Details About eBay Business Model – How Does it Make Money?

Last Updated on May 20, 2025

Ever bought sneakers from a stranger or sold an old phone to someone across the country? Congrats — you’ve already been part of eBay’s wild world. 

Launched way back in 1995 (yes, before TikTok existed), eBay has grown from a quirky auction site into a global e-commerce powerhouse. But here’s the real question: how does a platform like eBay make money when it doesn’t sell anything itself? Spoiler alert — it’s all about connecting buyers and sellers, and taking a smart cut in the process. In this breakdown of eBay’s business model, we’ll explore how the platform earns, what keeps it running, and why it’s still thriving in the age of Amazon and Etsy. 

Whether you’re a budding entrepreneur or just curious about the OG of online selling, this guide will give you a clear, no-fluff look at how eBay turns everyday transactions into billions. Let’s unpack how the internet’s biggest garage sale became big business.

What is eBay?

eBay is one of the pioneers of online marketplaces, connecting millions of buyers and sellers across the globe. Founded in 1995 by Pierre Omidyar, eBay started as an auction site where individuals could bid on everything from electronics to collectibles. Fast forward to today, and eBay has evolved into a massive platform offering both auction-style listings and fixed-price sales, serving over 182 million active buyers worldwide.

What sets eBay apart? It’s not just a simple marketplace — it’s a global community where people can shop for new, used, and rare items, often at competitive prices. In 2023, eBay’s Gross Merchandise Volume (GMV) reached $73.21 billion, showing just how much economic activity flows through the platform.

Beyond individual sellers, eBay has become a vital hub for small businesses and large retailers, with over 1.7 billion listings active at any given moment. It’s a place where you can find anything from vintage fashion to hard-to-find gadgets and even cars or real estate.

How Does eBay Make Money?

Ever found a rare collectible or scored a deal on a vintage jacket? If so, you’ve experienced the magic of eBay. But have you ever wondered how eBay turns those transactions into billions? Let’s dive into the platform’s business model and uncover the revenue streams that keep eBay thriving.

Transaction Fees: eBay’s Primary Revenue Source

Let’s start with the money-maker: transaction fees. These are the lifeblood of eBay’s business model, bringing in the largest chunk of its revenue. The concept is simple but powerful — every time a seller completes a sale on eBay, the platform takes a cut. This cut is called the “final value fee,” and it’s a percentage of the total amount paid by the buyer, including shipping and handling (but excluding sales tax).

The fee percentages vary based on the category of the product and whether the seller has a store subscription. For example, in most categories, sellers are charged around 12.9% to 15% of the sale price. High-volume sellers or store owners may qualify for reduced rates, which helps incentivize power sellers to stay loyal to the platform.

Let’s do some quick math. Say you sell a pair of sneakers for $150. eBay might take around 13% of that, which is $19.50. Multiply that by millions of transactions per day, and you’ve got a revenue powerhouse. In fact, according to eBay’s 2023 report, these transaction-based revenues generated over $8.8 billion, which accounted for nearly 87% of total revenue.

This model is genius because it scales automatically. More listings and more successful sales mean more revenue, all without eBay having to hold any inventory. It’s a classic example of a platform business thriving on user activity rather than direct product ownership.

Listing Fees: Charging for Visibility

While eBay lets most casual sellers list items for free, up to 250 listings per month, this changes once you become a more active seller. After those free listings are used up, eBay charges what’s called an insertion fee, or a listing fee. This fee is typically $0.35 per listing for sellers who exceed the free limit, although it can vary by category and seller type.

But it doesn’t stop there. eBay also offers optional listing upgrades that give your items extra visibility. Want to add a subtitle to your listing, schedule it to go live at a certain time, or add a bold font to stand out in search results? Those perks come at a cost. These small fees may seem minor, but when thousands of sellers choose them to gain a competitive edge, they generate serious revenue.

And here’s the real kicker: store owners often have to pay tiered monthly fees based on their store level (more on that in the next section), but those store packages also come with listing limits. Once you exceed your plan’s limit, guess what — listing fees kick back in. This cleverly encourages sellers to either pay for upgraded store subscriptions or spend more on insertion fees.

In 2022, eBay’s listing-related revenue was estimated at around $742 million. While that’s significantly smaller than final value fees, it’s a powerful supplemental income stream, especially given how automated and low-effort it is to manage.

Listing fees are a classic upsell strategy. You get sellers in the door with free listings, then gradually introduce charges for higher volume, premium positioning, and added visibility. For eBay, this means turning its marketplace into more than just a sales hub — it becomes a monetized stage for competition, where visibility is a paid advantage.

Subscription Fees: Enhanced Seller Services

Once sellers get serious about making money on eBay, many of them turn to eBay Store subscriptions — a smart move that also happens to be a steady revenue stream for eBay. These subscriptions give sellers access to a suite of professional tools, analytics, discounted fees, and higher listing limits. In short, it’s eBay’s way of offering a “pro mode” for entrepreneurs, small businesses, and high-volume sellers. To understand it better, read key insights from building an Amazon-like app.

eBay offers several store tiers: Starter, Basic, Premium, Anchor, and Enterprise. Each tier comes with its own perks, like reduced final value fees, free monthly listings, and promotional tools. Prices range from around $4.95/month for a Starter Store to $2,999.95/month for an Enterprise Store. That’s a big range, but it reflects eBay’s ability to serve everyone from part-time resellers to full-on e-commerce brands.

Let’s say you run a Basic Store, which costs $21.95/month (annual plan). This gets you 250 free fixed-price listings and access to promotions like markdown sales and shipping discounts. If you’re running a large-scale eBay business, these tools are essential, and eBay makes sure the value scales with you.

In 2023, eBay reported earning roughly $900 million from subscriptions alone. That’s nearly a 10% share of its total annual revenue, a significant chunk considering it’s coming from a relatively small portion of power users.

What makes this model so effective is that it builds recurring revenue — the holy grail of business models. Unlike transaction or listing fees, which vary month to month, subscription fees are predictable, steady, and scalable. They also signal high user retention. If a seller pays $60, $200, or even $3,000 a month to stay on eBay, that’s a strong sign they’re making money — and they’re committed to the platform.

This SaaS-like approach to e-commerce is what sets eBay apart from marketplaces that purely rely on volume. eBay gives sellers an ecosystem — not just a storefront — and charges accordingly for the privilege of access.

Also read: Key Insights from Building Amazon-Like App-Like Businesses

Advertising Revenue: Promoted Listings

Let’s talk about digital real estate. On eBay, not all listings are created equal — some get prime-time placement at the top of search results, and that visibility? It isn’t free. That’s where Promoted Listings come in, turning eBay into a powerful advertising platform for its own sellers.

Promoted Listings allow sellers to boost their visibility by paying to have their items featured in more prominent positions across the site. Think of it like Google Ads for eBay — sellers bid for attention, and eBay rewards the highest value and most relevant offers with better placement. This is especially useful in saturated categories like fashion, electronics, and collectibles, where competition is fierce.

What’s clever is how eBay charges for this service: it’s typically performance-based, meaning sellers only pay if someone clicks on the promoted listing and buys the item within a 30-day window. That “sales-based” pricing model gives sellers more confidence to advertise, since they know they’re only paying for real results, not just clicks or impressions.

In Q3 of 2023 alone, eBay earned around $366 million in advertising revenue, up from $263 million the previous year. That’s nearly a 40% year-over-year growth, and advertising now makes up over 4% of eBay’s total revenue, with plenty of room to grow.

Beyond Promoted Listings Standard, eBay has also introduced Advanced Campaigns, a CPC (cost-per-click) model that functions more like traditional digital advertising. This gives sellers more control over targeting, budgeting, and bidding, and gives eBay a second stream of ad income.

Why is this such a win for eBay? First, it requires no physical products or customer support — just algorithmic placement and real estate management. Second, the better eBay’s data and targeting get, the more attractive these placements become to sellers.

Advertising also creates a competitive dynamic among sellers. When two or more sellers are offering similar items, they’re more likely to promote their listings to win visibility. That bidding war? Pure profit for eBay.

In short, Promoted Listings turn eBay into a media platform, not just a marketplace. And as more sellers compete for buyer attention, this revenue stream will likely become one of eBay’s biggest growth engines.

Managed Payments: Streamlining the Checkout, Boosting Profits

Once upon a time, every eBay transaction involved a third-party middleman: PayPal. While that setup worked well for years, it also meant eBay was handing over a slice of its earnings with every single sale. But in true platform-power-move fashion, eBay decided to bring payments in-house. The result? eBay Managed Payments launched in full swing after the PayPal separation was finalized in 2021.

So, how does eBay make money here? Simple — by acting as its own payment processor. When buyers make a purchase, the money flows through eBay’s own system, and the company charges sellers a payment processing fee as part of the overall transaction cost. While this fee is baked into the final value fee (typically 12.9%–15%, depending on category), eBay now retains what it used to share with PayPal. That means more money from each sale stays in eBay’s pocket.

Beyond just taking a cut, eBay now controls the full checkout experience. This gives it tons of benefits: faster payouts for sellers, integrated sales reporting, reduced buyer friction, and — most importantly — access to transaction data. That’s a goldmine for understanding buyer behavior and optimizing future revenue strategies.

From a seller’s perspective, managed payments also offer one big advantage: simplification. There’s no need to juggle PayPal, Stripe, or other payment tools — everything is handled within eBay. The platform supports a wide range of payment methods, including credit/debit cards, Apple Pay, Google Pay, and even some localized options for international buyers. It’s smoother, more modern, and more consistent.

As of Q3 2023, eBay was processing nearly 100% of its transactions through Managed Payments, contributing to an estimated $234 million in quarterly income from this source alone. That figure will only grow as the platform scales its seller base and transaction volume.

For eBay, this shift wasn’t just about eliminating fees — it was about owning the entire customer journey, end to end. That control gives eBay better margins, better service integration, and tighter control over fraud prevention and seller standards.

In a nutshell: by bringing payments in-house, eBay took back power — and turned a former cost center into a profit engine.

Also read: Cost to Develop an eBay-Like Marketplace App

Shipping and Logistics: eBay Labels and Parcel Services

When you think about eBay, shipping might not be the first thing that comes to mind. But in the world of e-commerce, how an item gets to the buyer is just as important as the sale itself. And eBay, being the smart operator it is, has figured out a way to earn money from that process too.

Enter eBay Labels and eBay Parcel Services — shipping solutions built right into the platform. These tools allow sellers to purchase discounted shipping labels directly through eBay, streamlining the fulfillment process while also generating revenue for the company.

Here’s how it works: when a seller ships an item, they’re offered various carrier options (like USPS, FedEx, UPS, etc.) at pre-negotiated discounted rates. These discounts are thanks to eBay’s massive shipping volume — think millions of packages per month. While eBay passes on a portion of the savings to sellers, it also keeps a margin for itself. That margin becomes a quiet, consistent source of revenue.

In 2020, eBay’s logistics and shipping services contributed approximately $500 million to its total revenue, and that number has likely grown as online shopping has continued to surge post-pandemic. What’s more, sellers benefit from the convenience, tracking integration, and protection options that come bundled into eBay’s shipping tools. It’s a win-win, and sellers are more likely to stick with the platform if fulfillment is fast, easy, and competitive in cost.

eBay has also been experimenting with deeper logistics partnerships. In some regions, it offers eBay International Shipping (EIS) — a managed global shipping solution where eBay handles customs, tracking, and delivery across borders. This adds even more value to the seller experience and provides another way for eBay to monetize international transactions, which make up a significant portion of its business.

So why is this smart? Because eBay is making money after the sale, too. The platform has turned logistics into a value-added service — not just a post-sale obligation. By offering integrated shipping, eBay increases seller stickiness, reduces pain points, and earns a quiet but solid margin on every label sold.

Also read: Key Insights from Building Amazon-Like App-Like Businesses

Classifieds and Local Listings: Monetizing Peer-to-Peer Connections

While most people associate eBay with auctions and Buy It Now listings, there’s another side of the business that’s often overlooked but still plays a significant role in how eBay makes money: classifieds and local marketplace platforms.

Think of classifieds as the OG of online selling — more like Craigslist than Amazon. Instead of processing payments and shipping items across the country, these platforms connect buyers and sellers locally for in-person deals. eBay has owned several of these platforms over the years, including Gumtree, Kijiji, Marktplaats, and eBay Kleinanzeigen, catering to local markets in countries like Canada, Germany, Australia, and the Netherlands.

While eBay sold off a majority of its classifieds group to Adevinta in a $9.2 billion deal in 2020, it still retains a stake in the business and remains active in certain regions. So, how does eBay make money from classifieds, even though there’s no direct sale taking place on the site?

The answer lies in ad revenue and promoted listings. Much like Promoted Listings on the main eBay platform, sellers in local marketplaces can pay to have their listings appear higher in search results or feature them on the homepage. These paid placements drive significant visibility, which is especially valuable in high-traffic categories like real estate, vehicles, and job postings.

Additionally, eBay offers premium listing options — sellers can pay for enhanced formatting, longer visibility, additional photos, or featured badges. For businesses using the classifieds platforms, eBay also sells subscription-based ad packages that allow multiple listings, branding, and analytics.

In 2020, before the majority sale to Adevinta, eBay’s classifieds business generated over $1 billion in annual revenue. Even though that number has dropped with the divestiture, the company still earns through its remaining local platforms and investments in Adevinta, which itself is now one of the largest online classifieds businesses globally.

Classifieds may not have the flashiness of international shipping or high-volume auctions, but they serve an important niche: community-driven commerce. They’re low-cost, scalable, and perfect for everyday buying and selling — whether it’s a couch, a used car, or a side hustle service.

eBay’s strength here lies in its ability to monetize user attention and trust in local transactions — a different flavor of peer-to-peer commerce, but profitable all the same.

Also read: Guide to Launch Your Amazon Alternative for US Shoppers

Global Expansion Strategy: Turning Local Sales into Worldwide Commerce

If there’s one thing eBay has done exceptionally well over the past two decades, it’s thinking big — and by big, we mean global. From a quirky online auction site in San Jose to a presence in over 190 markets worldwide, eBay’s global expansion strategy is a masterclass in platform growth.

eBay didn’t just “go international” — it localized. That means customizing everything from language and payment systems to shipping partnerships and product categories to suit each region’s unique shopping behavior. For instance, eBay Germany (through its former classifieds arm, eBay Kleinanzeigen) focused heavily on local selling and pick-up culture, while markets like the UK and Australia leaned into high-volume e-commerce.

So how exactly does global expansion translate into revenue?

First, international users boost Gross Merchandise Volume (GMV) — the total value of goods sold on the platform. In 2023, eBay reported a GMV of $73.2 billion, with more than 50% coming from markets outside the U.S. That means every international transaction not only drives final value and listing fees but also fuels subscription upgrades, promoted listings, and shipping service usage — all of which feed back into eBay’s core revenue streams.

To manage this global sprawl, eBay relies on regional partnerships and market-specific platforms. It often acquires or invests in local companies to enter new geographies. For example, in India, eBay had a strategic partnership with Flipkart before shifting its focus to cross-border trade. In other markets like Canada and the UK, eBay functions as a full-fledged marketplace with localized support, tax handling, and logistics.

Shipping has also been a critical lever in eBay’s international playbook. Through programs like eBay International Shipping (EIS) and Global Shipping Program (GSP), the platform manages cross-border fulfillment, taking care of customs, tracking, and delivery on behalf of sellers. This simplifies the international sales process and encourages more sellers to list globally, knowing eBay has their back. To know further, read the building an AI-powered recommendation system

The tech side of this strategy can’t be ignored either. eBay has invested heavily in AI and machine translation to make listings understandable across languages, and personalization engines to recommend relevant global items based on location, past behavior, and trends.

Of course, global growth doesn’t come without challenges — from currency fluctuations to regulatory hurdles — but eBay’s lean marketplace model makes it uniquely positioned to scale without massive infrastructure investment. Unlike Amazon, eBay doesn’t need warehouses in every country. It simply needs engaged sellers, active buyers, and systems that connect them seamlessly.

Ultimately, eBay’s global expansion is more than just a geographic play — it’s a volume multiplier. Every new region brings new transactions, new seller subscriptions, and new advertising opportunities. By building localized experiences while maintaining a unified global brand, eBay continues to grow its presence and profits, far beyond its Silicon Valley roots.

What Should You Learn From eBay’s Business Model?

Diversification Is the Key to Long-Term Sustainability

eBay’s ability to diversify its revenue streams has been a crucial factor in its sustained success. Initially known for auction-style listings, the platform expanded to include transaction fees, advertising, payment processing, and shipping services. By tapping into multiple income sources, eBay minimizes risks tied to any single revenue stream. In 2023, nearly 45% of eBay’s $9.5 billion revenue came from transaction fees, while additional income came from advertising and other services. For entrepreneurs, eBay’s approach highlights the importance of building a diverse set of income streams to ensure stability and resilience in a fluctuating market.

Customer-Centric Innovation Drives Engagement

eBay’s continuous innovation focuses on improving the user experience, which is key to maintaining high engagement. Managed Payments streamlined transactions by handling payments directly within the platform, which also helped eBay retain a higher portion of transaction fees. Promoted Listings allow sellers to increase visibility for their products, driving more sales while benefiting eBay’s revenue. Additionally, Buyer Protection Policies increase consumer trust, making buyers feel safe about their transactions. These innovations reinforce the importance of creating seamless and secure experiences for users. As eBay’s success shows, customer-centric features lead to higher satisfaction, more sales, and increased platform loyalty.

Global Expansion Fuels Growth

eBay’s expansion into international markets has significantly contributed to its growth. As of 2023, more than 50% of eBay’s GMV came from outside the U.S. Rather than offering a one-size-fits-all solution, eBay customized its platform to meet the needs of various markets by localizing languages, payment methods, and shipping options. Additionally, eBay’s Global Shipping Program made it easier for sellers to reach international buyers. This strategy has helped eBay maintain its dominance in over 190 markets worldwide. Entrepreneurs can take a cue from eBay’s approach to scaling globally, as international expansion opens doors to new revenue streams and opportunities.

Also read: How to Attract & Retain Top Sellers on Your Amazon-like App

Data-Driven Decisions Lead to Smarter Growth

eBay effectively uses data-driven decision-making to optimize its platform and enhance the customer experience. Through the use of artificial intelligence and machine learning, eBay analyzes user behavior to recommend relevant products, increasing conversion rates and boosting sales. Personalized recommendations based on browsing history or purchase habits create a more tailored experience for shoppers. For entrepreneurs, eBay’s approach underscores the importance of data analytics in understanding customer needs and behavior. By using data to inform decisions, businesses can make smarter moves that improve marketing, sales strategies, and overall user engagement, ultimately driving growth.

Trust and Transparency Build Loyalty

At the core of eBay’s model is the trust it has built between buyers and sellers. The platform’s Seller Feedback Ratings and Buyer Protection Policies ensure that transactions are safe, reliable, and transparent. These measures help foster a sense of security for users, making them more likely to return. eBay’s commitment to maintaining high standards of service has earned it the trust of millions globally. For entrepreneurs, building trust is a crucial factor in growing a loyal customer base. By implementing transparent policies, offering excellent customer service, and prioritizing security, businesses can create long-term relationships with customers.

Launch Your eBay-like App with Oyelabs

Ready to launch your eBay-like marketplace? With Oyelabs, you can turn your vision into reality. Whether you’re aiming to create an auction platform or a fixed-price marketplace, our expert team will help you build a robust, user-friendly app. We specialize in creating customized solutions tailored to your business needs, offering features like secure payment systems, real-time product listings, and efficient seller management tools. Don’t just dream of an e-commerce empire — let Oyelabs help you build it. Get in touch today, and let’s create a platform that connects buyers and sellers around the world!

Final Thoughts

eBay’s business model is a perfect example of how adaptability, diversification, and customer-centric innovation can drive long-term success. From expanding globally to leveraging data for personalized experiences, eBay has built a sustainable platform that thrives on user engagement and trust. As entrepreneurs, there’s much to learn from eBay’s ability to diversify revenue streams and continuously enhance the user experience. If you’re inspired by eBay’s success and want to create your own thriving marketplace, Oyelabs is here to help. Reach out today, and let us help you build a custom platform that can revolutionize the e-commerce world!