VIRTUAL SHOPPING CENTER

VIRTUAL SHOPPING
Virtual shopping is the process whereby consumers directly buy goods or services from a seller in realtime, without an intermediary service, over the Internet. It is a form of electronic commerce. An online shop, eshop, e-store, internet shop, webshop, webstore, online store, or virtual store evokes the physical analogy of buying products or services at a bricks-and-mortar retailer or in a shopping centre. The process is called Business-to-Consumer (B2C) online shopping. When a business buys from another business it is called Business-to-Business (B2B) online shopping.

HISTORY
In 1995 Amazon launched its online shopping site, and in 1996 eBay appeared.[1] In 1990 Tim BernersLee created the first World Wide Web server and browser.[1] It opened for commercial use in 1991 . In 1994 other advances took place, such as online banking and the opening of an online pizza shop by Pizza Hut.[1] During that same year, Netscape introduced SSL encryption of data transferred online, which has become essential for secure online shopping. Also in 1994 the German company Inters hop introduced its first online shopping system.

Customers
In recent years, online shopping has become popular; however, it still caters to the middle and upper class. In order to shop online, one must be able to have access to a computer as well as a credit card or debit card. Shopping has evolved with the growth of technology. According to research found in the Journal of Electronic Commerce, if one focuses on the demographic characteristics of the in-home shopper, in general, the higher the level of education, income, and occupation of the head of the household, the more favourable the perception of non-store shopping., Enrique.(2005) The Impact of Internet User Shopping Patterns and Demographics on Consumer Mobile Buying Behaviour. Journal of Electronic Commerce Research, An influential factor in consumer attitude towards non-store shopping is exposure to technology, since it has been demonstrated that increased exposure to technology increases the probability of developing favourable attitudes towards new shopping channels.[2] Online shopping widened the target audience to men and women of the middle class. At first, the main users of online shopping were young men with a high level of income and a university education. This profile is changing. For example, in USA in the early years of Internet there were very few women users, but by 2001 women were 52.8% of the online population.

Logistics
Consumers find a product of interest by visiting the website of the retailer directly, or do a search across many different vendors using a shopping search engine. Once a particular product has been found on the web site of the seller, most online retailers use shopping cart software to allow the consumer to accumulate multiple items and to adjust quantities, by analogy with filling a physical shopping cart or basket in a conventional store. A "checkout" process follows (continuing the physical-store analogy) in which payment and delivery information is collected, if necessary. Some stores allow consumers to sign up for a permanent online account so that some or all of this information only needs to be entered once. The consumer often receives an e-mail confirmation once the transaction is complete. Less sophisticated stores may rely on consumers to phone or e-mail their orders (though credit card numbers are not accepted by e-mail, for security reasons).

Payment
Online shoppers commonly use credit card to make payments, however some systems enable users to create accounts and pay by alternative means, such as:

Billing to mobile phones and landlines[3][4] Cash on delivery (C.O.D., offered by very few online stores) Cheque Debit card Direct debit in some countries Electronic money of various types Gift cards Postal money order Wire transfer/delivery on payment

Some sites will not accept international credit cards, some require both the purchaser's billing address and shipping address to be in the same country in which site does its business, and still other sites allow customers from anywhere to send gifts anywhere. The financial part of a transaction might be processed in real time (for example, letting the consumer know their credit card was declined before they log off), or might be done later as part of the fulfillment process.

Product delivery
Once a payment has been accepted the goods or services can be delivered in the following ways. Downloading: This is the method often used for digital media products such as software, music, movies, or images. Drop shipping: The order is passed to the manufacturer or third-party distributor, who ships the item directly to the consumer, bypassing the retailer's physical location to save time, money, and space. In-store pickup: The customer orders online, finds a local store using locator software and picks the product up at the closest store. This is the method often used in the bricks and clicks business model. Printing out, provision of a code for, or emailing of such items as admission tickets and scrip (e.g., gift certificates and coupons). The tickets, codes, or coupons may be redeemed at the appropriate physical or online premises and their content reviewed to verify their eligility (e.g., assurances that the right of admission or use is redeemed at the correct time and place, for the correct dollar amount, and for the correct number of uses). Shipping: The product is shipped to the customer's address or that of a customer-designated third party. Will call, COBO (in Care Of Box Office), or "at the door" pickup: The patron picks up prepurchased tickets for an event, such as a play, sporting event, or concert, either just before the event or in advance. With the onset of the Internet and e-commerce sites, which allow customers to buy tickets online, the popularity of this service has increased.

Shopping cart systems

Simple systems allow the offline administration of products and categories. The shop is then generated as HTML files and graphics that can be uploaded to a webspace. These systems do not use an online database. A high end solution can be bought or rented as a standalone program or as an addition to an enterprise resource planning program. It is usually installed on the company's own webserver and may integrate into the existing supply chain so that ordering, payment, delivery, accounting and warehousing can be automated to a large extent. Other solutions allow the user to register and create an online shop on a portal that hosts multiple shops at the same time. Open source shopping cart packages include advanced platforms such as Interchange, and off the shelf solutions as Avactis, Satchmo, osCommerce, Magento, Zen Cart, VirtueMart, Batavi and PrestaShop. Commercial systems can also be tailored to one's needs so the shop does not have to be created from scratch. By using a pre-existing framework, software modules for various functionalities required by a web shop can be adapted and combined.

Online Shopping

Like many online auction websites, many websites allow small businesses to create and maintain an online shops (ecommerce online shopping carts), without the complexity that involved in purchasing and developing an expensive stand alone ecommerce software solutions.

Design
Why does electronic shopping exist? For customers it is not only because of the high level of convenience, but also because of the broader selection; competitive pricing and greater access to information.[5][6] For organizations it increases their customer value and the building of sustainable capabilities, next to the increased profits.

Information load
Designers of online shops should consider the effects of information load. Mehrabian and Russel (1974) introduced the concept of information rate (load) as the complex spatial and temporal arrangements of stimuli within a setting.[8] The notion of information load is directly related to concerns about whether consumers can be given too much information in virtual shopping environments. Compared with conventional retail shopping, computer shopping enriches the information environment of virtual shopping by providing additional product information, such as comparative products and services, as well as various alternatives and attributes of each alternative, etc. Two major sub-dimensions have been identified for information load: complexity and novelty Complexity refers to the number of different elements or features of a site, which can be the result of increased information diversity. Novelty involves the unexpected, suppressing, new, or unfamiliar aspects of the site. A research by Huang (2000) showed that the novelty dimension kept consumers exploring the shopping sites, whereas the complexity dimension has the potential to induce impulse purchases.

Consumer expectations
The main idea of online shopping is not just in having a good looking website that could be listed in a lot of search engines or the art behind the site.[11] It also is not only just about disseminating information, because it is also about building relationships and making money.[11] Mostly, organizations try to adopt techniques of online shopping without understanding these techniques and/or without a sound business model.[11] Rather than supporting the organization's culture and brand name, the website should satisfy consumer's expectations. A majority of consumers choose online shopping for a faster and more efficient shopping experience. Many researchers notify that the uniqueness of the web has dissolved and the need for the design, which will be user centered, is very important. Companies should always remember that there are certain things, such as understanding the customer's wants and needs, living up to promises, never go out of style, because they give reason to come back. And the reason will stay if consumers always get what they expect. McDonaldization theory can be used in terms of online shopping, because online shopping is becoming more and more popular and a website that wants to gain more shoppers will use four major principles of McDonaldization: efficiency, calculability, predictability and control. Organizations, which want people to shop more online with them, should consume extensive amounts of time and money to define, design, develop, test, implement, and maintain the website.[11] Also if a company wants their website to be popular among online shoppers it should leave the user with a positive impression about the organization, so consumers can get an impression that the company cares about them.[11] The organization that wants to be accepted in online shopping needs to remember, that it is easier to lose a customer then to gain one.[11] Lots of researchers state that even when a site was "top-rated", it would go nowhere if the organization failed to live up to common etiquette, such as returning e-mails in a timely fashion, notifying customers of problems, being honest, and being good stewards of the customers'

data.[11] Organizations that want to keep their customers or gain new ones should try to get rid of all mistakes and be more appealing to be more desirable for online shoppers. And this is why many designers of webshops consider research outcomes concerning consumer expectations. Research conducted by Elliot and Fowell (2000) revealed satisfactory and unsatisfactory customer experiences.

Online stores are usually available have Internet access both at work as internet cafes and schools conventional retail store requires business hours.

Advantages

24 hours a day, and many consumers and at home. Other establishments such provide access as well. A visit to a travel and must take place during

In the event of a problem with the item it is not what the consumer ordered, or it is not what they expected consumers are concerned with the ease with which they can return an item for the correct one or for a refund. Consumers may need to contact the retailer, visit the post office and pay return shipping, and then wait for a replacement or refund. Some online companies have more generous return policies to compensate for the traditional advantage of physical stores. For example, the online shoe retailer Zappos.com includes labels for free return shipping, and does not charge a restocking fee, even for returns which are not the result of merchant error. (Note: In the United Kingdom, online shops are prohibited from charging a restocking fee if the consumer cancels their order in accordance with the Consumer Protection (Distance Selling) Act 2000.

Information and reviews

Online stores must describe products for sale with text, photos, and multimedia files, whereas in a physical retail store, the actual product and the manufacturer's packaging will be available for direct inspection (which might involve a test drive, fitting, or other experimentation). Some online stores provide or link to supplemental product information, such as instructions, safety procedures, demonstrations, or manufacturer specifications. Some provide background information, advice, or how-to guides designed to help consumers decide which product to buy. Some stores even allow customers to comment or rate their items. There are also dedicated review sites that host user reviews for different products. In a conventional retail store, clerks are generally available to answer questions. Some online stores have real-time chat features, but most rely on e-mail or phone calls to handle customer questions.

Price and selection

One advantage of shopping online is being able to quickly seek out deals for items or services with many different vendors (though some local search engines do exist to help consumers locate products for sale in nearby stores). Search engines, online price comparison services and discovery shopping engines can be used to look up sellers of a particular product or service. Shipping costs (if applicable) reduce the price advantage of online merchandise, though depending on the jurisdiction, a lack of sales tax may compensate for this.

Shipping a small number of items, especially from another country, is much more expensive than making the larger shipments bricks-and-mortar retailers order. Some retailers (especially those selling small, highvalue items like electronics) offer free shipping on sufficiently large orders. Another major advantage for retailers is the ability to rapidly switch suppliers and vendors without disrupting users' shopping

Disadvantages
Fraud and security concerns
Given the lack of ability to inspect merchandise before purchase, consumers are at higher risk of fraud on the part of the merchant than in a physical store. Merchants also risk fraudulent purchases using stolen credit cards or fraudulent repudiation of the online purchase. With a warehouse instead of a retail storefront, merchants face less risk from physical theft. Secure Sockets Layer (SSL) encryption has generally solved the problem of credit card numbers being intercepted in transit between the consumer and the merchant. Identity theft is still a concern for consumers when hackers break into a merchant's web site and steal names, addresses and credit card numbers. A number of high-profile break-ins in the 2000s has prompted some U.S. states to require disclosure to consumers when this happens. Computer security has thus become a major concern for merchants and e-commerce service providers, who deploy countermeasures such as firewalls and antivirus software to protect their networks. Phishing is another danger, where consumers are fooled into thinking they are dealing with a reputable retailer, when they have actually been manipulated into feeding private information to a system operated by a malicious party. Denial of service attacks are a minor risk for merchants, as are server and network outages. Quality seals can be placed on the Shop web page if it has undergone an independent assessment and meets all requirements of the company issuing the seal. The purpose of these seals is to increase the confidence of the online shoppers; the existence of many different seals, or seals unfamiliar to consumers, may foil this effort to a certain extent. A number of resources offer advice on how consumers can protect themselves when using online retailer services. These include: Sticking with known stores, or attempting to find independent consumer reviews of their experiences; also ensuring that there is comprehensive contact information on the website before using the service, and noting if the retailer has enrolled in industry oversight programs such as trust mark or trust seal. Before buying from a new company, evaluate the website by considering issues such as: the professionalism and user-friendliness of the site; whether or not the company lists a telephone number and/or street address along with e-contact information; whether a fair and reasonable refund and return policy is clearly stated; and whether there are hidden price inflators, such as excessive shipping and handling charges. Ensuring that the retailer has an acceptable privacy policy posted. For example note if the retailer does not explicitly state that it will not share private information with others without consent. Ensuring that the vendor address is protected with SSL (see above) when entering credit card information. If it does the address on the credit card information entry screen will start with "HTTPS". Using strong passwords, without personal information. Another option is a "pass phrase," which might be something along the lines: "I shop 4 good a buy!!" These are difficult to hack, and provides a variety of upper, lower, and special characters and could be site specific and easy to remember.

Although the benefits of online shopping are considerable, when the process goes poorly it can create a thorny situation. A few problems that shoppers potentially face include identity theft, faulty products, and the accumulation of spyware. Whenever you purchase a product, you are going to be required to put in your credit card information and billing/shipping address. If the website is not secure a customers information can be accessible to anyone who knows how to obtain it. Most large online corporations are inventing new ways to make fraud more difficult, however, the criminals are constantly responding to these developments with new ways to manipulate the system. Even though these efforts are making it easier to protect yourself online, it is a constant fight to maintain the lead. It is advisable to be aware of the most current technology and scams out there to fully protect yourself and your finances.[20]. One of the hardest areas to deal with in online shopping is the delivery of the products. Most companies offer shipping insurance in case the product is lost or damaged; however, if the buyer opts not to purchase insurance on their products, they are generally out of luck. Some shipping companies will offer refunds or compensation for the damage, but it is up to their discretion if this will happen. It is important to realize that once the product leaves the hands of the seller, they have no responsibility (provided the product is what the buyer ordered and is in the specified condition).[20].

Lack of full cost disclosure

The lack of full disclosure with regards to the total cost of purchase is one of the concerns of online shopping. While it may be easy to compare the base price of an item online, it may not be easy to see the total cost up front as additional fees such as shipping are often not be visible until the final step in the checkout process. The problem is especially evident with cross-border purchases, where the cost indicated at the final checkout screen may not include additional fees that must be paid upon delivery such as duties and brokerage. Some services such as the Canadian based Wishabi attempts to include estimates of these additional cost,[21] but nevertheless, the lack of general full cost disclosure remains a concern.

Privacy
Privacy of personal information is a significant issue for some consumers. Different legal jurisdictions have different laws concerning consumer privacy, and different levels of enforcement. Many consumers wish to avoid spam and telemarketing which could result from supplying contact information to an online merchant. In response, many merchants promise not to use consumer information for these purposes, or provide a mechanism to opt-out of such contacts. Many websites keep track of consumers shopping habits in order to suggest items and other websites to view. Brick-and-mortar stores also collect consumer information. Some ask for address and phone number at checkout, though consumers may refuse to provide it. Many larger stores use the address information encoded on consumers' credit cards (often without their knowledge) to add them to a catalog mailing list. This information is obviously not accessible to the merchant when paying in cash.

Product suitability
Many successful purely virtual companies deal with digital products, (including information storage, retrieval, and modification), music, movies, office supplies, education, communication, software, photography, and financial transactions. Other successful marketers use Drop shipping or affiliate marketing techniques to facilitate transactions of tangible goods without maintaining real inventory. Some non-digital products have been more successful than others for online stores. Profitable items often have a high value-to-weight ratio, they may involve embarrassing purchases, they may typically go to people in remote locations, and they may have shut-ins as their typical purchasers. Items which can fit in a

standard mailbox such as music CDs, DVDs and books are particularly suitable for a virtual marketer. Products such as spare parts, both for consumer items like washing machines and for industrial equipment like centrifugal pumps, also seem good candidates for selling online. Retailers often need to order spare parts specially, since they typically do not stock them at consumer outletsin such cases, e-commerce solutions in spares do not compete with retail stores, only with other ordering systems. A factor for success in this niche can consist of providing customers with exact, reliable information about which part number their particular version of a product needs, for example by providing parts lists keyed by serial number. Products less suitable for e-commerce include products that have a low value-to-weight ratio, products that have a smell, taste, or touch component, products that need trial fittings most notably clothing and products where colour integrity appears important. Nonetheless, Tesco.com has had success delivering groceries in the UK, albeit that many of its goods are of a generic quality, and clothing sold through the internet is big business in the U.S.

The impact of others review on consumer behaviour

One of the great benefits of online shopping is the ability to read others reviews, which could be from experts or simply fellow shoppers on one product and service. The Nielsen Company conducted a survey in March 2010 and polled more than 27,000 Internet users in 55 markets from the Asia-Pacific, Europe, Middle East, North America and South America to look at questions such as How do consumers shop online?, What do they intend to buy?, How do they use various online shopping web pages?, and the impact of social media and other factors that come into play when consumers are trying to decide how to spend their money on which product or service. According to that research,[22] reviews on electronics (57%) such as DVD players, cell phones or PlayStations and so on, reviews on cars (45%), and reviews on software (37%) play an important role and have influence on consumers who tend to make purchases and buy online. In addition to online reviews, peer recommendations on the online shopping pages or social media play a key role for online shoppers while researching future purchases of electronics, cars and travel or concert bookings. On the other hand, according to the same research,[22] 40% of online shoppers indicate that they would not even buy electronics without consulting online reviews first. Online reviews play a fundamental role on consumers who want to buy some kind of product, but the biggest effect is seen for electronics, cars and software.

SECURITY
(1) Shop at the websites of companies that you know and are popular offline. (2) Keep a record of all your purchases. (3) Keep all your important personal information safe. (4) Look for the latest credit card password procedures, such as Verified by Visa. (5) Keep your passwords private. (6) Read the return policy before placing an order. (7) Read and understand the companys privacy statement (or policy).

CASE STUDY-EBAY

ORIGINS AND HISTORY

eBay headquarters in San Jose

The online auction website was founded as AuctionWeb in San Jose, California, on September 3, 1995, by French-born Iranian computer programmer Pierre Omidyar as part of a larger personal site that included, among other things, Omidyar's own tongue-in-cheek tribute to the Ebola virus.[6] One of the first items sold on eBay was a broken laser pointer for $14.83. Astonished, Omidyar contacted the winning bidder to ask if he understood that the laser pointer was broken. In his responding email, the buyer explained: "I'm a collector of broken laser pointers."[7] The frequently repeated story that eBay was founded to help Omidyar's fiance trade Pez candy dispensers was fabricated by a public relations

manager in 1997 to interest the media. This was revealed in Adam Cohen's 2002 book, The Perfect Store, [6] and confirmed by eBay. Chris Agarpao was hired as eBay's first employee and Jeffrey Skoll was hired as the first president of the company in early 1996. In November 1996, eBay entered into its first third-party licensing deal, with a company called Electronic Travel Auction to use SmartMarket Technology to sell plane tickets and other travel products. Growth was phenomenal; in January 1997 the site hosted 2,000,000 auctions, compared with 250,000 during the whole of 1996.[8] The company officially changed the name of its service from AuctionWeb to eBay in September 1997. Originally, the site belonged to Echo Bay Technology Group, Omidyar's consulting firm. Omidyar had tried to register the domain name echobay.com, but found it already taken by the Echo Bay Mines, a gold mining company,[9] so he shortened it to his second choice, eBay.com.[10] (Echobay.com is now owned by Echobay Partners, Ltd., a private equity firm based in Nevis.) In 1997, the company received $6.7 million in funding from the venture capital firm Benchmark Capital.
[11]

Meg Whitman was hired as eBay President and CEO in March 1998. At the time, the company had 30 employees[12] half a million users and revenues of $4.7 million in the United States.[13] eBay went public on September 21, 1998,[14] and both Omidyar and Skoll became instant billionaires. eBay's target share price of $18 was all but ignored as the price went to $53.50 on the first day of trading.[15] As the company expanded product categories beyond collectibles into almost any saleable item, business grew quickly.[7] In February 2002, the company purchased IBazar, a similar European auction web site founded in 1995 and then bought PayPal on October 14, 2002. In early 2008, the company had expanded worldwide, counted hundreds of millions of registered users, 15,000+ employees and revenues of almost $7.7 billion.[13] After nearly ten years at eBay, Whitman made the decision to enter politics. On January 23, 2008 the company announced that Whitman would step down on March 31, 2008 and John Donahoe was selected to become President and CEO.[16] Whitman remained on the Board of Directors and continued to advise Donahoe through 2008. In late 2009, eBay completed the sale of Skype for $2.75 billion, but will still own 30% equity in the company.[17] In July 2010, eBay was sued for $3.8 billion by XPRT Ventures that accused eBay of stealing information shared in confidence by the inventors on XPRT's own patents, and incorporated it into features in its own payment systems, such as PayPal Pay Later and PayPal Buyer Credit.[18] December 20, 2010, EBay Inc. says it will acquire a German online shopping club - brand4friends for 150 million Euro ($197 million) to strengthen the company fashion business in Europe. It is subject to regulatory approval and expected to close it in the Q1 2011.[19] [EDIT ] ITEMS Millions of collectibles, decor, appliances, computers, furnishings, equipment, domain names[20], vehicles, and other miscellaneous items are listed, bought, or sold daily on eBay. In 2006, eBay launched its Business & Industrial category, breaking into the industrial surplus business. Generally, anything can be auctioned on the site as long as it is not illegal and does not violate the eBay Prohibited and Restricted Items policy.[21] Services and intangibles can be sold, too. Large international companies, such as IBM, sell their newest products and offer services on eBay using competitive auctions and fixed-priced storefronts. Separate eBay sites such as eBay US and eBay UK allow the users to trade using the local currency. Software developers can create applications that integrate with eBay through the eBay API by

joining the eBay Developers Program.[22] In June 2005, there were more than 15,000 members in the eBay Developers Program, comprising a broad range of companies creating software applications to support eBay buyers and sellers as well as eBay Affiliates. Controversy has arisen over certain items put up for bid. For instance, in late 1999, a man offered one of his kidneys for auction on eBay, attempting to profit from the potentially lucrative (and, in the United States, illegal) market for transplantable human organs. On other occasions, people and even entire towns have been listed, often as a joke or to garner free publicity. In general, the company removes auctions that violate its terms of service agreement. [EDIT] PAYPAL-ONLY CATEGORIES

eBay North First Street satellite office campus (home to PayPal)

Beginning in August 2007, eBay required listings in "Video Games" and "Health & Beauty" to accept its payment system PayPal and sellers could only accept PayPal for payments in the category "Video Games: Consoles".[23] Starting January 10, 2008, eBay said sellers can only accept PayPal as payment for the categories "Computing > Software", "Consumer Electronics > MP3 Players", "Wholesale & Job Lots > Mobile & Home Phones", and "Business, Office & Industrial > Industrial Supply / MRO".[24] eBay announced that starting in March 2008, eBay had added to this requirement that all sellers with fewer than 100 feedbacks must offer PayPal and no merchant account may be used as an alternative.[25][26] This is in addition to the requirement that all sellers from the United Kingdom have to offer PayPal.[27] Further, and as noted below, it was a requirement to offer Paypal on all listings in Australia and the UK. In response to concerns expressed by the Australian Competition and Consumer Commission, however, eBay has since removed the policy on the ebay.com.au website requiring sellers to offer PayPal as a payment option.[citation needed] [EDIT] EBAY EXPRESS

eBay Express logo

In April 2006, eBay opened its new eBay Express site, which was designed to work like a standard Internet shopping site for consumers with United States addresses. It closed in 2008. Selected eBay items were mirrored on eBay Express, where buyers shopped using a shopping cart to purchase from multiple sellers. The UK version was launched to eBay members in mid-October 2006 but on January 29, 2008

eBay announced its intention to close the site.[28] The German version, eBay Express Germany,[29] was also opened in 2006 and closed in 2008. [EDIT] SELLING MANAGER APPLICATIONS At the 2008 eBay Developer's Conference, eBay announced the Selling Manager Applications program (SM Apps).[30] The program allows approved developers to integrate their applications directly into the eBay.com interface.[31] The applications created by developers are available for subscription by eBay members who also subscribe to Selling Manager. [EDIT] EBAY SPECIALTY SITES eBay maintains a number of specialty sites. eBay Pulse, for example, provides information about popular search terms, trends, and most-watched items. Other ebay Community Content includes the Discussion Boards, Groups, Answer Center, Chat Rooms, and Reviews & Guides. eBay has a robust mobile offering, including SMS alerts, a WAP site, Java ME clients, an Android OS application and an Apple iPhone application available in certain markets. Best of eBay is a specialty site for finding the most-unusual items on the eBay site. Users can vote on and nominate listings that they find. [EDIT ] AUCTION TYPES eBay.com offers several types of auctions.

Auction-style listings allow the seller to offer one or more items for sale for a specified number of days. The seller can establish a reserve price. Fixed price format allows the seller to offer one or more items for sale at a Buy It Now price. Buyers who agree to pay that price win the auction immediately without submitting a bid. Fixed price format with best offer allows the seller to accept best offers. If a buyer submits a best offer, the seller either rejects or accepts the best offer. If the best offer is not satisfactory, a seller may submit a counter offer to the buyer. Best offer is not available for auction style listings. In addition, best offer is not available in every category. Sellers also meet specific requirements in order to sell with best offer.

[EDIT ] BIDDING [EDIT] AUCTION-STYLE LISTINGS Bidding on eBay's auction-style listings is called proxy bidding and is essentially equivalent to a Vickrey auction, with the following exceptions.

The winning bidder pays the second-highest bid plus one bid increment amount (i.e., some small predefined amount relative to the bid size), instead of simply the second-highest bid. However, since the bid increment amounts are relatively insignificant compared to the bid size, they are not considered from a strategic standpoint.[32] The current winning bid is not sealed, but instead is always displayed. However, at any given moment, the highest bidder's bid is not necessarily displayed, since this amount may be higher than the amount required to win the auction.

Sample eBay page layout (as announced on June 15, 2009) [EDIT ] EXAMPLE OF BIDDING ON AN AUCTION-STYLE LISTING This section does not cite any references or sources. Please help improve this section by adding citations to reliable sources. Unsourced material may be challenged and removed. (June
2010)

Suppose bidding for an item placed by Anne starts at $1.00 and that the bid increment amount in this price range is $.25. Eric bids $3.00 for the item, and since no one else has bid yet, eBay displays that the current highest bid is Eric's, with a bid of $1.00, and that the minimum allowable bid is $1.25, which is equal to one bidding increment above the winning bid. Suppose then that Bob bids $2.00 for the item. Since Eric has already bid more than Bob, eBay will display that the current highest bid is Eric's, with a bid of $2.25, which equals the second-highest bid ($2.00) plus the bid increment amount ($.25). Again, eBay will also display that the minimum allowable bid is $2.50, one bid increment above the highest bid. Suppose that Bob bids again, this time at $2.75. Again, since Eric's bid is higher than Bob's, eBay will display that the current highest bidder is Eric, with a bid of $3.00, which is equal to the second-highest bid ($2.75) plus the bid increment ($.25). eBay will also display that the minimum allowable bid is $3.25, one bidding increment above the current highest bid. Suppose Bob bids one more time, at $10.00. Since Bob's bid is now higher than Eric's, eBay will display that the current potentially winning bidder is Bob, with a bid of $3.25, which is equal to the second-highest bid ($3.00) plus the bid increment ($.25). If Bob were to win the auction, he would have to pay the amount equal to the winning bid ($3.25), even though his previous bid was much larger than that. [EDIT] SELLER RATINGS In 2007, eBay began using detailed seller ratings with four different categories. When leaving feedback, buyers are asked to rate the seller in each of these categories with a score of one to five stars, with five being the highest rating and one the lowest. Unlike the overall feedback rating, these ratings are anonymous; neither sellers nor other users learn how individual buyers rated the seller. The listings of

sellers with a rating of 4.3 or below in any of the four rating categories appear lower in search results. Power Sellers are required to have scores in each category above 4.5.[33][34][35][36][37] In a reversal of roles, on January 24, 2010 Auctionbytes.com held an open survey in which sellers could effectively rate eBay itself, as well as competing auction and marketplace sites.[38] In the survey, users were asked to rank 15 sites based on five criteria:

Profitability Customer Service Communication Ease of Use Recommendation

After the results were published, eBay had finished 13th overall,[39] edged out by established sites such as Amazon and Craigslist, as well as lesser-known upstarts like Atomic Mall and Ruby Lane. In individual category rankings, eBay was rated the worst of all the 15 sites on Customer Service and Communication, and average on Ease of Use. A number of respondents said they would have given eBay a rating of ten 3 to 5 years ago. eBay was rated twelfth out of fifteen in the Recommended Selling Venue category. [EDIT ] PROFIT AND TRANSACTIONS
This section may contain original research. Please improve it by verifying the claims made and adding references. Statements consisting only of original research may be removed. More details may be available on the talk page. (November 2007)

eBay generates revenue from various fees. The eBay fee system is quite complex; there are fees to list a product and fees when the product sells (Final Value Fee), plus several optional adornment fees, all based on various factors and scales. The U.S.-based eBay.com takes $0.10 to $4 (based on the opening price) for a basic listing without any adornments and 8.75% (12% for some categories, e.g. Clothing & Accessories) of the final price (as of May 2009). The UK based ebay.co.uk[40] takes from GBP 0.15 to a maximum rate of GBP 3 per 100 for an ordinary listing and from 0.75 percent to 10% (writing as of June 2009) percent of the final price. Reduced FVF's are available to business registered customers. In addition, eBay owns the PayPal payment system that has fees of its own. Under current U.S. law, a state cannot require sellers located outside the state to collect a sales tax, making deals more attractive to buyers. Although some state laws require purchasers to pay sales tax to their own states on out-of-state purchases, it is not a common practice. However, most sellers that operate as a full time business do follow state tax regulations on their eBay transactions.[41][42] However for the tax called Value added tax (VAT), eBay requires sellers to include the VAT fees in their listing price and not as an add-on and thus eBay profits by collecting fees based on what governments tax for VAT.[43] The company's current business strategy includes increasing international trade.[44][45] eBay has already expanded to over two dozen countries including China and India. The only places where expansion failed were Taiwan and Japan, where Yahoo! had a head start, and New Zealand where TradeMe, owned by the Fairfax media group is the dominant online auction website. A more recent strategy involves the company increasingly leveraging the relationship between the eBay auction site and PayPal: The impact of driving buyers and sellers to use PayPal means not only does eBay turn buyers into clients (as a pure auction venue its clients used to be predominantly sellers) but for each new PayPal registration it achieves via the eBay auction site it also earns offsite revenue when the

resulting PayPal account is used in non-eBay transactions. In its Q1 2008 results, total payment volume via PayPal increased 17 percent, but off the eBay auction site it was up 61 percent.[46] For most listing categories, eBay sellers are permitted to offer a variety of payment systems such as PayPal, Paymate, ProPay, and Moneybookers.[47] eBay runs an affiliate program under the name eBay Partner Network.[48] eBay affiliate marketers were originally paid a percentage of the eBay seller's transaction fees, with commissions ranging from 50% to 75% of the fees paid for an item purchased. In October 2009, eBay changed to an affiliate payout system that it calls Quality Click Pricing, in which affiliates are paid an amount determined by an undisclosed algorithm. The total earnings amount is then divided by the number of clicks the affiliate sent to eBay and is reported as Earnings Per Click, or EPC. [EDIT ] ACQUISITIONS
Main article: List of acquisitions by eBay

[EDIT ] ECONOMICS As eBay is a huge, publicly visible market, it has created a great deal of interest from economists, who have used it to analyze many aspects of buying and selling behavior, auction formats, etc., and compare these with previous theoretical and empirical findings. [EDIT ] CONTROVERSY AND CRITICISM
Main article: Criticism of eBay

eBay has its share of controversy, including cases of fraud, its policy of requiring sellers to use PayPal, and concerns over forgeries and intellectual property violations in auction items. [EDIT ] PROHIBITED OR RESTRICTED ITEMS In its earliest days, eBay was essentially unregulated. However, as the site grew, it became necessary to restrict or forbid auctions for various items. Note that some of the restrictions relate to eBay.com (the U.S. site), while other restrictions apply to specific European sites (such as Nazi paraphernalia). Regional laws and regulations may apply to the seller or the buyer. Generally, if the sale or ownership of an item is regulated or prohibited by one or more states, eBay will not permit its listing. Among the hundred or so banned or restricted categories:

Tobacco (tobacco-related items and collectibles are accepted.)[49] Alcohol (alcohol-related collectibles, including sealed containers, as well as some wine sales by licensed sellers are allowed, some sites such as ebay.com.au allow licensed liquor sales)[50] Drugs and drug paraphernalia[51] Nazi paraphernalia[52] Bootleg recordings[53] Firearms and ammunition,[54] including any parts that could be used to assemble a firearm as well as (as of July 30, 2007) any firearm part that is required for the firing of a gun, including bullet tips, brass casings and shells, barrels, slides, cylinders, magazines, firing pins, trigger assemblies, etc. Crossbows and various types of knives are also forbidden. Police and emergency service vehicular warning equipment such as red or blue lights and sirens (antique or collectible items are exempt) Used underwear (see Panty fetishism) and dirty used clothing[55]

Forged, illegal, stolen, or confidential documents, which include passports, social security cards, drivers licences, voter registration cards, birth certificates, school documents, medical records, financial information, government license plates, government classified information, or CarFax documents. Any item that is used to modify documents is also restricted.[56] Human parts and remains (with an exception for skeletons and skulls for scientific study, provided they are not Native American in origin)[57] Live animals (with certain exceptions)[58] Certain copyrighted works or trademarked items.[59] Lottery tickets, sweepstakes tickets, or any other gambling items.[60] Military hardware such as working weapons or explosives. Enriched uranium, plutonium, and other fissile material. Sexually oriented adult material, which must be listed in the "Adult Only" category,[61] notwithstanding certain items prohibited:[61] o Child pornography o Materials deemed obscene, including bestiality, necrophilia, rape, coprophilia, and incest o Used sex toys o Services including any sexual activity o Links to sites that contain prohibited items o Adult products that are delivered digitally Virtual items from massively multiplayer online games, restrictions that vary by country[62][63] Ivory products[58] Knives, other than cutlery, are prohibited in the UK following media pressure about the sale of items assessed by police to be "illegal"[64] Many other items are either wholly prohibited or restricted in some manner.[65]

[EDIT ] UNUSUAL SALE ITEMS

In May 2006, the remains of U.S. Fort Montgomery, a stone fortification in upstate New York built in 1844, were put up for auction on eBay. The first auction ended on June 5, 2006, with a winning bid of $5,000,310. However, the sale was not completed, and the fort and lands surrounding it remain for sale and have been relisted on the site several times since.[66][67] In February 2004, a scrapped F/A-18 Hornet fighter jet was listed on eBay by Mike Landa, of Landa and Associates, with a starting bid of $1,000,000. He was the legal owner of the plane after purchasing it from a scrap yard and also offered to have the plane restored for flying condition for a Buy It Now price of $9,000,000. Landa also told potential buyers that maintenance of the plane would cost roughly $40,000 a month for just 2 to 3 hours of flying time. The FBI told Landa that he could only sell the plane to an American citizen residing in the United States, and that the plane must not leave U.S. airspace. The auction ended without a sale.[68] In January 2003, Thatch Cay, the last privately held and undeveloped U.S. Virgin Island, was listed for auction by Idealight International. The minimum bid was $3,000,000.00 and closed January 16, 2003.[69] In December 2005, a brussels sprout cooked on Christmas Day was listed by "crazypavingpreacher" (Andrew Henderson of Darlington, England). It sold for 99.50 on January 4, 2006. The sprout had been frozen and was sent by first class post in insulated packaging to the buyer, "5077phil". The listing was reported in the Daily Star, making the front page (and was followed by a series of "copycat" listings of various vegetables). The proceeds of the sale were donated to Tearfund, a major Christian relief and development agency working in the Third World. This sprout was the first cooked brussels sprout to be sold on eBay.[70] In January 2006, a British man named Leigh Knight sold an unwanted brussels sprout left over from his Christmas dinner for 1550 in aid of cancer research.[71][72] In May 2006, a Chinese businessman named Zhang Cheng bought a former Czech Air Force MiG21 fighter jet from a seller in the United States for $24,730. The seller, "inkgirle", refused to ship it. It is not known whether he was refunded.[73][74] In June 2005, the wife of Tim Shaw, a British radio DJ on Kerrang! 105.2, sold Tim's Lotus Esprit sports car with a Buy It Now price of 50 pence after she heard him flirting with model Jodie Marsh on air. The car was sold within 5 minutes, and it was requested that the buyer pick it up the same day.[75] In May 2005, a Volkswagen Golf that had previously been registered to Joseph Ratzinger (then a cardinal, who had since been elected pope and chose the regnal name Benedict XVI on April 19,

2005) was sold on eBay's German site for 188,938.88 ($277,171.12 USD). The winning bid was made by the GoldenPalace.com online casino, known for their outrageous eBay purchases.[76] A seaworthy 16,000-ton aircraft carrier, formerly the British HMS Vengeance, was listed early in 2004. The auction was removed when eBay determined that the vessel qualified as ordnance, even though all weapons systems had been removed.[77] Water that was said to have been left in a cup Elvis Presley once drank from was sold for $455. The few tablespoons came from a plastic cup Presley sipped at a concert in North Carolina in 1977.[78] Coventry University student Bill Bennett got 1.20 for a single cornflake.[79] A man from Brisbane, Australia, attempted to sell New Zealand at a starting price of A$0.01. The price had risen to $3,000 before eBay closed the auction.[80] An Australian newspaper reported in December 2004 that a single piece of the Kellogg's breakfast cereal Nutri-Grain sold on eBay for A$1,035 because it happened to bear a slight resemblance to the character E.T. from the Steven Spielberg movie. Apparently the seller went on to make even more money in relation to the sale for his appearance on a nationally televised current affairs program.[81] One of the tunnel boring machines involved in the construction of the Channel Tunnel was auctioned on eBay in 2004.[82] A group of four men from Australia auctioned themselves to spend the weekend with the promise of "beers, snacks, good conversation and a hell of a lot of laughs" for A$1,300[83] Disney sold a retired Monorail Red (Mark IV Monorail) for $20,000[84] The German Language Association sold the German language to call attention to the growing influence of English in modern Germany.[85] In late November 2005, the original Hollywood Sign was sold on eBay for $450,400.[86][87] In February 2007, after Britney Spears shaved all of her hair off in a Los Angeles salon, it was listed on eBay for 1 million USD before it was taken down.[88] In September 2004, the Indiana Firebirds arena football team was auctioned off, first in a regular auction that failed to reach the reserve price,[89] and again as a "Buy it Now" item for $3.9 million.[90] Bridgeville, California (pop. 25) was the first town to be sold on eBay in 2002, and has been up for sale 3 times since.[91] In April 2005, American entrepreneur Matt Rouse sold the right to choose a new middle name for him. After receiving an $8,000 "Buy It Now" bid, the Utah courts refused to allow the name change. He currently still has his original middle name "Jean".[92] In 2004, a partially eaten, 10-year-old grilled cheese sandwich said to bear the image of the Virgin Mary sold on eBay for $28,000.[93] In January 2008, four golf balls were auctioned on eBay after being surgically removed from the carpet python that had inadvertently swallowed them whilst raiding eggs in a chicken enclosure. The story attracted considerable international attention and the balls eventually sold for more than A$ 1,400. The python recovered and was released.[94] In May 2008, Paul Osborn of the UK listed his wife Sharon for sale on eBay, alleging that she had an affair with a coworker.[95] In June 2008, Ian Usher put up his "entire life" on auction. The auction included his house in Perth, belongings, introduction to his friends, and a trial at his job.[96] When bidding closed, his "life" sold for $384,000.[97] In August 2008, Dr Richard Harrington, Vice President of the UK Royal Entomological Society, announced that a fossilized aphid he bought for 20 from a seller in Lithuania, was a previously unknown species. It has been named Mindarus harringtoni after Dr Harrington. He had wanted to name it Mindarus ebayi, but this name was disallowed as being too flippant. The 45-million-year-old aphid, preserved in a piece of Baltic amber, is now housed in the Natural History Museum in London.
[98]

In October 2008, amidst the 20082009 Icelandic financial crisis one seller had put up Iceland for sale. Auction started with 99 pence but had reached 10 million pounds (US $17.28 million). However, singer Bjrk was "not included" in the sale. The notice read Located in the mid-Atlantic ridge in the North Atlantic Ocean, Iceland will provide the winning bidder with a habitable environment, Icelandic Horses and admittedly a somewhat sketchy financial situation. Bidders' questions included: "Do you offer volcano/earthquake insurance?"[99] In November 2008, a Swedish man put a digitally hand-drawn picture of a 7-legged spider onto eBay. The picture stemmed from an article on the site 27bslash6.com wherein David Thorne claims to have attempted to pay a chiropractor's bill with a picture of a 7-legged spider, which he valued at $233.95. On eBay, the bidding price started at $233.95, with bidding ended at a sale price of US$10,000.[100] Both the e-mail exchange and the picture have become internet hits.[101]

In July 2009 Dornoch Capital Advisors placed England's Coca Cola League One Side Tranmere Rovers F.C. on eBay without permission for them to do so from owner and chairman Peter Johnson. This led to Johnson issuing a statement on the team's website saying that the team was not for sale and that he had contacted eBay to have the listing removed.[102] In August 2009, a mother of six from South Arkansas auctioned off the legal rights to name her unborn child.[103] In December 2009, a woman auctioned the copyright for a never before seen four-minute home video of Marilyn Monroe smoking a joint.[104] In September 2010, a 23 year old man named Michael Fawcett, Stockton-on-Tees, was trying to raise money for Cancer Research by attempting to sell a Ghost. The auction caught the attention of a local news paper. However, after day 6 of the auction, eBay removed the item stating it was against their policy to sell intangible items or items whose existence cannot be verified on receipt of them, such as ghosts, souls, or spirits .[105][106]

[EDIT ] CHARITY AUCTIONS Using MissionFish as an arbiter, eBay allows sellers to donate a portion of their auction proceeds to a charity of the seller's choice. The program is called eBay Giving Works in the US, and eBay for Charity[107] in the UK. eBay provides a partial refund of seller fees for items sold through charity auctions. [108] As of March 4, 2010, $154 million has been raised for U.S. nonprofits by the eBay Community since eBay Giving Works began in 2003.[109] Some high-profile charity auctions have been advertised on the eBay home page, and have raised large amounts of money in a short time. For example, a furniture manufacturer raised over $35,000 for Ronald McDonald House by auctioning off beds that had been signed by celebrities.[citation needed] To date the highest successful bid on a single item for charity was for the annual "Power Lunch"[110] with investor Warren Buffett at the famous Smith & Wollensky Steakhouse in New York. The winning bid was $2.63 million with all of the proceeds going to the Glide Foundation. At the time of writing, the winning bidder is still not publicly known, but they will be able to bring up to seven friends to the lunch. The previous highest successful bid on a single item for charity was for a letter[111] sent to Mark P. Mays, CEO of Clear Channel (parent company of Premiere Radio Networks the production company that produces The Rush Limbaugh Show and Glenn Beck Program) by United States Senator Harry Reid and forty other Democratic senators, complaining about comments made by conservative talk show host Rush Limbaugh. The winning bid was $2,100,100, with 100 percent of the proceeds going to the Marine CorpsLaw Enforcement Foundation, benefiting the education of children of men and women who have died serving in the armed forces. The winning bid was matched by Limbaugh in his largest charity donation to date.[112] In 2007, eBay Canada partnered with Montreal-based digital branding agency CloudRaker to develop a campaign to raise money for Sainte-Justine children's hospital in Montreal. They aligned themselves with internet phenomenon Ttes Claques to create an eBay auction based on popular T-A-C character Uncle Tom, an infomercial host who pitches absurd products. eBay and CloudRaker reproduced Uncle Toms imaginary products, The Body Toner Fly Swatter, The Willi Waller Potato Peeler, and the LCD Shovel and sold them online. In 6 weeks, they raised $15,000 for Hopital St-Justine with one fly swatter, one potato peeler, and one shovel, a world record. The Body Toner Fly Swatter sold for $8,600, the Willi Waller Potato Peeler sold for $3,550, and the LCD Shovel sold for $2,146.21. [EDIT ] ENVIRONMENTAL RECORD On May 8, 2008, eBay announced the opening of its newest building on the company's North Campus in San Jose, which is the first structure in the city to be built from the ground up to LEED Gold standards.[113]

The building, the first the company has built new in its 13-year existence, uses an array of 3,248 solar panels, spanning 60,000 square feet (5,600 m2), and providing 650 kilowatts of power to eBay's campus. [114][115] All told the array can supply the company with 15-18 percent of its total energy requirements, reducing the amount of greenhouse gases that would be produced to create that energy by other means.[114] SolarCity, the company responsible for designing the array, estimates that the solar panels installed on eBay's campus will prevent 37 million pounds of carbon dioxide from being released into the environment as a result of replaced power production over the next three decades.[115] Creating an equivalent impact to remove the same amount of carbon dioxide from the atmosphere would require planting 322 acres (1.30 km2) of trees.[115] The design of the building also incorporates other elements to reduce its impact on the environment. The building is equipped with a lighting system that detects natural ambient light sources and automatically dims artificial lighting to save 39 percent of the power usually required to light an office building.[113] eBay's newest building also reduces demand on local water supplies by incorporating an eco-friendly irrigation system, low-flow shower heads, and low-flow faucets.[113] Even during construction, more than 75 percent of the waste from construction was recycled.[113] eBay also runs buses between San Francisco and the San Jose campus to reduce the number of commuting vehicles.[113] [EDIT ] SKYPE eBay Inc. acquired Skype in 2005 and significantly expanded its customer base to more than 480 million registered users worldwide. To focus on its core e-commerce and payments businesses, eBay Inc. sold a majority stake in Skype in November 2009, retaining a minority investment in the company.[citation needed] In May 2011, Microsoft announced that it had acquired Skype for $8.5 billion. [EDIT ] CRAIGSLIST
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In the summer of 2004, eBay acknowledged that it had acquired 25% of classified listings website, Craigslist. Former Craigslist executive Phillip Knowlton was the seller, and he insisted that his former employer was aware of his plans to divest his holdings. Initially, eBay assured Craigslist that they would not ask the company to change the way it does business. eBay spokesman Hani Durzy stated that the "investment was really for learning purposes; it gives us access to learn how the classified market online works."[116] The classifieds service Kijiji was launched by eBay in March 2005. In April 2008, eBay sued Craigslist to "safeguard its four-year financial investment", claiming that in January 2008, Craigslist took actions that "unfairly diluted eBay's economic interest by more than 10%."[117] Craigslist countersued in May 2008 "to remedy the substantial and ongoing harm to fair competition" that Craigslist claims is constituted by eBay's actions as a Craigslist shareholder.[118] In September 2010, Delaware Judge William Chandler ruled that the actions of Craigslist were unlawful, and that the actions taken by Craigslist founders Jim Buckmaster and Craig Newmark had "breached their fiduciary duty of loyalty", and restored eBay's stake in the company to 28.4% from a diluted level of 24.85%.[119] However, the judge dismissed eBay's objection to a staggered board provision citing that Craigslist has the right to protect its own trade secrets. [120][121] eBay spokesman Michael Jacobson stated "We are very pleased that the court gave eBay what it sought