eBay's Bid For Success

Internet Auction Site Racking Up Big Gains

(CBS) 
"It’s a gamble. There's a little bit of gambling. Am I going to get the auction,” says Kathleen, a buyer who claims she now looks on eBay "for anything I need in the house, before I go out." This includes Tupperware, small appliances, clothing, Christmas and wedding gifts.

An eBay auction works exactly the same way as an old-fashioned one: the highest bidder wins.

For example, Mike Benson, a St. Louis lawyer, is looking for a rare baseball card of Stan Musial. In seconds, he finds 84 different Stan Musial cards up for auction on eBay, including one for the very card he wants. To bid, he simply enters the highest amount he’s willing to spend. In this case, it's $50. He eventually lost the card to a higher bid of $63.

Every time there’s a sale, eBay takes a cut of the action. As a result, eBay’s market value is now worth more than Bloomingdale’s, Macy’s, Sears, and Toys ‘R Us combined.

“It was an entirely new idea that took advantage of the Net," says Whitman. “There’s no land-based analog for eBay. We hold no inventory, we ship no product.”

This is a marketplace where a Madonna fan can buy an outfit from the singer’s world tour, and a prospective homeowner can spend $2,100,100 for a country house in New York State with its own missile silo.

Sixteen million items are up for sale every day. And eBay users aren't just buying and selling -- they're also talking online in chat rooms.

"We spend more time together on the boards than I do with my family," says Judy, an eBay user.

Four years ago, Laurie Liss began selling discounted designer clothes and shoes that she picked up on sale at department stores. Now, the entire family is part of the action. Laurie models an outfit, her sister snaps the picture, her brother-in-law puts it on eBay. As the bids start coming in, her mother monitors the auction.

The shipping department is in the kitchen, where mom and dad are packing boxes to send around the globe. They keep their inventory - their Prada shoes, their Guccis, and their Chanels - in the garage. They ran out of room in their original home, so they just bought three new houses all in a row with their eBay profits.