Did Ebay Create a Blue Ocean?

Ebay – A Blue Ocean?

Managing in the Global Economy

Pierre Omidyar founded eBay in 1995. Initially launched as a small, person-to-person trading post, Omidyar designed eBay to be an efficient market where all users had equal access to information and treated one another with honesty and respect. The first criteria for a blue ocean is that they seldom result from technological innovation. Often, the underlying technology already exists – and blue ocean creators link it to what buyers value. Omidyar used the power of a new existing technology, the Internet, to create his vision. Although the Internet was relatively unknown to the general public, the technology was already in place and traffic to his site grew steadily as more people went online.

The next criteria of a blue ocean is that they involve creation of uncontested market spaces where the competition is irrelevant, resulting in steady growth, profits, and brand equity that lasts while others try to catch up. The competition is never used as a benchmark in a blue ocean. Ebay offered consumers an efficient and entertaining auction format for buying and selling personal items, such as antiques, coins, collectibles, memorabilia, stamps, and toys. Omidyar’s site enabled sellers to list items for sale and buyers to bid on items of interest using eBay’s fully automated, topically arranged, easy-to-use online service. This type of person-to-person trading had historically been conducted through offline trading forums, such as classifieds, collectibles shows, conventions, flea markets, art shows, and auctions. By creating an uncontested space where users from all over the world could buy and sell these items online, Omidyar created a blue ocean. He didn’t compete with these traditional offline forums. As the site quickly grew it became more attractive for buyers and sellers - brand equity was created in this new online auction industry and thus there was scant incentive for buyers to switch to...