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Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
Ebay
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Ebay

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E BAY

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  • 1. EBay Inc. internet business models text and cases Anup Sharma
  • 2.  
  • 3. Index
    • Company Overview
    • Origin and evolution
    • The industry
    • Business strategy
    • Competition
    • GBF..
    • Conclusion
  • 4. History
    • 1995 – founder Pierre Omidyar, graduate from Tufts University, encouraged by his wife’s hobby.
    • Skoll, Omidyar’s 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
  • 5. Company Overview
    • An online auction platform that facilitates transaction between buyers and sellers of goods and services.
    • Mission &Vision:
    • eBay’s Vision is to provide a global online trading platform where practically anyone can trade practically anything.
  • 6. 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.
  • 7. 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.
  • 8. 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
  • 9. 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
  • 10. 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.
  • 11. 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
  • 12. 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
    • eBay’s ’98 revenue was 47.4 million; ’03 jumped to $2.1 billion, a 134% average increase over previous year.
  • 13. 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.
  • 14. 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.
  • 15. eBay’s Revenue 1998 2003
  • 16. 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
  • 17. Issue of privacy and trust
    • EBay’s 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.
  • 18. eBay’s 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.
  • 19. 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.
  • 20. 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: Internet’s largest auction place to buy anything automotive.
  • 21. 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.
  • 22. Competition
    • Major Competitors-
      • Amazon
      • AOL
      • Yahoo
    • Traditional stores
      • Wal-Mart
      • Dell
      • Macy’s
      • Home Depot
  • 23. Ebay Vs Yahoo Not as wide wiiide scope no yes Charge of posting none yes insurance Better than eBay Not as efficient response Less likely More likely Chances of buy/sell To buyer and seller when item is sold Up to 5% of closing price commission No charge to any buyers or sellers Based on the reserve price of the item Fee 14 days 1O days Max duration Yahoo Ebay content
  • 24. 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.
  • 25. 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.
  • 26. 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.
  • 27. Questions are welcome at this time. Thank you for your continued attention..

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