eBay, Ready to do Your Bidding?

eBay was born 10 years ago. The story goes that Pierre Omidyar spent a few days off work in 1995 building the original auction website so his girlfriend could trade Pez dispensers with other collectors. The story may not be accurate, but is a true insight into the ethos of the company.

Since then eBay's volumes have grown each year, and so have its profits.

	1999	2000	2001	2002	2003	2004
Profit (after tax) ($m)	10	48	90	250	442	778
Revenues ($m)	225	431	749	1214	2165	3271
Value of Sales ($b)	2.8	5.4	9.3	14.9	23.8	34.2
No. of Items Sold (m)	130	265	423	638	971	1400
Registered Users (m)	10	22.5	42.4	61.7	94.9	135

The process is very simple.
1. Would-be buyers or sellers sign up as eBay members, although anyone can watch the progress of each auction.
2. Post your auction item with a time to run.
3. Wait for the auction to run its course. The software will keep track of the highest bid.
4. Buyer and seller sort out the payment and delivery details between them.

eBay is more than just a market place for casual traders. Over 1m people derive their main income from trading online and there are 100,000 shops set up on the site. You can set fixed prices for items which makes life easier for bulk vendors.

eBay has no physical shops of its own, no stock and does not suffer from price competition. Adam Cohen describes eBay as "The Perfect Store". But being perfect is hard work.

This week a woman was convicted in the UK for £42,000 of fraud on eBay. What does eBay do to make it safe to trade? Issues of trust mean that membership may be levelling out in the US.

And what about competition? Well there isn't that much. Yahoo and Overstock offer auctions, but their combined volumes are less than 5% of eBay's. Amazon sells second hand, and it won't be long before Google wants a slice of the auctions market. More threatening is the fact that it costs so little to set up an e-commerce site: most of eBay's biggest sellers have eBay stores, but they could set up online shops and avoid all commission. If an independent could find a way to attract sufficient attention from buyers there'd be a mass exodus.

www.eBid.tv is one of many auction sites charging absolutely no commission - but if you are selling then it's still worth paying to get in front of all eBay's bargain hunters.

eBay can't rest on its laurels, but it continues to grow by 50% a year, and for the moment the opportunities (for example, in China) seem greater than the threats.