Creating and Managing the Networked Enterprise

Case In Point: eBay and Its Digital Biosphere

Created in September 1995 by Pierre Omidyar, eBay is “The World’s Online Marketplace” for the sale of goods and services by a diverse community of individuals and businesses. Eight years later the eBay “biosphere” included some 62 million registered members from around the world. It is the most popular shopping destination on the Internet.

On any given day, there are more than 12 million items listed on eBay across 18,000 categories. In 2002, eBay community members conducted $14.9 billion in gross merchandise sales. The San Jose, CA company which employees more than 4,000, has long enjoyed one of the Internet’s most profitable and efficient businesses with revenues in 2002 passing $1.2 billion and a 62.2 % year over year in sales growth rate.

Through the discussion and chat boards, community members meet and get to know each other, discuss topics of mutual interest and provide one another with helpful information on trading on eBay. These discussion boards are public forums that encourage open communication between members. Such community involvement and development became clear to Omidyar in eBay’s earliest days when he was working on the feedback forums and discovered that sellers and buyers used it for praise as well as airing out complaints.

“As it turned out,” he said, “I learned that it became more about creating standards for a way a community operated.” Meg Whitman eBay’s CEO agreed, “You can put up a new feature, and within 20 minutes you will have a very good sense of what the adoption rate is going to be. And within an hour, we’ll have 4,000 responses.” As Adam Cohen writes in The Perfect Store: Inside eBay, “The implications of the eBay model are revolutionary.”

SOURCE: Roadmap To Entrepreneurial Success