Final Documentation

eBay: Increasing global opportunities for small traders through technology-enabled commerce

    Description
    eBay encompasses both an online marketplace, present in 39 markets worldwide and over 97 million active users, and the payment service PayPal with over 100 million active users, available in 190 markets and in 25 currencies. The third leg of eBay, GSI, was added in 2011. These legs act together to enable commerce and connect buyers and sellers globally. As such eBay can be seen as an illustration of a new, evolving, and powerful type of commerce – technology enabled, multi-channel, and consumer-driven– which eBay calls Commerce 3.0. To further understand how this new type of commerce was affecting the evolution of international trade, eBay commissioned an in-depth study, completed in 2013.

    Summary of results
    This study compares the impact of geographic distance, a standard measure of trade costs, on eBay and offline international trade flows. In considering the same set of 61 countries and the same basket of goods for both types of transactions, the effect of distance are found to be on average 65% smaller on eBay than online. The study argues this difference is due to a reduction of search costs; It increases when information frictions are high, i.e. when trade partners speak different languages and when corruption in the exporting country is high. Moreover, eBay-ratings technology, which reduces information frictions, further reduces the distance effect on eBay. The study estimates the welfare gains from a reduction in online distance-related frictions to the level prevailing online at 4% on average. The study and a report developed by eBay to share the study with a wider audience are attached, while a further summary on the World Bank blog is available here.

    Subsequently eBay also presented at the DCED 2013 Annual Meeting on increasing global opportunities for small traders through technology-enabled commerce. eBay introduced the new micro-multinationals – the potential new drivers of economic growth in developing countries; their data clearly showed that very small businesses are much more likely to export when using electronic trading platforms such as eBay. The need to remove trade friction and scale innovation was highlighted. The Annual Meeting presentation is also attached.

    Further information is available at www.ebaymainstreet.com and www.ebayinc.com/social-innovation