Ebay

Electronic Commerce EC STAR

www.ebay.com

Team: EC STARMember: Kim, Jong Woo (Techno) Jin, Yong Sun(MIS) Myung, Sung Sin(MIS)


www.ebay.com

Why ?


www.ebay.com

Most profitable company Most profitable company

Fastest growing companyFastest growing company

Good Business ModelGood Business Model

World wide community World wide community

Fun to Buy and SellFun to Buy and Sell


www.ebay.com

JUNE 4, 2001 INTERNATIONAL -- ASIAN BUSINESS

How Yahoo! Japan Beat eBay at Its Own Game

Yahoo Japan

95%($1.6B)

eBay Japan3%

etc2%

Market Share in Japan 2000.12

Market Share in Japan 2000.12

Buying COST On Auction korea ,iBazar

Buying Cost($200M

)

Revenue ($20M)

Source :BusinessWeek

Issue in eBay


Agenda

1. Overview of Auctions 2. Overview of eBay

Company Profile Financial Analysis Business Models

3. Introduction of eBay site Auction process Major Services and Features

4. Analysis of competition5. Strategy

SWOT / 5 Force Recommendations

2 31 4 5


Overview of Auctions

Definition of Auction

“ An auction is a market mechanism by which buyer make bids and sellers place offers “

“ Auctions are characterized by the competitive nature by which the final price is reached “ - JAE LEE … Electronic Commerce the 2nd edition –

Types of Dynamic Pricing

One Many

One Direct Negotiation

Auctions

Selle

r

Many Reverse

Auctions

Exchange

Buyer

2 31 4 5



Types of e-Auction

B2B

www.ariba.com

B2B

www.ariba.com

C2B

www.priceline.com

C2B

www.priceline.com

B2C

www.amazon.com

B2C

www.amazon.com

C2C

www.ebay.com

C2C

www.ebay.com Consumer

G2C

www.hc-sc.gc.ca

G2C

www.hc-sc.gc.ca

strategis.ic.gc.castrategis.ic.gc.ca

BusinessBusiness

G2B

Consumer GovernmentGovernment

BusinessBusiness

2 31 4 5


E- commerce Industry Background : The growth of Internet and Online Commerce


• Number of server : 109,574,429 ( 2001.1 www,isc.org )• The number of user : 513.41M ( 2001.8 www.nua.com )• The Total value of global e-commerce transactions : $657 billion (2000) -> $1.2 trillion (2001E) • B2B auctions are forecasted to grow ( Forester Research ) $8.7 billion in 1998 -> $52.6billion ( 2002)

2 31 4 5


Comparative Estimates Worldwide Total eCommerce

0

2000

4000

6000

8000 eMarketer

International DataCorp.ActivMediaResearchForresterResearchGoldman Sachs &Co.Ovum

2000 2001 2002 2003 2004


Comparative Estimates Worldwide Total eCommerce ( $ Billion)

2 31 4 5


Company profile

Foundation : September 1995 Location : San Hose , Ca USA Registered Users : 29.7 M ( Nov 2001) Employee : 1,927 (June 2001 ) History

Sep 1995 : eBay was founded in Pierre Omidyar’s San Jose living Room Feb 1998 : Meg Whitman became CEO Sep 1998 : Nasdaq ( $ 18 per Stock ) Dec 1998 : 2.2M users , 33.7M Total items Dec 1999 : 10.0M users, 129.6 M total items Dec 2000 : 22.0M users, 265M items Nov 2001 : 29.7M users 17 Global Sites (Including Korea, Japan, France ,German)

2 3 4 51


Company profile - Management of Company

Name: Pierre Omidyar Title: Founder and Chairman eBay responsibilities: Oversees strategic direction and growth,

model and site development, and community advocacy. Education: B.S., Computer Science, Tufts University.

Name: Meg Whitman Title: President and CEO eBay responsibilities: Build a successful business while deliver

ing on customer needs and expectations Education: M.B.A., Harvard Business School. B.A., Economics, Princeton University.

2 3 4 51


MISSIONMISSIONeBay's mission is to help practically anyone trade practically anything on earth.

eBay's mission is to help practically anyone trade practically anything on earth.

MARKETMARKET

eBay enables trade on a local, national and international basis. It features a variety of international sites, specialty sites, categories and services

eBay enables trade on a local, national and international basis. It features a variety of international sites, specialty sites, categories and services

Company profile – Mission & market 2 3 4 51


Financial Analysis - Revenue & Net Income

86129

224724

431424

0

100000

200000

300000

400000

500000

1998 1999 2000

Revenue(1000$)Revenue(1000$)Revenue(1000$)Revenue(1000$) Net Income(1000$)Net Income(1000$)Net Income(1000$)Net Income(1000$)

7273 9567

48294

0100002000030000400005000060000

1998 1999 2000

2 3 4 51


8.4

4.25

11.2

02468

1012

1998 1999 2000

Net Income/Revenue(%)Net Income/Revenue(%)Net Income/Revenue(%)Net Income/Revenue(%) Net Income/Share($)Net Income/Share($)Net Income/Share($)Net Income/Share($)

0.070.04

0.19

0

0.05

0.1

0.15

0.2

1998 1999 2000

Financial Analysis – ROA & PER 2 3 4 51


Financial Analysis – Stock Price 2 3 4 51


Business Model – reason for eBay’s success

Largest Online Trading ForumLargest Online Trading Forum

Compelling Trading EnvironmentCompelling Trading Environment

Trust and Safety ProgramsTrust and Safety Programs

Cost-Effective, Convenient TradingCost-Effective, Convenient Trading

Strong Community AffinityStrong Community Affinity

Intuitive User ExperienceIntuitive User Experience

2 3 4 51


Seller Seller

• Browing and bidding

Is free of charge

• Nonrefundable Insertion Fee

• Additional listing options to promote

• Final Value Fee

Business Model

Byuer Byuer

2 3 4 51


Profit Opportunity in process

Requirement

Deliveryprofit

E-moneyProfit

TradingProfit

Listing Profit

SellingProfit

AdvertisingProfit

Delivery

Payment

Trading

Listing

Searching

2% of Total Revenues(2000)

89% of TR

9% of TR

New profit opportunity

2 3 4 51


Introduction of eBay 2 3 4 51


Auction Process

1. Register

2.Bidding

3.Successful Bid

4.Pay

(eBay Direct Pay /Credit Card …)

5.N

otif

y

6. Notify payment

7. Delivery

8.Delivery Notification

10.Get Paid

9.P

ass

acco

unt

Banking

SellerBuyer

4. Pay ( Check / Money order)

2 3 4 51


Major Categories

Major CategoriesMajor Categories

2 3 4 51


Specialty SitesSpecialty Sites

Half.com :The eBay community benefits from a marketplace combining traditional auction-style trading and Half.com's fixed-price trading. Half.com offers an organized online marketplace to buy and sell high quality, previously owned mass-market goods

eBay Stores :eBay Stores expands the marketplace for sellers by allowing them to create customized shopping destinations to merchandise their items on eBay

eBay Motors :eBay Motors is the Internet's largest auction-style marketplace for buying and selling all things automotive

Specialty Sites 2 3 4 51


Major services and features

SafeHarbor SafeHarbor SafeHarbor SafeHarbor SafeHarbor is eBay's comprehensive safety resource and protective arm.

Feedback Forum : Check the "reputation" or business practices of any buyer or seller at eBay.

Escrow : Inspect what you buy before sending payment by asking your seller to consider escrow services.

Fraud Protection Program : You are covered for up to $200 on most items - free! (applies to most users, subject to guidelines)

ID Verify : Get successfully verified and sell on eBay.

2 3 4 51


Major services and features

Authentication ServicesGet a second opinion on your item by using outside expertise.

Verified Rights Owner (VeRO) ProgramMake sure that items do not violate intellectual property rights as there may be liability involved.

Dispute ResolutionAn independent service that provides a neutral place to work out disputes online efficiently and effectively.

SafeHarbor SafeHarbor SafeHarbor SafeHarbor

2 3 4 51


Billpoint : eBay's preferred online bill payment service that facilitates credit card payment between buyers and sellers

eBay International : Users on eBay represent countries all over the world. With eBay's vision and global business strategy, the company continues to expand its service and brand abroad

Buy It Now :Buy It Now is an exciting optional enhancement for item listings. It allows buyers to buy an item at a specified price without having to wait for an end of an auction

Major services and features 2 3 4 51


eBay Professional Services Professional Services on eBay serves the fast growing and fragmented small business marketplace by providing a destination on eBay to find professionals

eBay Local Trading eBay has local sites in 60 markets in the U.S. These localized eBay sites allow users to easily find items located near them and browse through items of local interest

eBay Premier eBay Premier is a specialty site on eBay, which showcases fine art, antiques, fine wines and rare collectibles from leading auction houses and dealers from around the world

eBay Live Auctions Live Auctions provides live, real-time online bidding on items being sold on the sales floor of the world's leading auction houses

Major services and features 2 3 4 51


Competitors

Amazon

Buy.com

Yahoo!

MSN

Wal-Mart

Macy’sSam’s Club

Autobytel.com

Dell

Home Depot

eBay’s broad-based competitors include the vast majority of traditional dept and general merchandise as well as emerging online retailers

AOL

2 3 4 51


Competitors - Yahoo 2 3 4 51


Source : Cost Analysishttp://www.alysta.com/software/ebayyahoo.htm June 10, 2001

eBay versus Yahoo for Sellers(1/2)

eBay YahooMaximumDuration 10 Days 14 Days

Ending

Time

eBay auctions end at the time the auction was created

Yahoo allows you to set the ending time within a one-hour range.

Feebased on the starting or reserve price of an item each time an item is listed

not charge any fees for listing auction items to the buyer or seller

Commis-sion

up to five percent of the final closing price fee for reserve auctions

to the buyer or seller when an item is sold

Chances ofBuy & Sell More likely Less likely

When a new Item Is posted

a page for the item gets created immediately,but it can take several hours before the item gets added to the list of items and is searchable

a page for the item is createdimmediately. The item is also added tothe list of items and is searchable immediately.

2 3 4 51



eBay versus Yahoo for Sellers (2/2)

eBay Yahoo

Sniping

Restart

Dutchauctio

n

Response

Restrictions

Counter

A bid is made within the last 5 mins of an auction, it is automaticallyextended by five minutes.

nothing to stop bidders from waiting until the last seconds of anauction to make a bid.

cannot be automatically restartedcan automatically be restarted

Possible, but you must have a ratingof at least ten before you can do this

Possible, not need to have a certainrating before you can create

Not respond as quickly as Yahoo.(browsing, searching, etc)

Better performance than eBay

More restrictions Fewer restrictions

to use another site to place a Counter on your auction item page

able to count without placing aCounter on your auction page

2 3 4 51


eBay versus Yahoo for Buyers


eBay YahooItems Over 6 times more items A lot fewer items

Charging for posting

Yes No

UnusualThing

More likely to find Not have as wide or deep of a selection

SearchTitles or titles & descriptionCan limit within a category

Browsitems

By title or by picture (if designated as part of the gallery )

Space for

pictures

Not provide space for pictures:You must place your picture files On some other site

Provides free space for auction itemPictures, so more items have picturesFor you to see

Titles or titles & descriptionCan limit within a categoryBy title or by picture

Insurance

Automatic insurance for sales

Not offer insurance

2 3 4 51


SWOT Analysis

First mover advantageFirst mover advantage Large and impenetrable Large and impenetrable market sharemarket share the scale of bidders &sellersthe scale of bidders &sellers No traditional retailing cost No traditional retailing cost structure structure

First mover advantageFirst mover advantage Large and impenetrable Large and impenetrable market sharemarket share the scale of bidders &sellersthe scale of bidders &sellers No traditional retailing cost No traditional retailing cost structure structure

e-Commerce is increasinge-Commerce is increasing Chances for M-commerceChances for M-commerce Possibility to expand high costPossibility to expand high cost productproduct Small competitor’s dismiss Small competitor’s dismiss

e-Commerce is increasinge-Commerce is increasing Chances for M-commerceChances for M-commerce Possibility to expand high costPossibility to expand high cost productproduct Small competitor’s dismiss Small competitor’s dismiss

Simple and easy to imitateSimple and easy to imitate Fraud trading (Trust Issues)Fraud trading (Trust Issues) System Security & reliabilitySystem Security & reliability

Simple and easy to imitateSimple and easy to imitate Fraud trading (Trust Issues)Fraud trading (Trust Issues) System Security & reliabilitySystem Security & reliability

Decrease in growth rateDecrease in growth rate Trust issues between buyers Trust issues between buyers & sellers& sellers Oriented in P2P marketOriented in P2P market Community powerCommunity power

Decrease in growth rateDecrease in growth rate Trust issues between buyers Trust issues between buyers & sellers& sellers Oriented in P2P marketOriented in P2P market Community powerCommunity power

S

TO

W

2 3 4 51


5 Force Analysis

Bargaining powerBargaining power

of Suppliersof Suppliers

Bargaining powerBargaining power

of Suppliersof Suppliers

Threat of substituteThreat of substitute

Products or servicesProducts or services

Threat of substituteThreat of substitute

Products or servicesProducts or services

Rivalry amongRivalry among

Existing CompetitionExisting Competition

Rivalry amongRivalry among

Existing CompetitionExisting Competition

Barriers to entryBarriers to entry

BuyersBuyers

(GM, HP…)

(B2B, B2C, C2B,off-line…)

(Yahoo, Amazon …)

(GE..)

2 3 4 51


SERVICE

GLOBAL…

SYSTEM

To Be the World Leader in e-Market PlaceTo Be the World Leader in e-Market Place

BUSINESS

MODEL

Recommendation 2 3 4 51

eBay : 22.0M users, 265M items


Recommendation

Back GroundBack Ground Depending on the category of product Incresing of Community power Trust issues between buyers & sellersTrust issues between buyers & sellers

Depending on the category of product Incresing of Community power Trust issues between buyers & sellersTrust issues between buyers & sellers

StratecyStratecy

Things

To

Do

Things

To

Do

Broaden the eBay Trading PlatformFoster eBay Community AffinityEnhance Features and Functionality

Broaden the eBay Trading PlatformFoster eBay Community AffinityEnhance Features and Functionality

Tarket key product categories for special users Develop new community tools Enhance the cummunity for women and old peoples Add new features and services to help trade with greater ease Expand Value-Addes Sevices ( community purchase) Increase the Trust and Safety Programs

Tarket key product categories for special users Develop new community tools Enhance the cummunity for women and old peoples Add new features and services to help trade with greater ease Expand Value-Addes Sevices ( community purchase) Increase the Trust and Safety Programs

ServiesServiesServiesServies

2 3 4 51


Recommendation

Back GroundBack Ground Growth rate Decreases To utilize the advantages of internet in globalization

Growth rate Decreases To utilize the advantages of internet in globalization

StratecyStratecy

Things

To

Do

Things

To

Do

Homogeneity global market Different strategies to enter new international markets

Homogeneity global market Different strategies to enter new international markets

Enforce Marketing in foreign countries Provide unified site and URL in each country Introduce country-specific services Choose from building solely, acquiring a company or partnering with strong local companis

Enforce Marketing in foreign countries Provide unified site and URL in each country Introduce country-specific services Choose from building solely, acquiring a company or partnering with strong local companis

GlobalizationGlobalizationGlobalizationGlobalization

2 3 4 51


Recommendation

Back GroundBack Ground Limit of P2P market size Great potential maket of B2C and B2B A new, rapidly evolving and intensely competitive area

Limit of P2P market size Great potential maket of B2C and B2B A new, rapidly evolving and intensely competitive area

StratecyStratecy

Things

To

Do

Things

To

Do

Expand Business Model from P2P to B2C and B2B Good relationship with partner

Expand Business Model from P2P to B2C and B2B Good relationship with partner

Have a partnership with bank, c-card,e-mopney, mobile communication company, google etc Expand gradually Business model from P2P to B2C Develop the ebay’s private brand product.

Have a partnership with bank, c-card,e-mopney, mobile communication company, google etc Expand gradually Business model from P2P to B2C Develop the ebay’s private brand product.

Business Model & Strategic allianceBusiness Model & Strategic allianceBusiness Model & Strategic allianceBusiness Model & Strategic alliance

2 3 4 51


Recommendation

Back GroundBack Ground 15 System downs between Aug 1998 and Nov 1999 The threat of Hacking ( Deny of services ) The cost of system failure is so big

15 System downs between Aug 1998 and Nov 1999 The threat of Hacking ( Deny of services ) The cost of system failure is so big

StratecyStratecy

Things

To

Do

Things

To

Do

Adapt to changing technologies and industry standard Achieve to stability, availability and efficiency

Adapt to changing technologies and industry standard Achieve to stability, availability and efficiency

Build backup system for important system such as CPU Disk,D/B, Network System, Power, Communication Line Downsize the computer system from Mainframe-level Sun to Win2000 or Linux ( ex: Google has 4,000 Linux server) Acquire specialist for System, DB, Network,Program and etc Invest more money on System Infrastructure

Build backup system for important system such as CPU Disk,D/B, Network System, Power, Communication Line Downsize the computer system from Mainframe-level Sun to Win2000 or Linux ( ex: Google has 4,000 Linux server) Acquire specialist for System, DB, Network,Program and etc Invest more money on System Infrastructure

System InfrastructureSystem InfrastructureSystem InfrastructureSystem Infrastructure

2 3 4 51


What are the uncertainties in e-biz

Rapid technology innovation in web and mobile: Searching technology/mobile trading

No homogeneity global market: Portal site May be more powerful than eBay.co.xx

Multimedia innovation force much investment: Leverage effect more advantageous to portal

The speed up of the Off-line shop’s innovation: All off-line shop operation on-line shop

e-money payment system will be show to us: They will be most powerful alliance group

2 3 4 51

But Our Recommendation will prevent uncertainties

change


Summary

eBay Will be the Best e-biz Leading Company

eBay Will be the Best e-biz Leading Company


www.ebay.com

Ebay

Technology

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