Wikipedia says:
Pierre Omidyar, who had created the Auction Web trading website, had formed a web consulting concern called Echo Bay Technology Group. "Echo Bay" didn't refer to the town in Nevada, "It just sounded cool," Omidyar reportedly said. Echo Bay Mines Limited, a gold mining company, had already taken EchoBay.com, so Omidyar registered what (at the time) he thought was the second best name: eBay.com.
According to the book "Make Money on eBay" by Dan Wilson another theory is that the "bay" refers to times when clippers circumnavigated the globe carrying expensive cargoes - in those days a bay was a safe and secure place of trade. :o)
I read somewhere that the blokes who started e bay worked in a where house driving forklift's . Everything had is own bay ie . flat screen tv went into ( A ) radios ( B) . and odds and ends that had no where of its own went in to bay ( E ) . hence ebay.
eBay was started in 1995 by Pierre Omidyar. It was first called Auctionweb. The name 'eBay' came later when he tried to register a domain name for his planned name EchoBay. It was already taken and so he shortened the name to 'eBay'.