Overview" 1). Founded in 1995, eBay began its existence as an on line auction service. Sellers (who must register with the site) list items for sale and, optionally, a minimum price (as well as a reserve price below which they will not sell the item). Today, sellers also have the option of setting a fixed price ("Buy It Now") that enables customers to purchase the item at a predetermined price and eliminate the bidding process. Buyers have a predefined period of time during which they may bid on items after which eBay validates if a bid exceeded the minimum price and the reserve. If the sale was successful according to these criteria, eBay notifies the buyer and seller through e-mail and they consummate the sale, including arranging for shipment and payment. At the time of the e-mail notification, eBay's involvement in the transaction is concluded. The site is not responsible for either payment or shipping (2003 Annual Report 2).
Buyers are not charged for bidding on an item, nor are they charged for having the successful bid at the end of an auction. Sellers are charged a placement fee based on the minimum starting price (the highest placement fee is $3.30 for a starting price of $50 or more). In addition, sellers can pay additional placement fees for special services, such as using boldface type on the site to attract more buyers or being featured in the Featured Items section (2003 Annual Report 7).
Invoices are sent to sellers for all fees (placement and success) on a monthly basis; new sellers are required to have a credit card account on
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