How Does eBay Make Money—Business & Revenue Model Explained

Published On 27th June, 2025

The digital transformation has completely changed the way we buy and sell products, and eBay has been at the forefront of this evolution for almost three decades.

Since its launch in 1995, eBay has grown substantially over the years to become one of the largest online marketplaces in the world, consisting of over 134 million active buyers and 18.3 million active sellers in 190+ countries.

With a year-over-year growth of 1.52%, eBay has reported a revenue of $10.312 billion in the first quarter of 2025.

The platform is a significant force in the world of eCommerce, with over 1.5 billion active listings at any point in time.

But the main question is, “How does eBay make money without holding inventory like Amazon?

In this article, we’ll explain how eBay makes money, provide a breakdown of its business model and its revenue streams, and share insights on how to build a multi-vendor marketplace like eBay with an incredible marketplace software like Yo!Kart.

What is eBay?

eBay is an eCommerce platform that aids individuals and businesses to purchase and sell new or old products through auctions or direct sales worldwide. The platform was founded in 1995, and today it operates as a multi-vendor online marketplace that connects millions of sellers and buyers across the world.

With more than 132 million active buyers and purchases in nearly every country, eBay continues to be one of the cornerstones of the online commerce ecosystem.

Success Story of eBay: A Timeline

Let’s take a quick journey through eBay’s growth story:

Year	Milestone
1995	Founded by Pierre Omidyar as “AuctionWeb”
1997	Renamed to eBay and reached 2 million auctions
1998	Went public (IPO); raised $63 million
2002	Acquired PayPal to strengthen payment systems
2015	Spun off PayPal into a separate public company
2020	Sold classified ads business for $9.2 billion
2024	eBay continues to generate $9.8+ billion in annual revenue

This timeline showcases eBay’s agility in adapting its model and expanding its services to maintain a competitive edge.

Business Model of eBay

Since eBay is an online multi-vendor marketplace, eBay does not own any inventory or stock it. eBay is simply a platform for buyers and sellers; it provides a digital marketplace so people around the world can buy and sell items from others. The real purpose of eBay and its business model is to provide a peer-to-peer (P2P) and business-to-consumer (B2C) buying and selling mechanism.

Here’s how the eBay business model works:

1. Marketplace-Driven (C2C and B2C)

eBay serves as a middleman that allows:

• Consumers-to-Consumers (C2C) — e.g., individuals sell their used items or collectibles to other individuals.
• Business-to-consumers (B2C) — e.g., a retailer lists a new product.

This means eBay has a two-sided marketplace that can accommodate both sales models. This allows eBay to have a wide user base and represent just about everything from vintage goods to new electronics.

2. No Inventory Holding

Unlike Amazon’s retail model, eBay does not manage inventory or logistics. Sellers are responsible for shipping products directly to buyers, which minimizes eBay’s operational overhead and risk.

3. Commission-Based Revenue

eBay generates revenue from charging sellers:

• Final value fees (a percentage of each sale)
• Insertion (listing) fees when the number of free listings is exceeded
  

This model scales nicely as eBay earns revenue on each and every transaction while never handling the physical goods.

4. Multiple Selling Formats

eBay offers auction-style listings (buyers bid on an item within a timeframe) and fixed-price listings (the buyer can buy at a fixed price immediately). This ability to combine multiple listing types appeals to different users, i.e., collectors, bargain hunters, and typical shoppers.

5. Global Reach with Local Support

eBay is a global selling destination, but it also has tons of localized versions of its platform in multiple countries. Sellers can easily take their selling practice from local to global.

6. Trust-Building Through Ratings

A strong feedback and rating system helps build trust between buyers and sellers. User reviews, seller ratings, and product feedback contribute to transparency and reliability.

How Does eBay Make Money—Revenue Model Explained

eBay’s revenue model is multi-faceted, multi-service and service-driven, and it does not make its money by selling items, instead through facilitating transactions between buyers and sellers. Because eBay is a platform-based corporation, it offers sellers services and charges sellers differently to generate revenue for the business. eBay charges fees to sellers for its various services offered. eBay also substantiates revenue through value-added services like promoted listings, store e-commerce subscriptions/typing and payment processing. eBay has a unique business model where it does not own inventory or logistics to provide products, so it has been able to grow into an incredible, scalable and profitable business.

Below is an overview of how eBay makes money:

1. Transaction (Final Value) Fees

This is eBay’s primary revenue stream. When a product is sold through their marketplace, eBay receives a percentage of the value of the total sale, which includes the selling price, the shipping amount, and all taxes (if applicable). eBay generally charges between 10% and 15.55%, depending on the product category.

For example, if a seller sells an item for $100 (including shipping), then eBay could take $12 as a final value fee. eBay’s revenue model is scalable and performance-based, as it only earns revenue when and if a seller sells a product.

2. Listing Fees (Insertion Fees)

Sellers get a limited number of free listings each month (between 200 and 300 for the average casual seller). After they reach the limit of free listings in a month, eBay imposes a small insertion fee for adding new listings, generally $0.30 to $0.35 per listing, plus one cent for each listing that reports a product category. The actual fee varies based on the product category as well as the listing format (two categories, two fees, etc.).

This fee structure encourages sellers to use their inventory wisely and keeps them from overspending on unnecessary or duplicate listings.

3. Promoted Listings & Ads

To increase product visibility, eBay offers Promoted Listings—an advertising service where sellers pay only when a promoted item sells through the ad. This is a form of cost-per-sale (CPS) advertising.

eBay also earns from third-party ads placed on its platform (display ads), especially on high-traffic pages and during buyer searches.

This advertising model adds a performance-based revenue stream for eBay while helping sellers compete for attention.

4. Store Subscriptions

For high-volume products or professional sellers, eBay offers subscription-based eBay Stores. These provide added benefits like:

• Advanced customization and branding
• Marketing tools
• Analytics dashboards
• Bulk listing and inventory management
  

There are several plans available that vary from $4.95/month (Starter plan) to a whopping $2,999.95/month (Enterprise plan), depending on the seller’s needs and the size of the store.

These subscriptions guarantee a continuing or recurring revenue stream for eBay, while also providing added tools for sellers.

5. Payment Processing Fees

eBay now relies directly on eBay Managed Payments for transactions, classified as a payment processing fee, as it has cut out the use of PayPal since being spun off in 2015. eBay charges sellers a small percentage from each transaction, generally in the range of 2.5% to 3.5% plus a fixed fee for every transaction.

Now that eBay owns the entire checkout process, eBay retains a larger percentage of each transaction.

6. Cross-Border Trade Fees

If a seller lists an item for buyers to ship internationally, or has a Global Shipping Program (GSP) listing, eBay charges additional fees for its service that Bill Deal encompasses:

• International visibility
• Customs documentation
• Handling and international transaction processing
  

eBay’s ability to monetize cross-border trade allows for a percentage of the global revenue for eBay.

How to Build a Successful eCommerce Marketplace Like eBay?

Developing an online marketplace like eBay is more than just a website. You need to know digital commerce, scalable technology, a strong business plan, how your marketplace operates, and how to create connections with sellers and buyers who want to be part of it. eBay did not become a global commerce powerhouse overnight; it took years of business evolution, platform innovation, seller ecosystem evolution, and customer trust to become one of the largest online marketplaces in the world.

If you intend to develop a product marketplace like eBay, whether general-purpose or niche, suggested below is a step-by-step process to help you build and scale a viable eCommerce marketplace.

1. Identify Your Marketplace Focus and Validate the Opportunity

One of the benefits of selling on eBay is that there are many options for sellers, whether collectibles and refurbished items, electronics, or fashion and accessories. But when you are starting a marketplace, and particularly a startup, it is advisable to start with a niche and build out.

Ask yourself these questions:

• What product categories will I allow on my platform?
• Will I focus on new goods, second-hand items, or both?
• Is there a gap in the market for localized or specialty products?
• Who are my ideal users (both buyers and sellers)?
  

Tip: Start with a narrow category (refurbished gadgets, vintage toys, and sustainable products) and be the expert in that category before you expand horizontally.

2. Choose the Right Business Model

A well-developed revenue model is crucial for successfully launching a marketplace. eBay has a blended revenue model, incorporating multiple revenue streams into its platform. When you’re creating your model, think about the following:

Common Marketplace Business Models:

• Commission-based model (primary model): Charges a percentage from every successful transaction (10–15%). 
• Listing/Inclusion fees: Charge sellers fees to list products (for example, $0.30 per item after the free limit). 
• Subscription model: Sellers can purchase a paid membership with benefits on behalf of their account (higher limits for listing, analytics, storefront strategy, etc). 
• Promoted listings/added ads: Sellers can pay for promoted listings. 
• Payment processing fees: Take a percentage of whatever price is paid in your auctions/transactions, and keep it as a cost of the transaction.

A lot of successful marketplaces (including eBay) utilize 2-3 models into one! Thus, providing mixed revenue streams.

3. Define Core Features and Platform Capabilities

In order to be able to build a competitive eCommerce marketplace (like eBay), the platform must be feature-rich and designed in such a way that both sellers and buyers can use it, leading to usability, reliability, and trust.

These should be the essential features:

• Multi-Vendor Management: Onboard and manage thousands of sellers with individual dashboards and storefronts.
  
• Product Listing Tools: Allow sellers to list products, upload media, manage inventory, and set product pricing, shipping rules, etc.

• Auction + Fixed Price Listings: Enable users to either bid (auction format) or ‘buy-it-now’ (fixed price) – a characteristic that distinguishes eBay’s platform.

• Advanced Search & Filters: Help users narrow down products using tags, categories, condition (new/used), price, and location.

• Ratings & Reviews: Establish a feedback system to rely on, develop a trust protocol or system to enable sellers and buyers to also be rated and reviewed.
  
• Secure Checkout: Support multiple payment gateway integrations, tax calculation, shipping estimation, and discount coupon support.
  
• Admin Control Panel: Admin will have control over anything a buyer or seller needs to do, as well as user activity, product approval, financial reporting, commissions, CMS, and mediation.

To enhance scalability and competitive capacity, you may also want to include:

• AI-powered product recommendations
• In-platform chat or Q&A
• Real-time analytics for sellers
• Mobile apps for Android & iOS
  

4. Select Between the Development Approaches

When planning to launch an eCommerce marketplace, you can choose between Custom Development or Pre-built eCommerce Marketplace Software. Custom development involves building your platform from scratch with tailored features, while pre-built solutions provide ready-to-launch software with core marketplace functionalities.

1. Custom Development:

Custom development refers to creating a fully bespoke marketplace designed and coded from the ground up to match specific business requirements, design preferences, and scalability goals.

Pros:

• Full control over design, features, and tech stack
• Unique user experience tailored to your brand

Cons:

• High development costs 
• Longer time-to-market
• Requires ongoing maintenance and a dedicated tech team
• Risk of budget overruns 
• Delayed project timelines

2. Pre-built eCommerce Marketplace Software:

Readymade eCommerce marketplace software allows you to build an eCommerce marketplace integrated with essential features and business APIs, enabling quicker launches with lower upfront costs.

Pros:

• Faster time-to-market 
• Reduced development effort
• Lower initial cost compared to custom development
• Comes with essential marketplace features out of the box
• Offers extensive customizations
• Highly scalable

Cons:

• May require one-time licensing or recurring fees

Must-have tech capabilities in your eCommerce marketplace:

• Scalability for high traffic & product volume
• Support for multi-currency and multi-language
• Modular architecture to allow feature expansions
• Robust API framework for third-party integrations (shipping, CRM, email)
• Mobile compatibility or dedicated apps
• Security: HTTPS, data encryption, GDPR readiness, anti-fraud systems
  

A solution like Yo!Kart offers all this out of the box and is tailored for multi-vendor commerce, making it an ideal choice to build a marketplace like eBay with fewer development headaches.

5. Onboard Quality Sellers and Build Initial Inventory

Your eBay-like platform’s success heavily depends on the quality and variety of sellers and products. Attracting the right sellers during the early phase is crucial to kick-starting buyer activity.

Seller Onboarding Strategies:

• Run early-bird promotions (e.g., no or less commissions in early phases)
• Provide easy onboarding tools and product importers
• Highlight top sellers on the homepage or in newsletters
• Offer free training, tutorials, or one-on-one assistance
  

Start with a curated group of sellers that align with your brand values, then expand through word-of-mouth, influencer collaborations, or B2B partnerships.

6. Plan a Marketplace Launch and Growth Strategy

Launching a marketplace is only the beginning. You’ll need a strong go-to-market (GTM) strategy to attract both sellers and buyers.

Growth Tactics:

• SEO-rich product listings to capture organic traffic
• Paid ads (Google Shopping, Facebook, Instagram)
• Referral programs for sellers and buyers
• Social commerce integrations (sell via Instagram, Pinterest)
• Email marketing & retargeting for user retention
  

Ensure your marketing message emphasizes what makes your platform different, whether it’s pricing, niche focus, ease of use, or seller-friendly policies.

Why Choose Yo!Kart to Build Your Multi-Vendor eCommerce Marketplace?

If you are looking to build a marketplace similar to eBay. Then, Yo!Kart is a powerful and highly customizable marketplace software. Yo!Kart is a powerful, fully customizable, scalable, and feature-rich multi-vendor eCommerce marketplace software, designed to help entrepreneurs build their eBay-like platform quickly.

Whether you’re targeting B2C, B2B, or P2P commerce models, Yo!Kart provides the necessary tools and flexibility to build a marketplace tailored to your business needs. Unlike many SaaS alternatives, Yo!Kart offers a one-time purchase model with packages starting from just $499 with no ongoing subscription fees, making it a cost-effective long-term solution.

Additionally, the software comes with built-in reporting and analytics tools that help marketplace owners track sales, customer behavior, vendor performance, and other key metrics for data-driven decision-making.

Here’s why you should choose Yo!Kart:

• 100% white label
• Self-hosted solution
• Ready to launch with essential features
• Highly customizable & scalable
• Mobile apps & API support
• SEO-friendly & performance optimized
• GDPR compliance ready
• Multi-lingual & multi-currency support
• 1 year of free technical support

Yo!Kart has powered over 5000 marketplaces across 100+ countries, serving a diverse clientele that ranges from early-stage startups to established enterprises. Its portfolio includes successful marketplaces, be it B2B or B2C, across various industries like electronics, fashion, B2B wholesale, and niche verticals.

Click here to explore Yo!Kart’s diverse and growing global clientele.

Conclusion

Every success story has lessons to teach, and eBay’s is no exception. eBay is a clear and compelling example of a scalable, commission-based, inventory-light business model based on a marketplace model. By supporting transactions between millions of buyers and sellers around the world, eBay has created a durable and incredibly profitable revenue machine. With its diverse revenue sources based on transaction fees, listing fees, promoted ads, subscriptions, and payment processing, there is clearly much to learn from eBay for entrepreneurs planning to build their own multi-vendor eCommerce platform.

If you are encouraged by eBay’s story and want to develop a marketplace in the same vein, orienting to Yo!Kart to create your platform should eliminate a huge proportion of both time and ultimate cost.

FAQs

Q 1. How does eBay make money without having its own inventory?

Ans. eBay makes money by charging sellers various fees, including transaction fees, listing fees, store subscriptions, promoted listings, and payment processing charges. Its business model focuses on facilitating sales between third-party sellers and buyers.

Q 2. Is it worth building an eCommerce marketplace like eBay for long-term profits?

Ans. Yes, building a multi-vendor marketplace like eBay can be a highly rewarding long-term investment. With the continuous growth of online shopping and the popularity of multi-vendor platforms, marketplaces like eBay attract a large and diverse user base of both buyers and sellers.

Additionally, by implementing a scalable revenue model and using a cost-effective, ready-made solution like Yo!Kart, you can quickly launch your marketplace, minimize development costs, and position your platform for sustainable growth and profits over time.

Q 3. Is it possible to build an eBay-like marketplace without spending too much?

Ans. Absolutely. While custom development from scratch can be expensive and time-consuming, you can significantly reduce costs by opting for a pre-built, customizable marketplace software solution like Yo!Kart. It comes with all essential multi-vendor features out of the box and can be tailored to fit your business needs, saving you both time and money while avoiding the complexities of full-scale custom development.

Q 4. How much does it cost to build a multi-vendor marketplace like eBay?

Ans. The cost to build an eBay-like platform depends primarily on your chosen development approach and required features. 

While custom development can cost anywhere between $50,000 – $200,000 or more, depending on complexity and region of development, pre-built solutions like Yo!Kart offers affordable packages starting from just $499, with a one-time cost for a lifetime license. Thus, making it a highly budget-friendly option for startups and small businesses.

Q 5. How long does it take to build an eBay-like marketplace?

Ans. Development time varies based on your chosen development approach. Custom-built marketplaces can take anywhere from several months to over a year, given the time required for design, development, testing, and deployment.

On the other hand, with pre-built solutions like Yo!Kart, you can launch your marketplace in as little as a few weeks to a couple of months, depending on the level of customization and integrations needed.