eBay’s Business Model and How It Makes Money

Source: ebay.com

eBay’s Background

eBay started in the mid-1990s as a platform to connect buyers and sellers. At that time, the concept of the internet and online shopping was unique to most users. The founder, Pierre Omidyar, started the company for his personal transactions. However, it grew to become a household name across the US and several other countries worldwide.

Several factors played a role in eBay’s popularity. Being one of the first few online platforms that facilitated both sellers and buyers added its growth. The company also invested in various other ventures early in its lifetime, increasing its impact significantly. The company has had an active investment portfolio buying companies quite often.

One of eBay’s top acquisitions came in the form of PayPal in 2002. The company purchased PayPal for $1.5 billion at the time and benefited significantly from it. PayPal became the world’s largest online payments and receipts solution, even doing more business compared to eBay. However, both companies have parted ways recently.

eBay is also a highly financially successful company. The company has had growing revenues for several years, except in the last 5 out of 6 years. eBay made total revenues of $10.8 billion, which was an increase of 0.50% from the $10.746 billion it made in 2018. The company also had total assets of $18.174 billion and total equity of $2.87 billion at the end of 2019.

eBay’s Business Model

eBay’s business model has been its primary source of success. It combines the company’s strengths to generate a substantial amount of revenues each year. While most experts believe it was eBay’s timing that allowed it to capitalize on the early online platform, there are several other factors that also played a crucial role in its financial growth.

As mentioned, eBay’s business model has allowed it to expand its services into various other business ventures. These ventures have generated a significant amount of revenue for the company. Through its online platform, the company provides buyers with a great alternative to buying in person. Its platform has a wide selection of products from which buyers can choose.

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However, eBay’s business model also attracts high expenses. The company has had variable net incomes throughout the years that don’t reflect growth in its profits. For example, the company made its highest net income of $7.266 billion in 2016, although its net sales were $9.927 billion. The company generated its highest revenue of $14.072 billion in 2012. However, it only made a net income of $2.609 billion.

How Does eBay Make Money?

eBay makes money from several segments and countries. The company’s primary source of revenue comes from its online platform eBay.com. Similarly, its primary market is the US market. However, there are also other markets and segments that produce decent profits and revenues for the company. Therefore, it is necessary to look at its performance through its segments and countries of operations.

eBay’s Segments

eBay generates a significant amount of its revenues from its online marketplace. However, it also makes a decent amount of money from StubHub and classified platforms.


eBay’s online marketplace is a substantial source of income. The company generated almost 80% of its revenues in 2018 and 2019 from its online marketplace. In its marketplace, the company offers two different types of services. The first type of service comes from its transactions between sellers and buyers. The second type of revenue comes from its marketing services and other services from the platform.

From its primary selling activities, the company made total revenues of $7.578 billion in 2019. It was an increase of 2.14% from the $7.416 billion the company generated in 2018. Similarly, these made 70.04% and 69.01% of eBay’s total net sales for 2019 and 2018.

From its marketing and other services, the company generated revenues of $1.060 billion and $1.225 billion for 2019 and 2018. Similarly, the company suffered a decrease of 15.57% in revenues in this category for 2019. These activities accounted for 9.80% and 11.40% of eBay’s total revenues in 2019 and 2018.

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Overall, eBay generated $8.638 billion and $8.641 billion in 2019 and 2018, respectively. Overall, there wasn’t a significant increase or decrease in the revenues. It only suffered a drop of 3 billion, attributable to its bad performance in the marketing and other services category. Overall, revenues from the segment amounted to 80.41% and 79.83 of the company’s revenues for both years, respectively.


The second highest source of revenue for eBay is its StubHub segment. StubHub is an online ticket reseller company. eBay acquired StubHub in 2007 for $310 million. However, in 2020, Viagogo acquired the company from eBay for $4.05 billion. However, it contributed to eBay’s income in 2019 and the years before.

eBay won’t make any more money from this segment. However, in 2019, the company generated total revenues of $1.121 billion from the segment. It was an increase of 3.39% from the $1.083 billion the company made from StubHub in 2018. eBay also divided revenues from the segment into the net, and marketing, and other revenues. The segment accounted for 10.36% and 10.08% of the company’s revenues in both years.


eBay also has several classified platforms in various countries. These include a collection of brands such as mobile.de, Marktplaats, eBay Kleinanzeigen, Kijiji, Gumtree, eBay classifieds, and others. It is the company’s third-largest segment in terms of revenues.

The classifieds segment generated revenues of $1.061 billion and $1.022 billion in 2019 and 2018. The revenues increased by 3.68% in 2019. Similarly, they accounted for 9.51% and 9.81% of the company’s total revenues in both years.

Intersegmental revenues

eBay also had $20 million in intersegmental revenues, which the company canceled from its consolidated revenues. However, the company did not specify to which segments these revenues relate.


Given below is a summary of eBay’s total revenues from its various market segments.

Particulars2018 (in millions)2019 (in millions)
Marketplace – net transaction revenues $7,416 $7,578
Marketplace – marketing services and other revenues $1,225 $1,060
[TOTAL] Marketplace $8,641 $8,638
StubHub – net transaction revenues $1,068 $1,057
StubHub – marketing services and other revenues $15 $64
[TOTAL] StubHub $1,083 $1,121
[TOTAL] Classifieds $1,022 $1,061
Intersegmental revenues $-   $(20)
Total $10,746 $10,820

eBay’s Markets

eBay operates in several countries around the world. Its primary market has always been the United States. However, it also generates significant revenues from Germany, the United Kingdom, and South Korea. Apart from these countries, the company also operates in various other locations.

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eBay generated total revenues of $4.337 billion and $4.373 billion from its US market. The market experienced a 0.83% decline in 2019. However, it also accounted for 40.16% and 40.69% of the company’s total revenues in both years, respectively.


eBay made total revenues of $1.506 billion and $1.591 billion from its German market. It suffered a 5.64% decrease in 2019. It also accounted for 13.94% and 14.81% of the company’s total revenues in both years, respectively.

United Kingdom

eBay made total revenues of $1.441 billion and $1.481 billion from its UK market. Like the above two segments, the UK segment also suffered a drop in 2019. For this segment, the decline was 2.78%. The UK segment accounted for 13.78% and 13.34% of the company’s revenues for both years.

South Korea

The South Korean market experienced an increase of 2.13% in 2019. The market generated revenues of $1.221 billion and $1.195 billion in 2019 and 2018, respectively. Similarly, this segment accounted for 11.31% and 11.12% of eBay’s total revenues in both years.

Rest of the World

eBay classifies all its other markets under the ‘Rest of the World’ category. The company operates in 32 countries. Therefore, all other countries come under this category. From the rest of the world, eBay generated $2.295 billion and $2.106 billion in revenues in 2019 and 2018. It experienced an increase of 8.24% over the year. Similarly, it accounted for 21.95% and 19.60% of the company’s total profits.


Given below is the summary of eBay’s profits from its various markets.

Market2018 (in millions)2019 (in millions)
United States           4,373           4,337
Germany           1,591           1,506
United Kingdom           1,481           1,441
South Korea           1,195           1,221
Rest of the World           2,106           2,295
Total         10,746         10,800


eBay is among the world’s largest online platforms that facilitate interactions between buyers and sellers. The company has had a successful business history. Its growth and expansion have been possible due to its business model. eBay’s primary source of income is from its online marketplace. Similarly, it generates a substantial amount of its revenues from its US market.

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