But is it possible to have markets that operate in the interests of sellers and buyers, without
a lot of government regulation? The answer might be yes, if they embody Adam Smith's
ideas. It used to be that when you wanted to go someplace
in a city you had to wait for a taxi or rent a car. But now, with apps like Uber and Lyft,
that's all changed. Lyft? Yes.
Hi are you David? Yes.
People today ride with strangers in their cars and with sites like Airbnb they sleep
in strangers' homes. It's just a tiny part of a much larger, and much more important,
social trend: an explosion of trust, enabled by the internet.
And the granddaddy of them all is eBay. Almost every country in the world has buyers
and sellers who work inside the eBay marketplace. Devin Wenig is CEO of eBay Marketplaces.
eBay is founded on this principle of economic democracy; that individuals around the world
who don't know each other and have never met can work in a system to be able to conduct
economic transactions fairly and securely and have confidence in that.
eBay was founded in 1995 by Pierre Omidyar. Pierre thought very strongly about the notion
of the free market. He believed in Adam Smith's principles. He believed that an economic democracy
would not only be a great business, but it had the potential to do immense amounts of
good around the world. eBay has hundreds of thousands of small sellers
around the world that are now doing more than half their business outside of their national
borders. One retailer that is profiting in this new era is Gelb Music.
Gelb was started in 1939... about 75 years ago. Located right here in Redwood City, California,
it's been here ever since. And about- carry about a little over 50,000 products here.
Mike Craig is Gelb's ecommerce/marketing manager. We have a complete line of drums, bass guitars,
recording equipment. We were waiting for our-our own website to
be built, we took about 200 products, mostly snare drums, did about $200,000. The test
definitely worked. The following year we put up about a thousand
products, maybe a little bit over and we did about $750,000 in sales.
We now have about 160 million active consumers who buy and sell in our marketplace every
day. We now sell a little less than $90 billion of goods every year. And consumers access
us from over 190 countries. Well, eBay has saved the store number one.
But has also opened our eyes to markets that we didn't think were obtainable.
One of the great things about marketplaces is that they act as an incredible price discovery
mechanism. Because if you're looking at a collectable
or a coin or a comic book or a rare automobile, the likelihood is that there were more sales
in eBay for that particular item than in any other marketplace in the world.
Adam Smith would have said that an "invisible hand" guides eBay sellers around the world.
As prices are on the rise, because buyers want a particular item, sellers stream into
the market to satisfy that demand. And when demand drops... prices go down.
Imagine a world where there're screens everywhere. Those screens are connected to a global marketplace.
That global marketplace has all the worlds' inventory- priced fairly- because it's an
open marketplace. And you're one click away from buying anything you want at any time
for a fair price. There are millions of exchanges, each minute,
all of them without regulation, among strangers, across borders and oceans. It's an enormous
amount of business... based solely on trust. Pierre's notion was, let the buyers and sellers
in the marketplace determine who the best buyers and sellers are. So the eBay feedback
system was born. The way ratings work is that when you sell
a product, the customer can go back and rate you: Was it a good experience? Was it a bad
experience? And that goes onto your record where everyone sees it.
"Public services are never better performed than when their reward comes in consequence
of their being performed, and is proportioned to the diligence employed in performing them."
I think being judged by your customers is a wonderful idea. I think that keeps us as-as
sellers on our toes. You have to deliver on what you promise, and if you do, that you're
rewarded by more customers and you'll grow. The free market isn't about robbing people
or cheating them, stealing from them; it is about cooperating with them. If people trust
you, if you're giving them a good service, they will do business with you. If you're
trying to cheat them, they might deal with you once, but once they've been cheated, you'll
never see them again. Part one of the promise is a fair, open, fast,
trusted marketplace that's enabled by technology. Coordinating a global marketplace like this
takes one of the largest site operation centers in the world.
We do about 300 million searches a day on the eBay marketplace. There are computers
and people, and systems and processes that all have to work in sync to make sure that
that's working 24/7. When we look at forecasting and eBay's going
to make up anywhere from 50 to 80% of our-our sales, that's- that's a huge number.
There is a concept of a micro-multinational, which I think is fascinating. And there are
hundreds of thousands of them alive inside the eBay marketplace.
It's that family owned independent, just homegrown kind of store. We're just being able to sell
around the world now. So, without either a strong corporate intervention
in the sense of eBay, or a strong government or regulatory intervention, this is a community
that has grown enormously because in essence it's self-regulated.
A free market is one of the most powerful forces on earth. And we've seen that with
our business.