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    E Bay

    Uploaded by

    Ahmed Tarek

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    © All Rights Reserved
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    eBay Inc. — 2009 Lori Radulovich Baldwin-Wallace College EBAY eBay.com {In August 2009, eBay Inc. formed a partnership with General Motors enabling hundreds of ‘GM dealers in California to help consumers negotiate purchase of new GM cars and trucks through the eBay online marketplace. Nearly all of California's 250 GM dealers took part in the program so consumers could visit Web pages like gm.ebay.com and chevy.cbay.com to browse new 2008 and 2009 GM vehicles, ask dealers questions, and figure out financ- ing. This program marked a shift for San Jose, California-based cBay, since most of the vehicles sold on eBay Motors—a site that sells various types of vehicles and auto parts— had historically been used For the second quarter of 2009, eBay's profit fell 29 percent and revenue declined 4 percent as the company continued its turnaround strategy ina harsh climate for consumer spending. These weak results were, however, better than analysts expected. For that ‘quarter, eBay reported nice growth in both their PayPal and Skype business segments, which offset decline in their Marketplaces business segment. EBay also that quarter announced they would spin off and make an initial publi offering of their Skype business segment in the beginning of year 2010. History How did the idea of selling practically anything to anyone, anytime, anywhere start? Surprisingly, ial began with Pez candy! One evening in September 1995, Pere Omid, the founder of eBay an his wife were discussing ther desire to contact other Pe collector. ‘To solve the problem, Omidyar created an online action in the form of a sole proprietorship business. As a result, eBay was crested over the Labor Day weekend by Pim, a computer programmer, who devised a code that enabled and ran the eBay action Web site from his home computer, Later in May 1996, eBay was incorporated in California and became public ‘on September 24, 1998. The first eBay auction was also conducted on Labor Day. As of 2008, eBay has «14 percent share of global e-commerce with 86.3 million active users. EBay, the first virtual online business community, empowers entrepreneurial indi- ‘duals to become e-commerce business owners. EBay.com offers a sense of community to buyers and sellers that is sustained by commoniation and high transaction rates ona wide selection of goods/services (eBay.com, 2006). EBay’s popularity is due tothe value offered to is users. EBay provides a “faster, easier, safer online commerce experience” (eBay, 2006, p. 7). EBay’s global networked community of buyers and sellers interact 24/7 in a secure and trusted global marketplace. E-commerce is supported by eBay's proprictary Skype VoIP technology, which allows fre telephone calls using a broadband Internet con- nection to any telephone number. Skype is available in 28 languages in over 225 countries (Bay, 2006). EBay’s e-commerce platform also provides full support forthe buying process (registration, bidding, management of outbid, ite isting, and transaction close), ‘community bulletins, chat, proprietary product search engine, purchase protection pro- _rams, customer support value added services for auction users, «personal home page that includes tailored information, and fully automated merchant services. EBay's success is sustained through communication and trust (eBay 2006) 100 LORI RADULOVICH EBay Inc. encompasses eBay.com, the online marketplace, PayPal, which refers to the online payments platform, and Skype, the Voice over Internet Protocol (VoIP) offered by ‘eBay's subsidiary Skype Technologies S.A. Corporate revenues are earned primarily from three business segments: (1) Marketplaces, (2) Payments, and (3) Communications. The Marketplaces segment generates revenues from listings and fees paid by sellers; the Payments segment revenues are generated from fees paid by merchants for payment process- ing services through PayPal and Bill Me Later. The Communications segment generates usage revenues from Skype VoIP for connection to traditional fixed and mobile telephones under eBay's subsidiary Skype Technologies S.A. Communications fees are assessed either on a subscription basis or per minute charge for “SkypeOut minutes.” Additional revenues are also earned from advertising and revenve-sharing contracts with third parties that provide transaction services to eBay and PayPal account users In 2008, eBay.com generated approximately $59.7 billion in gross merchandise revenues with consumer electronics accounting for the largest percentage of trade at $6.0 billion or 17 percent, as indicated in Exhibit 1. PayPal eamed approximately $30.4 billion of net total payment revenues directly from eBay.com transactions, which represented approxi- imately 51 percent of PayPal’ net Total Payment Volume during 2008 and 9 percent of global ‘e-commerce transactions revenue (eBay.com 20092). Why is eBay so popular? The eBay Marketplace EBay transformed the Internet and the way many of us shop and do business worldwide. EBay's marketplace, or “marketspace,” is an online virtual trading platform for the sale of goods and services by a community of users that comprises individual buyers and sellers, as well as small business owners. EBay provides the virtual marketplace auction where the market determines the price of items sold. EBay offers millions of items for trade through auction-style and fixed-price trading in 39 markets and boasts 86.3 million active global users as of 2008. In 2007, eBay sold nearly $60 billion goods, which equates to worldwide ‘eBay users trading more than $1,900 worth in goods every second. As of December 31, 2008, eBay Inc. employed approximately 16.200 people. EXHIBIT 1 eBay Gross Merchandise Volume by Category eBay Annualized 4th Quarter 2008 Gross Merchandise Volume by Category (in billions) Consumer Blectronies $6.90 1751% ‘Computers $3.60 9.14% Clothing & Accessories $5.00 12.69% Home & Garden $3.80 9.64% Collectibles $240 6.09% Books/Musie/Movies $2.60 6.60% Sports $2.60 6.60% ‘Business & Industrial $2.10 533% Toys $240 6.09% Jewelry & Watches $2.20 5.58% ‘Camera & Photo S160 4.06% Antiques & Art 81.20 3.05% Coins & Stamps $1.20 3.05% Tickets & Travel S180 451% Total 10.00% Source: Adae from eBay.com 2009 Marketplaces Fat Shes. CASE 10 » EBAY INC. —2009 101 By 2009, eBay has attained customized local sites across four major areas of the world in the following regional markets: World Market Regional Markets Asia Pacific ‘Australia, China, Hong Kong, India, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan Europe Austria, Belgium, France, Germany, Ireland, Italy, Netherlands, Poland, Spain, Sweden, Switzerland, United Kingdom North America Canada, United States Latin America Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay and Veneruela, Costa Riea, the Dominican Republic, and Panama jon and Mission What is eBay's plan? Although eBay Inc. does not have a formal mission or vision state- ‘ment, the following statements can be found in eBay's yearly annual reports. ‘We intend to achieve our mission of ereating the world’s online marketplace by improving and expanding across three main areas; categories, formats, and geogra- pies (2005 Annual Report) ‘We intend to achieve our mission of ereatng the world's leading e-commerce sranchise by building upon our core Marketplaces business and building our adjacent basinesses, (2006 Annual Report) ‘We intend to continue to work toward our mission of eretting the world’s lead- ing ecommerce franchise by investing in our core Marketplaces segment and continu ing to build our adjacent Marketplaces businesses. (2007 Annual Report) eBay Inc. (EBAY) EBay common stock is traded on the Nasdaq Global Select Market exchange under the ticker symbol EBAY. As of February 11, 2009, there were approximately 4,800 common stock owners. To date, eBay has never paid a cash dividend on stock and specifically states that there are no anticipated cash dividends forthcoming in the Future. The stock price for 2005 through 2009 ranged from a high around $60 per share to a low near $10. Year-end. stock price values were $58.17 at 2004, $43.22 as of 2005, $30.07 by 2006, $33.19 in 2007, and 13.96 at the end of the calendar year 2008. Business Segment I: Marketplaces, Platforms, and Services EBay Inc's Marketplaces platforms and services segment includes eBay.com, StubHub, Online Classifieds, Online Advertising, Shopping.com, and Rent.com. eBay.com Platform Buyers and sellers enjoy trading among a wide selection of goods and services in a secure, ‘rusted, and efficient commerce environment. Listings of items for sale have exceeded 140.0 million per day. The key to success is eBay's user support, such as announcements, bulletin boards, customer support, personal pages, and more. EBay's Marketplaces plat form brings buyers and sellers together through fully automated online Web sites 24/7. As of December 2008, approximately 516,000 online storefronts were listed in locations across the globe. The Marketplaces platform is the core online commerce platform ‘eBay.com. Other marketplaces platforms consist of classified Web sites, StubHub, Shopping.com, Half.com, and Rent.com. In the Marketplaces platform, eBay.com, traditional auction-style or fixed-price options are offered in 39 markets. Auction style listing allows a seller to select a minimum price for opening bids that stay open fora period of time. Alternatively, the fixed-price for mat allows sellers to name a sale price upon listing instead of waiting for the auction period to expire 102 LORI RADULOVICH A Trusted Online Community “To facilitate trading with unknown partners on the Internet, eBay Inc. provides a trusted and safe trading environment by offering the following services: Feedback Forum, Safe Harbor Program, Verified Rights Owner Program, Customer Support, Value-Added Tools and Services, and Loyalty Programs. Feedback Forum provides feedback, comments, and ratings on other users that ean be viewed by potential users when considering a purchase. Information is recorded up to 12 months and provides color-coded star ratings. EBay recently adopted a policy that no longer permits sellers to leave negative feedback. The Safeflarbor Program provides ‘guidelines for resolving disputes among parties. Complaints are investigated and offenders may receive warnings that are posted to users, Violators may be suspended from either bid-

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