Ecommerce Strategy:

1
Ecommerce Strategy

• Building a Virtual Conglomerate
• Ecommerce Management
• September 4, 2003
• Anindya Ghose

2
No. 1 Search Destination In the U.S.

• The leading Internet
• portal with 220 million
• visitors each month
• 
  
  
• (Source Nielsen//NetRatings)

3
Brief History (1)1994-96 Starting business

• One of the first online navigational guide to the
  Web
• David Filo and Jerry Yang began developing the
  Yahoo! search engine and directory, attracting
  thousands of visitors in 1994.
• First million-day hit in 1994.
• Sequoia Capital decided to fund it in April 1995.
• Incorporated the business and started selling ad
  space on its Web site in 1995. Top Mgt from
  MOTOROLA and NOVELL.
• Went public (IPO) and teamed with SOFTBANK to
  form Yahoo! Japan and Yahoo! Europe in 1996 with
  about 49 employees.

Yet Another Hierarchical Officious Oracle
4
Brief History (2)1997-2000 Continuing growth

• Expanding services
• Acquired Four11 (Internet directory specialist),
  Viaweb (e-commerce software), and Yoyodyne
  (Internet direct marketing).
• International expansion (25 international sites
  in 13 languages).
• Acquired Geocities (3.7 bil), broadcast.com (5
  bil), e-mail communications firm eGroups (430
  mil).
• Launched streaming media application Yahoo!
  Player.
• Wading into B2B waters
• Teamed with TIBCO Software to offer Corporate My
  Yahoo!
• Launched Yahoo! B2B Marketplace.
• Developed Enterprise Information Portal, teamed
  with Inktomi, Critical Path, and TIBCO Software.

5
Brief History (3)2000 -2002 Struggling for more
revenues

• As the dot-com bubble burst in 2000, online ad
  revenue dried up and forced to re-evaluate its
  ad-supported model.
• Looking for ways to add more revenue from
  business services and subscription/listing fees
• Charging fees to list items on its auction sites
• Providing a subscription based music service
• Purchasing HotJobs.com (planning
  subscription-based access to the listing)
• Fee-based document search service (partnered with
  devine)
• Adding e-books to Yahoo! Shopping.
• Developing a high-speed Internet service with SBC
  Communication.

6
Selected Web sites features

• Communications Properties
• Yahoo! Groups (group e-mail lists)
• Yahoo! Mail
• Yahoo! Messenger
• Information
• Yahoo! Education
• Yahoo! Health
• Yahoo! News
• Yahoo! Weather
• Yahooligans (Web guides for children)
• Listings
• Yahoo! Autos
• Yahoo! Careers
• Yahoo! Real Estate
• Media
• Yahoo! Broadcast
• Yahoo! Games
• Yahoo! Movies
• Yahoo! Music

• Commerce
• Yahoo! Auctions
• Yahoo! Classifieds
• Yahoo! Shopping
• Yahoo! Travel
• Yahoo! Warehouse (marketplace for used items)
• Finance
• Yahoo! Finance
• Yahoo! FinanceVision
• Enterprise solutions
• Domain name registration
• Web site housing
• Yahoo! Business Mall

7
TODAY - Consumer and Usage Highlights Good
news?

• Yahoo! had more than 237 million unique users
  worldwide during 2002, including Yahoo! Japan, up
  from 192 million in 2001.
• Yahoo!'s traffic increased to a record 1.62
  billion page views per day on average during
  2002, up from 1.1 billion page views per day in
  2001.
• More time is spent on Yahoo! than on any other
  portal. An average U.S. Yahoo! consumer spends
  113 minutes per month. (Nielsen//Netratings,
  February 2002)
• 98 million active registered members logged into
  their personalized Yahoo! services during 2002,
  up from 67 million in 2001.
• Yahoo! enabled approximately 776 million in
  commerce transactions during 2002.

8
Business Model (1)Business profile/strategy

• Building a global Internet media company
• Offering a branded network of comprehensive
  information, communications and shopping
  services.
• Giving away content and communications services
  for free to attract eyeballs and ad dollars.
• Building an Internet market mall.
• Yahoo Everywhere!
• Continuing expansion of its services
  geographically, to different types of services,
  and to different platforms (e.g., cell phones and
  Palm handheld computers).

9
Business Model (2)Business profile/strategy

• Value Creation
• Providing easy and convenient search
  capabilities, variety of contents, and
  communications services to users
• Facilitating direct and personalized marketing
  activities to advertisers
• Providing a complete set of business solutions to
  merchants
• Providing online business and enterprise services
• To enhance the productivity and Web presence of
  Yahoo!s clients.
• Corporate intranets Corporate My Yahoo!, teamed
  with TIBICO Software.
• Building a Virtual Conglomerate

10
Business Model Some Statistics

• Marketing and Merchant Services
• Yahoo! served 4,175 advertisers and merchants
  during 2002. Yahoo! clients include 58 of the
  Fortune 100 advertisers.
• 95 percent of the company's top 200 advertisers
  in 2001 continued programs in 2002.
• Yahoo! Store numbers rose to over 18,000
  merchants.
• Consumer and Business Services
• Yahoo! now has 45 major Yahoo! Portal Solutions
  customers and Yahoo!'s Portal Solutions total
  licensed seats to employees, customers, and
  business partners now exceeds one million.
• Yahoo! hosted and distributed an average of over
  15 million hours of streamed audio and video
  corporate events for clients in 2002.

11
Financials (1) Revenue

• Major sources of revenue
• banner ad sales
• sponsorship ads
• listing fees
• transaction fees for
• facilitating e-commerce

12
Financials (2) Costs

• The biggest sources of costs include
• Advertising and other
• market-related expenses
• Compensation and
• and employ-related
• expenses
• Sales commissions

13
Financials (3) Net Income

• In 1998, made
• a positive net
• income first time
• in its history
• In 2001, turned
• back into
• a big negative
• income but got back positive
• in 2002

14
Market Competition

• Competitors
• AltaVista
• Amazon.com
• America Online
• eBay
• Microsoft
• Terra Lycos .

15
Market Competition (1)Top competitors America
Online

• The worlds largest Internet access provider
• Offers content, communication tools, and online
  shopping
• Other operations include
• Netscape (browser software)
• Digital city (online community guide)
• ICQ (instant messaging software)

16
Market Competition (2)Top competitors Microsoft
Corporation

• The 1 software company
• Continuing to expand its empire
• Online services and e-commerce portal MSN
• Travel services Expedia
• E-commerce services through joint venture
  Avanade with Accenture
• Television station MSNBC
• Video game console Xbox
• Microsoft is targeting web services for future
  growth, especially with its .NET initiative

17
Yahoo Strengths and Opportunities

• Early mover advantages
• Large audience reach and strong brand recognition
• Source of scale and scope economies
• Rich managerial resources/capabilities
• Yahoo has got a great promotional and marketing
  machine.
• Large pool of high-caliber people.
• Ready to change

18
Weaknesses and Threats

• Web advertising is a very poor revenue generator
• Fierce market competition
• Volatile market and New competitors
• Differentiation/Switching cost
• Appropriability of business model
• Why do we need portal site in the first place?
• Exploring acquisitions of real estate site
  Homestore.com and online travel service
  Travelocity.com.
• If you can do it, so can I!

19
Questions Discussions