This note considers eBay, the dominant online C2C auctioneer and (with Amazon.com) increasingly the dominant etailer.

It covers -

• introduction
• studies
• development
• as a retail portal

It supplements the broader discussion of online auction mechanisms, markets and issues.

     introduction

eBay was founded in 1995 by Pierre Omidyar to sell his partner's Pez dispensers (Pez, for non-specialists, are what granny would describe as 'things to rot your teeth') and at the height of the dot com bubble was a multibillion dollar corporation with a positive cash flow. eBay's revenues from listing fees and advertising in 2001 were US$749 million, with the value of all transactions supposedly valued at an aggregate US$9.3 billion. Wal-Mart's sales at that time were US$220 billion. As of mid-2004 eBay had a market capitalisation of US$53 billion.

Apart from the eBay.com flagship it has local sites forAustralia, Austria, Belgium, Canada, France, Germany, Ireland, Italy, Korea, the Netherlands, New Zealand, Singapore, Spain, Sweden, Switzerland, Taiwan and the UK. It has a presence in Latin America through MercadoLibre.com and in China through EachNet.

     studies

eBay is been lauded in works such as The e-Bay Phenomenon: Business Secrets Behind the World's Hottest Internet Company (New York: Wiley 2000) by David Bunnell, The Perfect Store: Inside eBay (New York: Little Brown 2002) by Adam Cohen and EBoys: The First Inside Account of Venture Capitalists At Work (New York: Crown 2000) by Randall Stross. We preferred the more modest 1999 Wired profile by William Gibson.

     development

EBay's development has involved deepening and (more successfully) broadening its activities.

Extension upstream through sale of high-value collectibles or acquisition of one of the major auction houses has been underwhelming. Speculation that eBay would buy the ailing Sotheby's or Christies was not substantiated. eBay paid US$260 million for offline collectibles auctioneer Butterfield & Butterfield in 1999 but sold it to Bonhams in 2002 after disapointing results.

It has had more success in expanding from collectibles to auction of other consumer items and building a position as a retail portal in partnership with manufacturers and some offline retailers.

That is evident in the auction figures for the year to August 2004. Collectables accounted for US$1.4 billion of its global turnover, less than motor vehicles at US$9.8 billion, consumer electronics at $2.5 billion and clothes & accessories at US$2.2 billion. Business buying increased to an estimated US$2 billion in global gross merchandise sales in 2003 from US$1 billion in 2002.

In 2002 eBay it acquired online payment system provider PayPal (founded 1998) for around US$1.5 billion. As of 2000 PayPal had US$100 million revenue, US$1.5 billion transactions and 17 million customers. That had increased to 20 million customers by 2002 and 45 million customers by mid-2004, with services available in 38 countries. In 2004 it announced that would offer instant credit lines to US customers through an agreement with consumer credit provider GE Consumer Finance. PayPal Buyer Credit would fund purchases made on eBay or other sites accepting PayPal.

In 2004 it paid approximately US$50 million for Baazee.com, claimed as the largest online marketplace in India, and US$149 million for mobile.de, a leading German online classifieds site for vehicles. During the same year it acquired 25% of craigslist, founded 1995.




   next page  (Amazon.com)