Get Big Fast

1

EBay Inc.
2
Index

• Company Overview
• Origin and evolution
• The industry
• Business strategy
• Competition
• GBF..
• Conclusion

3
History

• 1995 founder Pierre Omidyar, graduate from
  Tufts University, encouraged by his wifes
  hobby.
• Skoll, Omidyars partner joined him as first
  president.
• 1996 incorporated in San Jose, CA
• Sept. 1998 eBay first IPO. 18 per stock.
• 97, Meg Whitman, joins as CEO. HBS

4
Company Overview

• An online auction platform that facilitates
  transaction between buyers and sellers of goods
  and services.
• Mission Vision
• eBays Vision is to provide a global online
  trading platform where practically anyone can
  trade practically anything.

5
Industry information

• Total value of global e-commerce transactions -
  657 b
• 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
  potential of internet as a trading platform.

6
Business Model

• Seller uploads the picture and description of the
  item to be sold.
• Sale ends at predetermined time.
• High bidder and seller contact each other and
  make arrangements of shipment.
• Buyer sends funds to seller money order, check,
  PayPal, seller sends goods.
• Buyer and seller then grade each other through
  feedback forums.

7
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 and trading
  services -89 of TR

8
Value Proposition

• Buyer
• Massive Selection
• More convenient
• Saves time and money
• Value added
• Seller
• - Broadens market
• - Lower Distribution Cost
• - maximize selling price
• - repeat business and clientele

9
The Growth

• In 97, the revenue hit 5.7m
• 98, Acquires Jump, Inc., the developer and
  operator of Up4Sale, an online trading service
  with an auction format.
• 98, Special strategic alliance with AOL. Revenue
  grows 724
• 99, acquires Kruse, Inc., a company that conducts
  auctions and performs appraisal services and
  auctioneer training for classic car auctions.

10
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
  and Germany.
• 2005, buys shopping.com and places a bid for
  skype.com

11
Financials

• A presence in over 20 countries internationally
  contributes to 40 of total revenue.
• Main competitors, Yahoo! and Amazon have seen 65
  and 61 revenue growth respectively over 6 year
  period from 98 to 03
• eBays 98 revenue was 47.4 million 03 jumped
  to 2.1 billion, a 134 average increase over
  previous year.

12
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 and
  individuals, because they can collect online
  payments without difficult set-up.
• eBay acquired PayPal in 2002 and has integrated
  it throughout its website as a payment option for
  auctions.

13
Velocity of trading

• Processes a Pocket PC in UK very six minutes.
• Mobile phone every 3O seconds in Germany.
• A Volkswagen is sold every 25 minutes in Germany.

14
eBays Revenue
1998
2003
15
Threats or Issues

• Bargaining power of suppliers.
• Substitutes product or services such as b2b, b2c
  service providers.
• Increasing competition from Amazon and yahoo.
• No barrier to entry in the industry.
• Buyer-seller frauds
• Technology failure or/and change

16
Issue of privacy and trust

• EBays view and approach.
• Trust is facilitated by fair information and
  principles.
• Users should be provided with notice and
  communication, choice and control, security,
  authentication and enforcement.
• eBay has earned this trust in time by consistent
  service.

17
eBays follow up

• Target key product categories for special users.
• Continue developing community tools.
• Enhance the community for women and senior
  citizens.
• Stress on adding services and features to make
  trading easier.
• Expand value added services.
• Major focus on trust and safety programs
• Maximum transparency.

18
EBay's tackle of security

• Feedback forum- check the business practices or
  reputation of any buyer or seller on eBay.
• Escrow- inspection of the product purchased
  before payment is being sent.
• Fraud protection program- coverage of users up to
  2OO.
• Verified rights owner program- make sure that
  items do not violate intellectual property
  rights.
• Neutral dispute resolution options.

19
Popular Subsidiaries

• Half.com- offers an organized online market place
  to buy and sell high quality previously owned
  mass market goods.
• EBay stores- expands the market place for sellers
  by allowing them to customize shopping
  destination to merchandise their products.
• EBay motors Internets largest auction place to
  buy anything automotive.

20
Subsidiaries services

• EBay professional services- serving fast growing
  marketplace by providing a destination on eBay to
  find professionals.
• Ebay local trading- allow users to browse items
  near them and browse through local interests.
• Ebay premier- showcases fine art, antiques, fine
  wines and rare collectibles from leading auctions
  and dealers.
• Ebay live auctions- real time bidding on items
  being sold on sale floor.

21
Competition

• Major Competitors-
• Amazon
• AOL
• Yahoo
• Traditional stores
• Wal-Mart
• Dell
• Macys
• Home Depot

22
Ebay Vs Yahoo
23
eBay Vs Competition- facts

• eBay had great first mover advantage and brand
  name establishment in the U.S.
• Google could also be a potential competitor but
  management does not see it as threat.
• In the International markets though, Yahoo moved
  in first and EBay is suffering from that still.(
  Japan and other south Asian markets.
• Amazon and yahoo stole most of the market share
  during three ebay crashes during 99.
• EBay does have its supremacy in the U.S. with
  yahoo, Amazon and Google following leaders.

24
GBF

• Network effects
• Sellers want to sell their item on the auction
  service with the most buyers, so they put their
  items up for sale on eBay.
• Buyers want to find the best prices with many
  sellers, so they go to eBay.
• Economies of scale
• Cost allocation over broader range of transaction
  being processed.
• Customer Retention
• Why would a customer would want to leave the
  biggest trading platform?
• Excellent opportunity to find similar interest
  sellers and buyers.

25
Reason for success

• Mature and diverse board of directors
• 7 outsiders, 1 insider, 1 related insider
• Strong management team lead by
• Meg Whitman. Senior staff consists of
  experienced managers from companies such as
  PepsiCo and Disney with an average of 20 yrs. of
  business experience and a strong 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.

26
Questions are welcome at this time.Thank you for
your continued attention..