name of their service to eBay. Orginally, the site belonged to Echo Bay Technology. Echo Bay was the first choice when it came to naming the company, but a gold mining company- Echo Bay Mines- had already taken it. The company site was forced to go to their second choice in the name which is the one that stuck with it for years - eBay.

Jeffrey Skoll was the first president of the company in 1996 and Chris Agarpao the first official employee. Since it's launch opening, eBay has seen and been the administration of over ten thousand auctions worldwide. It's funny to think that the first item ever sold on eBay was a broken laser pointer that sold for $14.83 USD.

Mission Statement: "eBay's mission is to provide a global trading platform where practically anyone can trade practically anything."

Today, eBay's community sums up to more than one hundred million registered members from around the world and is the most popular shipping destination on the Internet. eBay also owns PayPal, Skype and other businesses.

The Business Model

International eBay

eBay was built to create an online person-to-person trading community on the Internet, using the World Wide Web. Sellers are allowed to electronically put items up for sale and receive payment via the Internet; Buyers are able to look for items through alphabetical topics where each different auction has its own category. Because everything is automated a seller can list an item in a matter of seconds, and a buyer can place a bid in even less. eBay has become an international trading service which has modernized the previous way of selling new or used goods.

There are no hidden fees for the buyers; However there are fees for the sellers:

“Insertion Fee” which ranges between $0.30 and $3.30 depending on the opening bid of the item for sale.

“Additional Listing Item” which allows the seller to promote the item – such as having a highlighted or bolded listing.

“Final Value” which is charged at the conclusion of the auction and can range from 1.25% and .25% of the final price of the item.

eBay sends an email at the conclusion of each auction to the buyer and the seller and lets them know if the bid exceeds the seller’s minimum price to sell, then the buyer and seller are able to complete the transaction separately from eBay. eBay cannot force a buyer to pay the seller once the auction is over if the buyer wants to opt out. The binding contract is between the buyer and seller only.

eBay works towards developing a safe online trading community so buyers and sellers can have an honest experience with eBay.

There are four ways in which eBay protects buyers and sellers:

eBay Feedback : A user’s feedback is their reputation and can help others decide whether or not they would like to do business with them.

Buyer Protection : When a buyer uses Pay Pal their purchases are covered up to C$1250 at no additional cost. There is also eBay Standard Purchase Protection Program that provides partial reimbursement for losses resulting from non-delivery or misrepresentation of most items.

eBay Toolbar with Account Guard : This enables members to protect their account by indicating when they are on an eBay or Pay Pal site warning them when that are in danger of a potentially fraudulent website.

Security Centre : This provides guidance on buying/selling/paying safely, as well as a government and law-enforcement resources.

Economic Issues

Advantages

There are a number of areas of the economy that gain a significant advantage from the use of e-bay, these areas include:

The consumers who can now acess a number of new products easier, not only is variety better, but the online shopping trend as streched from clothing to cars

This graph not only shows how wide spread the trend is but also shows that there is a part of online shopping that can appeal to everyone

The sellers who can now sell to a much more wide-spread market

The distributors and shipping companies who must transport the many goods that are being sold over long distances

The stock market that has recieved huge capital increases from e-bay and businesses that require e-bay's services

These are only the areas where the largest effects are seen, but e-bay and businesses like it have had an effect on nearly every area of many international economies.

E-bay's Contribution to Globalization:

Probably the most wide-spread postive effect that results from the use of e-bay is the fatc that it makes products from almost anywhere in the world globally available. It has also made it very cheap for producers to sell their products globally. Before E-bay a producer would have to set up deals with distributors and shipping companies and then get international trade licenses to trade internationally, now with E-bay all they have to do is post their product on-line and pay the sellers fee.

E-bay on the Stock Market:

E-bays contribution to the NASDAQ stock exchange has been astronomical, not only did it see a steady rise in price from 2001-2006, but it has also gained a reputation as one of the most reliable computing company based stocks there is. With yearly incomes exceeding 1 billion dollars per. year over the last two years, it has been able to even re-assure some stock buyer's confidence when investing in other new internet and computing based companies.

E-bay Helping Distributors

The revenue collected by distributors and shipping companies based on sales made through E-bay are difficult to see or measure, as most businesses don't tell their shipping company that they are selling over E-bay. There is simple evidence though that supports the fact that E-bay has had a huge influence on these companies yearly revenues. This can especially be seen when examining Purolator, a large international shipping company that has existed for a number of years, but it wasn't until the introduction of E-bay (and other web-based selling companies) that Purolator's revenue not only allowed them to increase the size of their company, but they also consistently ship to more and more places as internet sales steadily increase.

Disadvantages

There are many economic disadvantages to online shopping. For example, ever buy an item, thinking the price was 19.99, and end up paying more than 25 dollars? Similar to taxes from buying in stores, there are extra costs involved from buying from eBay, such as (but not limited to):

Shipping & handling costs
Duties
Taxes
Custom clearance fees

These can vary from product to product, as larger items means larger fees. For example, shipping a 1 lb letter, from Washington DC to Honolulu ranges from $4.60 to $48.29! This difference comes from either using the US postal service, or an independent company like UPS, and the amount of time its going to take to get there. We pay more money to get our item in less time, especially around the Christmas season, when the thought of having the perfect present for that special someone come in on Boxing Day is absurd.

When Convenient Shopping Becomes an Addiction

Anything imaginable can be bought on eBay, all for a price. Other disadvantages come from the addiction online shopping can bring, as it’s very easy to spend money and not keep track of how much you’re spending. You can buy anything with only a click of a button, and it’s easy to lose track of how much money you’ve spent, until your credit card bill comes. Many people can rack up a large amount of debt by becoming a slave to their online shopping addiction. This is common when it comes to bidding on an item, as the natural drive a competition brings can blindside the bidder, and “trick” them into spending away their hard earned dollars.

eBay is accessible from anywhere that has a internet connection, making the temptation to “check our bids” and to place new ones from the office, home, or even the local coffee shop from our PDAs, blackberries or iPod touches less of a wish and more of a reality. The utter convenience eBay brings to us is beneficial in some matter, but jeopardizes our ability to physically touch, and see an item before we purchase it. Often, that "perfect" gift turns out to be something quite different than we expected.

Return for a Full Refund?

Not likely when it comes to eBay, most sales are final sale, as the seller does not want their items returned back to them. It is likely that the sellers that will do refunds won't refund the shipping and handling, or any other extra costs attributed to the item. It is recommended by eBay that if a seller will accept returns, that they should have a detailed return policy, including whether a "restocking fee" would be charged, who pays for the extra S&H, and the conditions on which the item may be returned (unopened, in original packaging, etc.). Buyers may have a problem returning items if they do not fit the return policy conditions, or cannot be returned at all.

Genuinely Fake?

Before you go spending hundreds or thousands of dollars on that "rare, one of a kind, limited edition item", think. eBay has plenty of ways to spot fraudulent items, including reading the seller feedback, checking the photos (the less "professional" it is, the more likely it's real), and comparing the listing price for the item to its relative value. However, sellers can create multiple accounts, and create "fake feedback" for themselves, take unprofessional photos, and list the item at its appropriate amount, and it can still be a fake. Receiving fraudulent items when buying from stores is dramatically lower than from buying online.

Addiction to Ebay

What is An Addiction?

An addiction is a need to engage in a specific activity, a need that is driven by genetic, biological, and social factors. Addictions are formed by habits that become compulsive and stop enriching a persons everyday life. Addictions fall under two categories, physical and psychological dependencies.

Physical Dependency- This kind of dependency produces an appearance of visible withdrawal symptoms. The continued use is usually to relieve anxiety caused by the absence of the addictive substance.

Psychological Dependency- dependency of the mind, leads to psychological withdrawal symptoms.

Addictions depend on a variety of things such as,

the addictive substance, and its affect on the users body
a persons genes
experiences in a persons past
how easy it is to aquire(or gain access to) the addictive substance
how people such as family and friends respond to the addictive substance, for example it may be more acceptable to be considered addicted to shopping rather than to a drug. Therefore the behaviour is less likely to be seen as harmful, and can go untreated for longer.

Although the idea of an online addiction to a site like EBay may seem insignificant at first, the results of such an addiction are alarming. Many people are reported to have spent their life savings, child’s college fund, or other large sum of saved money online, in a fashion not unlike gambling. For people with any time of addiciton the most important thing is to recognize the problem early on and find help immediatly.

eBay Addiction

A simple Google search of "eBay Addictions" returns not only articles on the matter, but also tips on how to prevent this addiction, personal blogs written by those affected by it, as well as quizzes to test yourself on whether you may be addicted yourself. It is a growing problem in today’s society, a society that is becoming more and more technologically advanced and who has everything available to them at the click of a finger. Similarly to how using a drug may give an addict an elated high, winning a bid on eBay can give users a rush that leaves them returning with more money to spend just to experience the same feeling again. Access to eBay is unlimited and easy to gain access to. All you need is an internet connection and as much time as you want can be dedicated to eBay, at no extra cost.

For the percent of the population addicted to eBay or some other online retail outlet, estimated at 5%, being addicted may mean waking up in the middle of the night to check on the last couple minutes of a bid, then going to work in the morning completely exhausted. It may also mean spending every last cent owned just to continue bidding, on sometimes useless objects. Even more alarming however, is the fact that users may be unable to tear themselves away from the computer and maintain healthy relationships with friends and family. Internet usage is at an all time high, and considering the percentage of people who now use the internet on a regular basis it is no wonder that the number of addictions have grown. The Internet is easily available and relatively cheap, allowing more access, and more dependence on its ever-growing capabilities.

Conclusion

eBay has many advantages which contribute to our economy and international relations but there are also many disadvantages which may not become apparent until after you begin using eBay. Things such as extra costs, fraudulent items, and final sales may affect almost all eBay sales, and addictions to this influential online shopping network are becoming more common in todays society.