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Is eBay spinning out of control?

Is eBay spinning out of control?

Fossils are Trevor George’s life, his semi-rural 17th-century cottage in Scunthorpe, Lincolnshire, is packed with them: 2ft-tall local ammonites, Patagonian saltasaurus dinosaur eggs, cretaceous fossilised insects piled up by 365m-year-old Moroccan trilobites. Until a year ago, George, once a soldier with the Royal Engineers, was making a tolerable if undemanding living polishing unrefined fossils in his back-garden workshop, which he would sell on to Britain’s remaining beach-front souvenir shops. Then he had an idea that made fellow dealers laugh out loud. Why didn’t he photograph and describe some of his older specimens, and try auctioning them on eBay?

George assumed that even serious collectors would hesitate before buying petrified life forms over the internet. He did not expect to find himself running a hugely profitable global business. His personal eBay trading account, in the name of "british-jurassic-fossils", made more than 5,100 sales last year, at prices ranging from a few pounds to £2,200. This year, with 200 trilobites or meteorites listed at any time, George expects to double turnover to around £250,000. "The potential’s there to make a million a year through eBay, maybe more," he says with undisguised delight, as he fills the kettle which, like the wall clock and garden tools, he bought second-hand over the site. "It’s changed my life. If I get two girls doing the typing, a third photographing and packing, I could become the Argos of British fossils."

A decade after an idealistic French-Iranian computer programmer named Pierre Omidyar built a website and auctioned off his broken laser pen for $14, that website is rewriting the rules of British business. AuctionWeb, launched at Omidyar’s ebay.com web address from his spare bedroom in California’s Silicon Valley, was conceived as "a place where people can come together" – an online exchange for all, which would never actually handle merchandise, but would let its users determine a fair market price. In exchange, Omidyar asked for a small proportion of any sale price to pay his web-hosting bills. Today, eBay continues to earn up to 5.25% commission on each sale, plus the fees it charges for everything from listing items to setting a reserve price. That "perfect marketplace", as Omidyar conceived it, is now the internet era’s outstanding commercial success story, handling trades worth $34 billion (£18 billion) a year. It is established in 32 international markets and its 135m registered members buy or sell goods worth $1,050 (£560) every second, from over 34m items listed at any time. Corporations such as IBM and Vodafone use eBay to dispose of excess stock, but 95% of this "community" still comprises individuals and small businesses.

Talk to an eBay employee and you’ll soon be showered with eager superlatives: the 4m new listings daily, the diamond rings traded every two minutes. But in the past few months, the most extraordinary numbers reflect the company’s phenomenal growth in this country, five years after a dedicated website was launched here. With 10m members, the UK is now eBay’s third biggest market after the US and Germany, growing at more than 160% each year. So culturally ingrained has it become that a day barely passes without an eBay story making the news – from students auctioning their foreheads to advertisers, to the more worrying reports of illegal gun trades, hard-core pornography, fraud and fake tsunami fundraisers.

But the negative publicity hasn’t stopped more than a third of British internet users visiting eBay each month to buy and sell, or just to check how much their Fendi bag or Ferrari Spider might fetch. Some use its chatrooms to swap stories about "eBay addiction", the thrill of bidding leading them into debt. For the more entrepreneurial, the site is a powerful new way to reach customers. The company estimates that at least 10,000 people in the UK now rely on eBay to make a living, having recast an established "offline" business as an internet-based "shop window", or turned a hobby into a commercial venture. For Trevor George, it was both. "You need a passion for what you’re selling," he says, scratching rock away from a 2in trilobite using a pneumatic air chisel. "That one’s 450m years old," he points out with paternal pride. "Every fossil is individual."

It is exactly how its founder intended it. On February 26, 1996, six months after launching the website as a hobby, Omidyar wrote to the "community" explaining that its growth depended on trust. "Most people are honest, but some people are dishonest. Or deceptive. It’s a fact of life... But here, those people can’t hide. We’ll drive them away... This grand hope depends on your active participation... Use our feedback forum. Give praise where it is due; make complaints where appropriate... By creating an open market that encourages honest dealings, I hope to make it easier to conduct business with strangers over the net."

A few myths have grown up around eBay’s birth. One is that Omidyar launched it to help his fiancée, Pam Wesley, now his wife, find some rare Pez sweet dispensers for her collection. That, Adam Cohen discovered, researching his authorised history of eBay, The Perfect Store, was a publicist’s invention designed to give a human face to a tech company. Further confusion surrounds the name. It is not a homage to San Francisco’s East Bay area, nor Echo Bay in Nevada.

It was simply a contraction of Echo Bay Technology Group, a name Omidyar used for his web consulting business because "it sounded cool". The echobay.com web address had been taken. A contracted form, ebay.com, was available.

Now 37 and living with Pam and their two young children in Nevada, Omidyar is estimated by Forbes magazine to be worth $10.4 billion. Although Omidyar remains chairman, Meg Whitman, an energetic former Disney executive, has been running the company since March 1998. This has left the publicity-shy Omidyar time to devote to his next goal: to give money to causes that, as he sees it, use the networking power of technology to "make the world a better place".


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