Exploiting the Internet, Opportunities for New Business

IIA, Westmeath CEB, Athlone

John McElligott

October 2006

About eBay

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eBay is the 21st century marketplace

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eBay Marketplace Business

• Provide a global online trading platform where practically anyone can trade practically anything

• Sellers create listings of products for sale– Listing fee as low as €0.20, small commission if item sells

– Items listed by individuals, SMEs, large businesses or charities on same terms (“level playing field”)

• Buyers can search, purchase and make payment– Thousands of categories of items

– Auction-style format or fixed price (“Buy It Now”)

• eBay acts to facilitate safe transactions and create transparency

Marketplace mission: create the world’s online marketplace

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eBay is based on feedback

• Goal to create open, transparent marketplace

• Seller Information Box includes details about the seller, including feedback score

• Feedback page shows detail of comments

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eBay Values

eBay was founded on five key values

• We believe people are basically good

• We recognise and respect everyone as a unique individual

• We believe everyone has something to contribute

• We encourage people to treat others the way they want to be treated

• We believe that an honest, open environment can bring out the best in people

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Welcome to the Community

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Find What You’re Looking for

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Get the Details

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Transact

Buyer

Seller

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Fast Facts

• 203 million registered users worldwide– At time of eBay.ie launch in June 2005 there were over 200,000 in Ireland

– eBay.co.uk passed 15 million users in April 2006

• At any time, there are 104 million items worldwide– More than 50,000 categories on eBay

– Approximately 6.5 million items added per day

• As of April 2006, eBay members had left more than 4.5 billion feedback comments for one another regarding eBay transactions

• Approximately 1.3 million sellers use eBay as a primary or secondary source of income

– More than 724,000 professional sellers in the U.S.

– More than 170,000 professional sellers in Europe

Source for number of professional sellers: AC Nielsen. All other metrics based on eBay data.

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Fast Facts (continued)

• In Q2 2006, the value of all goods traded was US $12.9 billion

• eBay users worldwide trade more than US$1,640 worth of goods on the site every second

• Based on Q2 2006 GMV, the following categories delivered US $1 billion or more in worldwide annualized GMV:

– eBay Motors at $17.1 B

– Clothing & Accessories at $3.9 B

– Consumer Electronics at $3.7 B

– Computers at $3.5 B

– Home & Garden at $2.9 B

– Books / Music / Movies at $2.6 B

– Sports at $2.5 B

• Fixed-price formats accounted for 35% of total GMV during Q2 2006

– Collectables at $2.3 B

– Business & Industrial at $1.9 B

– Toys at $1.7 B

– Jewellery & Watches at $1.7 B

– Cameras & Photo at $1.4 B

– Antiques & Art at $1.1 B

– Coins & Stamps at $1.0 B

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eBay GMV (US $)

$44.3 B

$34.2 B

$23.8 B

$14.9 B

$9.3 B$5.4 B

$2.8 B$0.7 B

1998 1999 2000 2001 2002 2003 2004 2005

81% CAGR

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Categories

Breadth

Depth

Category Expansion, new and used items

Why Run a Business on eBay?

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Irish Seller: irish-celt (4819 )

• Registered on eBay since: 1998

• Location: Milltown Malbay, Co. Clare

• Selling: postable antiques

• Seller vignette

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eBay’s Addressable Market is Large

end-of-life used/vintagenew/scarce in-season retail

Inefficient markets

Highly efficient markets

Less efficient markets

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Benefits as a Business Channel

• Reach– Can reach a market of 203 million eBay users – Over 200,000 eBay users in Ireland; over 15 million users in UK

• Business profitability– Low transactional costs– Can reduce or replace many of the traditional costs of doing business (e.g. premises,

advertising)

• Safety and reputation– Can build a reputation using feedback and comments– Safe, easy payments via PayPal

• Ease of use– Listing and promoting items is easy– Several tools to facilitate selling (e.g. Turbo Lister)– Can use eBay as an alternative, or occasional channel

• Support– Prioritised support for businesses and leading sellers– On-line help resources

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Access to Large Global Buyer Base

(1) Source: IDA Ireland.

(2) eBay.ie Registered Users as of June 2005.

(3) eBay.co.uk Registered Users as of April 2006.

(4) eBay Europe registered users as of April 2006.

(5) eBay global registered users as of June 2006.

Athlone

eBay.ie Registered Users at launch

eBay.co.uk Registered Users

eBay Europe Registered Users

eBay Global Registered Users

Populations

16,000 (1)

> 200,000 (2)

> 15,000,000 (3)

> 50,000,000 (4)

203,000,000 (5)

Midlands Region 279,137 (1)

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Low Transaction Costs

Insertion Fees

Starting or Reserve Price Insertion Fee

€ 0.01 – € 1.49 € 0.20

€ 1.50 – € 6.99 € 0.30

€ 7.00 - € 19.99 € 0.50

€ 20.00 - € 44.99 € 1.00

€ 45.00 - € 149.99 € 2.00

and up € 3.00

Final Value Fees

Closing Price Final Value Fee

Item not sold No Fee

€ 0.01 - € 44.99 5.25% for the amount of the high bid (at the listing close for auction-style listings) up to € 2.36

€ 45.00 - € 849.99 5.25% of the initial € 44.99 (€ 2.36), plus 3.25% of the remaining closing value balance up to € 26.16

Over € 850.00 5.25% of the initial € 44.99 (€ 2.36), plus 3.25% of the initial € 45.00 - € 849.99 (€ 26.16), plus 1.75% of the remaining closing value balance

Subscription Fees

Shop Format Fee

Basic € 8.95 / month

Featured € 19.95

Anchor € 99.95

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Example Fee Totals

• For an item that starts at €0.01 and sells for €30.00

Listing Fee (€0.01 - €1.49) €0.20

Final Value Fee (5.25% of total) €1.58

Total €1.78

eBay Fees as % of Total 5.9%

• For an item that starts at €0.01, has reserve of €500 and sells for €900

Listing Fee (fee based on Reserve Value of €500) €3.00

Final Value Fee €29.40

Reserve Fee (2% of reserve price) €10.00

Total €42.40

eBay Fees as % of Total 4.7%

• Margins can increase by using multiple item fixed price or Shop Inventory Format to promote your items

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What Can You Sell?

• You can sell practically anything on eBay.ie, as long as it is legal

• Specific listing policies provide users with guidance

– http://pages.ebay.ie/help/sell/questions/prohibited-items.html

– All eBay users are bound by these policies, which are updated as appropriate

• There are some variations in listing policies between eBay sites due to local laws and obligations

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Getting started – Feedback

• Feedback is an essential enabler of trade on the eBay platform– It is the primary method for our members to protect themselves and make

informed decisions before bidding or buying

• What is it?– Every member has a reputation based on feedback

– Personal opinion comments from other members for transactions with positive, neutral, or negative rating

– Feedback score is a count of positive ratings minus negative ratings from unique members

– Each member can affect another’s score by a net of +1, 0 or –1

– Coloured feedback stars attained at various levels

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Feedback System – Generating Trust

• Goal to create open, transparent marketplace

• Seller Information Box includes details about the seller, including feedback score

• Feedback page shows detail of comments

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PayPal – Safe, Fast, Convenient Online Payments

Benefits of using PayPalCustomer clicks on PayPal link.

Customer logs in and enters payment amount.

Seller gets electronic notification of funds received and delivers goods.

Seller can withdraw funds or send payment to another customer.

Sender

Receiver

How PayPal works – 4 steps

1.

2.

3.

4.

• Safe and secure

• Fast

• Easy

• International

• Buyer protection

• Cost effective

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Quick Facts

• Global leader in online payment solutions

• PayPal has 114 million total accounts, is available in 55 markets and in seven currencies

• PayPal has over 10 million accounts in the UK

• PayPal transacted about $1,126 in total payment volume every second in Q2 2006.

• PayPal established its international headquarters in Dublin in 2003

• PayPal is a safe way to pay online and maintains a very low loss rate due to fraud – 0.29%, or less than one third of one percent.

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Return Policy

• Many sellers allow the return of items sold– Business sellers must provide customers with

a period of seven working days after receipt

– Many individual sellers honour similar terms as good business practice

• eBay facilitates communication of a seller’s policy through:

– Seller tools

– Standard placement on item listings

• Stating a clear return policy creates transparency and reinforces buyer trust

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Why is it so great?

Skype lets you talk through the Internet … for free.

You can also make very low cost calls to phones around the world

Download Skype at www.skype.com.

Contact eBay buyers and sellers using Skype – testing in select categories

• Free unlimited worldwide calling to other Skype users

• Low cost calls to international landlines and mobiles (e.g. $0.02/ min to New Zealand)

• Superior sound quality

• Videoconferencing

• Easy to use

Free Calling and “Skype Me”

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Tools to Support Efficient Selling

Turbo Lister

& Selling Manager Selling Manager Pro

Listing Creation √ TL √

Inventory Control √

Restock Alerts √

Monitoring Real Time Sales √ SM √

Emailing Buyers √ SM √

Invoicing Buyers √ SM √

Automating Processes √

Sales Reporting √ SM √

Cost Free € 6.99 / month

(30 day free trial)

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Automation with Selling Manager Pro

• Many selling processes can be automated with Selling Manager Pro:

– Listing creation

– Contacting buyers

– Invoicing

• Sellers can tailor their own selling strategies by month, quarter or seasonally

• Good value for business sellers

– Free with Featured or Anchor Shops subscription

– €6.99 per month otherwise

Third party tools (e.g. ChannelAdvisor) also available to serve large sellers

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Maximise Visibility – eBay Shops

• Unique look and presence

• Customise colours and branding

• Extra promotion and recognition

• Control what you cross-sell

• Data on visitors to your Shop

• Shop-only format with lower insertion fee, longer listing duration

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Sales Reports and Sales Reports Plus

• Can be used to tailor market approach

• Provides sales information by category, day, format, ending times

• Also compares ASP

• Sales Reports are Free

• Sales Reports Plus offers more detail

– Free with Shops subscription

– €4.99 per month without Shops

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Select the Right Delivery Services

• Postage, courier and delivery market is de-regulating; new options are continually available

• Providers can offer differentiated services, such as tracking, guaranteed delivery and volume discounts

• GLS are building out a network of “Parcel Shops” around Europe ~ 50 in Republic of Ireland to date

• Optimum solution may involve different providers for posting to different regions

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Become an Effective Business Seller – Top Tips

• Include search keywords in your title and write a complete, accurate description

• Sell internationally and specify postage costs for multiple jurisdictions

• Include a clear and buyer-friendly return policy

• Become more efficient and organised with the right seller tool for you

• Offer PayPal as a payment option for ease, speed, buyer peace of mind

• Take your feedback rating seriously – it’s your brand!

• Consult the Business Centre

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Education Resources

• eBay Explained– eBay Tour, how to buy, sell, use My eBay, etc.

– http://pages.ebay.ie/help/ebayexplained/

• Community & chat boards– Member to member help, discussion boards,

interest groups

– http://pages.ebay.ie/community/

• Business Centre– Advice for business sellers

– http://pages.ebay.ie/ebaybusinesscentre/index.html

• Safety Centre– Safety tips & problem reporting

– http://pages.ebay.ie/safetycentre/

• eBay Events– eBay University, IIA/CEB & other events

– http://www.ebay-events.ie/

• Site help and contact Customer Support– http://pages.ebay.ie/help/index.html

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Free Business OnRamp Support

• Service to assist businesses with becoming sellers on eBay.ie– Expert consultation with a member of our specialist Business team

– Support through the process of getting started

– Advice on how to make the most of your eBay selling

• How to take advantage1. Register as a seller on the eBay.ie site

2. Once you have registered, send email to IrishBusiness@eBay.com with the following:

– Your eBay user ID

– Best contact telephone number, with voicemail if possible

3. We will arrange a time for the Business Onramp consultation, generally can schedule within two weeks

eBay in Ireland

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eBay.ie Business History

• May 2004: Tánaiste and Minister for Enterprise, Trade and Employment Mary Harney TD officially opens eBay’s Irish offices

– European CS centre and PayPal’s international headquarters

• June 2005: Launch of eBay.ie to give Irish eBayers their own marketplace

• July 2005: Wanderly Wagon’s Judge appointed eBay Security Watchdog

• September 2005: First eBay University in Ireland

• November 2005: Launch of eBay Motors Ireland to facilitate trade of vehicles, parts and accessories

• March 2006: eBay announces expansion of Irish operations– >900 employees in Ireland, plans to create >300 additional jobs

• July 2006: eBay and O2 partner to launch eBay Mobile

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eBay Mobile

• Launched in partnership with O2

• From i-mode phones users can:– Search

– View simplified listings

– Bid and buy

– Also available at www.ebaymobile.ie

• Ad campaign in summer 2006– Print ad in June O2 magazine

– Co-branded TV ad launched July 2006

– Co-branded radio ad launched August 2006

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Education – Events

• eBay.ie sponsors and participates in local events

• Goals: further education on e-commerce and eBay as a platform to enable business

• Recent and upcoming events:– eBay University, Dublin: 12 September 2006

– Generating Revenue for Your Website, Tullamore: 14 September 2006

– Facilitating Broadband Leadership, Dublin: 21 September 2006

– Exploiting Business Opportunities on the Internet, Carlow: 5 October 2006

– eBay University, Limerick: 10 October 2006

– Exploiting Business Opportunities on the Internet, Athlone: 19 October 2006

– National IT and e-Security Summit, Dublin: 9 November

– Exploiting Business Opportunities on the Internet, Dún Laoghaire: 23 November 2006

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Charity Fundraising

eBay.ie works directly with Irish charities to help promote fundraising and awareness, offering unique items and experiences

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Select Irish Charities Featured To Date

DEBRA Ireland

Brothers of Charity Svcs. Galway Irish Autism Action Leprosy Mission Ireland

Cystic Fibrosis Assn. of Ireland

Irish Heart Foundation

To Russia With Love

Fermoy Lions Club Irish Wheelchair AssociationAction Aid International Ireland

Bóthar GOAL Ireland Kildare Town C.Y.M.S.

Irish Cancer Society

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An Irish buyer purchases an auto part every 5 minutes

Velocity of Trading – Irish Buyers

On an average day…

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An Irish buyer purchases a DVD every 4 minutes

Velocity of Trading – Irish Buyers

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An Irish buyer purchases a collectible every 2 minutes

Velocity of Trading – Irish Buyers

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An Irish buyer purchases an item of clothing every 2 minutes

Velocity of Trading – Irish Buyers

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In Q3 2006, an Irish buyer buys 3 items across all categories every minute of every day

Velocity of Trading – Irish Sellers

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An Irish seller lists a collectible for sale every 5 minutes

Velocity of Trading – Irish Sellers

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An Irish seller sells an item in music every 4 minutes

Velocity of Trading – Irish Sellers

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An Irish seller sells an item in computing every 4 minutes

Velocity of Trading – Irish Sellers

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An Irish seller sells an item across all categories every minute

Velocity of Trading – Irish Sellers

Case Studies

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Irish Seller: fion7252 (33 )

• Started selling in July

• Clearing out her closet– Clothes

– Shoes

– Accessories

– Handbags

• “Everyone has something to sell”

• Part-time seller: cash for unwanted items for a bit of spending money

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Irish Seller: emerald-isle-stamps-shop (1682 )

• Former computer programmer, decided to set up his own business on eBay after returning from travel

• Dedicated eBay store covers all aspects of Irish philately & coinage as well as stamps from around the world

• Also acting as an agent for other businesses to sell on eBay – means he can keep stock to low levels

• Close to selling the amount needed to make a full-time living

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Irish Seller: esmescards (2386 )

• Individual “PowerSeller” working from home in Gorey, Co. Wexford

• Selling homemade cards and imported materials for making cards

• Items sold through eBay to a worldwide market of buyers

• Profits from eBay selling have enabled her to earn a living and work her way off of state benefits

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Irish Seller: luzerntech (17639 )

• Business employing ~40 people in Blanchardstown

• Separate user IDs selling to Ireland, UK, Germany, Spain, France, Italy

• Full service business selling on behalf of manufacturers (e.g. Palm, In Focus, Lexmark)

• Sells returned and refurbished PDAs, printers, home cinema, projectors, etc.

• Vast majority of sales are through eBay, with a fraction on own website

• Plan for >€1 million in monthly eBay sales by end of 2006

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Irish Seller: bohemianfootballclub (41 )

• Registered on eBay since: 2005

• Location: Dalymount Park, Dublin

• Selling: soccer jerseys and memorabilia

• Seller vignette

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Useful Links

• Registration

• eBay.ie Business Centre

• eBay Explained

• eBay Selling Explained

• Site Help/Contact eBay Customer Support

• Fees

• eBay Shops

• PayPal

• Contact PayPal Customer Support

• Skype

• Community and Chat Boards

• eBay Ireland Trading Message Board

• Seller Tools Finder

• Judge’s Safe ‘Surf’ Code

• Safety Centre

• eBay Toolbar

• User Agreement

• Listing Policies

• eBay Verified Rights Owner (VeRO) Programme

• eBay Events

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Summary

• Marketplace offering vast breadth and depth of items to buyers

• Great way for sellers to reach vast customer base across Ireland – and the globe!

• Low cost of transacting

• Easy, affordable, secure payment processing with PayPal

• Advanced tools and Shops to support growing a business online

• Businesses: arrange for an on-ramp consultation call at irishbusiness@ebay.com

• Other questions? Contact me directly at john.m@ebay.com

• Thank you!