ebay: the internet’s auction leader
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eBay: The Internet’s Auction Leader
By:
Rachel Taylor
Zach Evans
Brief History of Auctions
Babylon 500 B.C. – women were auctioned on the condition that they be married
Ancient Rome – bids were not called out in the open but through ‘discrete’ actions such as a wink or wave
Reference in Oxford English Dictionary of auctions taking place in Great Britain in 1595
Sotheby’s is founded in 1744 Christie’s is founded in 1766 Auctions migrated to America and were used
to liquidate goods at the end of a season
Company Overview
Founded in September 1995 2003 Employees: 6,200 (annual growth: 55.0%) Mission: “…to provide a global trading platform where
practically anyone can trade practically anything.” International sites that serve: Australia, Austria,
Belgium, Canada, France, Germany, Ireland, Italy, Korea, the Netherlands, New Zealand, Singapore, Spain, Sweden, Switzerland, Taiwan, and the U.K.
Has investments in Latin America and China through MercadoLibre.com and EachNet
Unique Characteristics
“eBay [is] running an enterprise unique to the Internet rather than trying to improve upon a business you could successfully plant in a strip mall.”
“The reason for eBay’s success is that it has taken on the same role that the government plays in the broader economy: setting the rules for commerce and enforcing them so that transactions are cheap, fair and predictable.”
Corporate Management
Pierre Omidyar – Founder & Chairman of the Board Meg Whitman – President & CEO Maynard Webb – COO Rajiv Dutta – CFO Jeff Jordan – Senior VP, U.S. Business William Cobb – Senior VP, International Matthew Bannick – Senior VP, Global Online
Payments Mike Jacobson – Senior VP, Legal Affairs, General
Counsel & Secretary
Top Competitors
Visitor Metrics – March/April 2004
23,638,000 visitors from work #6 ranking Just behind the U.S. Government
45,369,000 visitors from home #5 ranking Just behind Google and in front of the U.S.
Government #1 electronics site #1 home and garden site #1 clothing, shoes & accessories site
Financial Performance
U.S. Dollars (in thousands)
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Net Revenues Net Income
Revenue Sources
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2001 2002 2003
U.S. International Payments
Users (millions)
42.461.7
94.9
17.8 27.741.2
0102030405060708090
100
2001 2002 2003
Active Users
Registered Users
Merchandise Listings (millions)
423.1
638.3
971
0
100
200
300
400
500
600
700
800
900
1000
2001 2002 2003
Merchandise Sales (millions)
$9,319
$14,868
$23,779
$0
$5,000
$10,000
$15,000
$20,000
$25,000
2001 2002 2003
Fees
For the Seller $0.30 to $4.80 insertion
fee $1.00 to $100.00 for
reserve price $0.15 to $1.00 for
additional pictures Closing Value fee
$0 – $25 : up to $1.31 $25 - $1,000 : up to
$28.12 Over $1,000 : $28.12 for
first $1,000 in value plus additional 1.50% of balance > $1,000.01
Other listing fees
For the Buyer There are no fees
associated with setting up an account
Buyers only pay the price of the auctions then win
Feedback Forums
Keeps levels of trust among users highAdds to sense of communityIncreases (perceived) switching costs
Users are less likely to use another auction provider because they would have to start over again
eBay Oddities
User attempted to sell one of their kidneys Auction read “Buyer pays all transplant and medical costs.” Turned out to be a hoax
eBay pulled the underwear category after users found ‘attractive’ individuals offering dirty and sweaty (or worse) garments Sellers tried to get around regulations by offering to
‘customize’ their wares Other fraudulent offerings:
Right to witness an execution Triplets A young man’s virginity
‘Do it eBay’ Ad Campaign
Late 2002 eBay returned to TV advertising for first time in two years
Campaign cost: $15 millionCampaign purpose: to break into the
retail mainstream
Questions?
Why do you think eBay has been as successful as they have?
Do you think buying something on eBay can have a negative effect on its perceived value?
Do you think that ‘eBayers’ have always existed or do you think that eBay has created a new way of thinking online?
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