eBay's formula: An easy-to-use online marketplace and a dedicated community

in 1999. "This new, non-auction format opened eBay's market to more inventory for commodity items like clothing, consumer electronics, media, and automobiles," he says.

Others changes include the purchase of online payment leader PayPal and the aggressive international expansion that began in 1999. "By expanding the eBay brand across the planet, eBay was able, with only a few misses, to nearly eliminate the traditional boundaries of the past that had prevented true consumer-based trade to flourish," Griffith adds.

However, eBay has hit a few rough spots in recent years. Recent changes have generated significant controversy among both buyers and sellers on the site, particularly its recent emphasis on attracting more fixed-price sellers using a format similar to Amazon's auctions, reducing upfront listing fees for sale items and increasing sales commissions. Many sellers believe eBay is abandoning its auction-based roots.

But Griffith says the criticism is hardly representative of the entire seller population, and points out that the changes have helped buyers and sellers.

"All of the changes we have made over the last year are [aimed at] improving the buying [and selling] experience," Griffith says. "Adjusting our fee schedule to lower upfront listing fees encourages sellers to list more inventory on the site. Limiting payment options to online payments creates a consistent checkout experience for both the buyer as well as the seller. Adding a new finding feature, Best Match, lets buyers find specific items faster and with fewer irrelevant results. Fee discounts based on performance, more stringent policy and enforcement for buyers who attempt to defraud or extort a seller, and removal of negative feedback left for sellers by non-paying buyers [are all added benefits]."

Griffith emphasizes that auctions will continue be an important part of the mix. "There would be absolutely no reason to break with this tradition," he says. "Auction format listings are here to stay on eBay."

(Image: eBay, circa 1997. Source: Internet Archive)  

Read the rest of the First To Market special feature:

• Yahoo Mail's road to success: Sticky content, regular upgrades, and keeping up with Gmail
• AIM's formula for success: Buddy lists, IM partnerships, and the enterprise
• PayPal: The king of Web-based payments returns to its mobile roots
• VeriSign's recipe: "Magic cookies," branding, and a need for security