James Ebay

7/31/2019 James Ebay

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James Ngondo

Galway Technical Institute

Ireland



History

Date Event Stock ($)

1995 Founded by Pierre Omidyar

1997 Menl Park, Calif (VC) 22% stock acquisition

1998 CEO Meg Whitman (July); IPO 1.871

1999 Alliance with AOL 25.016

2000-2006 Global expansion to over 2 dozen countries 12.708

Feb 2002 Withdrew from Japanese market & Hong Kong(where Yahoo! Auctions/Shopping had head start)

20.833

Jul 2002 Acquired PayPal 15.13

2005 Acquired Skype 49.500



Company Overview An online auction platform that facilitates

transaction between buyers and sellers of goods and services.

Mission &Vision:

eBay’s Vision is to provide a globalonline trading platform where

practically anyone can tradepractically anything.

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Industry information Total value of global e-commerce transactions - $657 b

There were 94.5 million active users in 2010

The number of users online 534 m

B2B auction transaction growth from 98 to 2OOO was$8 b to $52 b

Increased awareness among users towards the potentialof internet as a trading platform.

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Products & Services• eBay started out selling Collectibles and Antiques

• Has since grown to include incredibly diverse categories of items:

• Collectibles• Antiques

• Art

• Coins

• Toys & Dolls

• Memorabilia

• Motor Vehicles

• Cars• Boats

• Parts

• Electronics

• Cameras

• Cell phones & PDAs

• Computers

• Entertainment• Movies, Music & Games

• DVD

• CD

• VHS

•Event Tickets

• Books

•

Clothing• Jewelry

• Shoes

• Accessories

• Home Improvement

• Décor

• Crafts

• Gardening



Business Model

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Business Process

Seller AccountCreation

Listing an Item

Reserve Dutch Buy-it Now Regular(Auction Type)

Bids Placed

Completinga Sale

After-sales

Service

Typically covered by Seller,

using eBay’s features.

No bids

Final Value Fee = 5% of the first $25+ 2.5% of remaining amount up to $1,000+ 1.25% of any portion of sale over $1,000

-eBay sends Outbid Notice if needed.-Seller’s feedback rating dictatesbidder confidence.



eBay API Buyers:

Get the current list of eBay categories View information about items listed on eBay

Display eBay listings on other sites Leave feedback about other users at the conclusion of a

commerce transaction

Sellers: Submit items for listing on eBay Get high bidder information for items you are selling Retrieve lists of items a particular user is currently

selling through eBay Retrieve lists of items a particular user has bid on



eBay: Target Segments

Primary target markets are Online Auction & Shopping communities.

eBay has business strategies to target specific segments of each.

Key segment is “Antiques & Collectibles”.

(It was the lack of a good community-based pet collectibles company thatinspired Pierre Omidyar to develop eBay. Collectibles still among highest ingross merchandise sales, boasts by far the most veteran sellers.)

Motor lovers: Using credibility of leading car collector Kruse Inc., eBay expanded its categorical offerings with eBay Motors. eBay Motors became

one of its most successful target segments with $2,500M Global GrossMerchandise Sales in 2002.

Art lovers: eBay also had a somewhat failed strategic partnership targeting Art Collectors directly.



Regional sites vs.

Network Externality eBay created > 24 regional trading sites within countries in order to facilitate theprocess of buying and selling items of local interest.

This regional focus and network externality are very much consistent becausethe larger the network size, the more opportunity for buyers and sellers to have abetter match of their needs.

Localization and Internationalization of eBay’s services should also help makethe site more accessible in a specific region, for speakers of the native language;thus offering the opportunity to gain new members at a faster rate

The only possible downside could be fragmentation and isolation of theindividual networks, so each new regional site must “feel” like part of the maineBay network and family



Revenue model and profit

Fees for the seller to post the item, any promotion activities and final sale

commission. Advertising revenue- 2% of TR

Selling profit is approx 9% of TR

Major money comes from listing andtrading services -89% of TR

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The Growth In 97, the revenue hit $5.7m

98, Acquires Jump, Inc., the developer and

operator of Up4Sale, an online trading service withan auction format.

98, Special strategic alliance with AOL. Revenuegrows 724%

99, acquires Kruse, Inc., a company that conductsauctions and performs appraisal services andauctioneer training for classic car auctions.

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Growth cont. 99, Acquires Billpoint, Inc., a firm that develops centralized

turnkey authorization, billing, and payment solutions 99, eBay goes online in the United Kingdom and Canada.

2000, acquires Half.com Inc. Heavy investment in international markets including

Spain, UK 2003: Transactions for the year near the $20 billion mark.

Sales exceed $2 billion.

2004, International expansion in India-bazee.com andGermany. 2005, buys shopping.com and places a bid for skype.com

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Financials A presence in over 20 countries

internationally contributes to 40% of totalrevenue.

Main competitors, Yahoo! and Amazon haveseen 65% and 61% revenue growthrespectively over 6 year period from ‘98 to‘03

eBay’s ’98 revenue was 47.4 million; ’03 jumped to $2.1 billion, a 134% averageincrease over previous year.

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Key Drivers

1. Network externality

The company believes that this critical mass of buyers, sellers, and items listed for sale createda cycle that helped eBay continue to grow its user base. and one thing is very true for this model is its largenumber of customers stay for longer period of time to complete transactions.

2. MediationIn addition to providing a venue for selling items, eBay provides buyers and sellers a place to socialize, to

discuss topics of common interest, and to provide feedback on one another

3. Universality On the Internet, amateurs and collectors from around the world, rather than locations within a reasonable

driving distance, could bid on items. And eBay is applying that latitude by connecting both parties.

4. Time moderation: the property of time moderation assists eBay a lot by tailoring time according to customer’s needs.

sometimes it enlarges time period of auction according to needs of a buyer

5. Distribution channel and replacement effect:eBay uses the traditional distribution channel without any sort of disintermediation and it is called thereplacement effect, that means, serving the same customers using the existing distribution channel.

6.Information asymmetry shrinking:eBay reduces all sorts of information asymmetry by allowing sellers to provide all related information to buyersto pave the way for successful transaction. So buyers are no more deprived by short of data .



Acquisition of PayPal

PayPal uses existing electronic infrastructure of bank accounts and credit cards to allow “small”monetary exchanges online.

Its convenient for small businesses andindividuals, because they can collect onlinepayments without difficult set-up.

eBay acquired PayPal in 2002 and has integrated itthroughout its website as a payment option forauctions.

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Velocity of trading Processes:

Pocket PC very 6 minutes(UK)

every 3O seconds in Germany.

25 minutes in Germany.

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Threats or Issues Bargaining power of suppliers.

Substitutes product or services such as b2b, b2c serviceproviders.

Increasing competition from Amazon and yahoo. No barrier to entry in the industry.

Buyer-seller frauds

Technology failure or/and change

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Popular Subsidiaries Half.com - a subsidiary of eBay, in which sellers offer

items at fixed prices, usually items that have a UPC,ISBN or other kind of SKU, rather than rare, old or

collectible items. EBay stores- expands the market place for sellers by

allowing them to customize shopping destination tomerchandise their products.

EBay motors- Internet’s largest auction place to buy anything automotive.

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Competition Major Competitors-

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Reason for successMature and diverse board of directors –

7 outsiders, 1 insider, 1 related insider

Strong management team lead by Meg Whitman. Senior staff consists of experiencedmanagers from companies such as PepsiCo and Disney with an average of 20 yrs. of business experience and astrong vision for the company.

Brand name development – eBay has carefully developed a brand name based on ease and trust. They have created the defacto online trading platform.

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James Ebay

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