Ebay - Positioned To Maintain Leadership Position

eBay was one of the first Internet companies to achieve profitability and figure out how to make online auctions work. It was first company to enter the online auction market, after which it experienced rapid growth. By mid-2001 eBay held a clear leadership position and its name was a household word. Little competition was to be seen on the horizon, although Amazon.com and Yahoo! were creating a niche in the online auction marketplace through new initiatives. With online auction sales increasing 149 percent in May 2001 to $556 million, eBay accounted for more than 65 percent, according to a study by Nielsen/NetRatings and Harris Interactive.

As of mid-2001 eBay's strategy was to expand its business into new markets and improve current services. The company's goal was to expand its platform as quickly as possible in order to have more business transacted. eBay's business model gave it almost unlimited capacity and advantages of scale over traditional auction houses. In auctions, the biggest market has a clear advantage over other competitors because sellers desire the liquidity that comes from having a bigger audience and more potential buyers. In addition to auctions, eBay has successfully expanded its platform to include fixed-price offerings, both through its acquisition of Half.com and through its eBay Stores program, as well as through its Buy it Now service.