eBay, Inc. provides an online marketplace for the sale of goods and services, online payment services, and online communication offerings to a community of individuals and businesses. The company brings together millions of buyers and sellers every day on a local, national and international basis through an array of websites. The company operates primarily in the United States and 24 other countries worldwide.
Segments
The company has three segments: Marketplaces, Payments and Communications. The Marketplaces segment enables online commerce through a variety of platforms, including the traditional eBay auction site, its classifieds websites, and comparison shopping site, Shopping.com. The Payments segment, which consists of PayPal, Inc. (PayPal) business, enables individuals or businesses to send and receive payments online. The Communications segment, which consists of Skype Technologies SA (Skype) business, enables Voice over Internet Protocol (VoIP) calls between Skype users, as well as provides connectivity to traditional fixed-line and mobile telephones.
MARKETPLACES SEGMENT
Marketplaces segment is comprised of online commerce platforms that enable a global community of buyers and sellers to interact and trade with one another. There are approximately a hundred million items available through auction-style and fixed-price trading on any given day.
The company intends to attract buyers and sellers to its community by offering: Selection, Convenience, and Entertainment for buyers; and access to broad markets, marketing and distribution, Ability to maximize selling prices, and opportunity to increase sales for Sellers.
Community of Buyers and Sellers: The company has aggregated buyers, sellers, and items listed for sale, which, in turn, has resulted in an online commerce environment.
The company offers a variety of community and support features, such as announcement and bulletin boards, customer support boards and personal pages, as well as other topical or category-specific information exchanges. Its community of confirmed registered users included approximately 222 million as of December 31, 2006. As of December 31, 2006, it had approximately 82 million active users on the eBay.com platforms.
Marketplaces Platforms
The company’s Marketplaces platforms are fully automated, topically arranged, and online services that provides availability 24 hours a day, seven days a week, enabling sellers to list items for sale and buyers to bid for and purchase items of interest, and all users to browse through listed items from any place in the world at any time. The platforms include software tools and services, available either for no charge or for a fee, that allow buyers and sellers to trade with one another. The Marketplaces platforms consist of an online commerce platform, eBay.com, and adjacent platforms consisting of Shopping.com, its classifieds websites and Rent.com.
eBay.com Platform
Marketplaces main platform, eBay.com, includes traditional auction format, fixed price format and eBay Stores. The company offers the main platform on localized sites in 24 countries.
Auction Listing Format
At the core of Marketplaces platform are the company’s traditional auction format listings, in which a seller would select a minimum price for opening bids, with the option to set a reserve price for the item, which is the minimum price at which the seller is willing to sell the item. A seller with appropriate feedback ratings can also sell in a ‘Multiple Item Auction’ format, which allows a seller to sell multiple identical items to the highest bidders.
Fixed Price Listing Format
The company’s fixed price format allows for a selling and buying experience. Sellers with appropriate feedback ratings can choose to use the Buy-It-Now feature at the time of the listing, which allows sellers to name a price at which they would be willing to sell the item to any buyer. Its Half.com subsidiary also provides a fixed price, person-to person e-commerce website that allows people to buy and sell previously owned books, movies, music and games at discounted prices.
eBay Stores
eBay Stores enables sellers to show all of their listings and to describe their respective businesses through customized pages. eBay Stores provide useful tools for sellers to build, manage, promote, and track their business. ‘Store Inventory Format’ listings allow sellers to list items at a fee and higher final value fee, for a minimum 30-day listing duration. As of December 31, 2006, there were approximately 600,000 online storefronts established by users in locations around the world.
Other Marketplaces Platforms
Shopping.com
Shopping.com is a comparison shopping website that allows shoppers to compare millions of products from thousands of stores. Shopping.com offers one of the product catalogs on the Internet — searchable by thousands of attributes — along with a consumer review service through Epinions.com, which helps users make informed buying decisions.
Classifieds Websites
Classifieds websites are available in various cities and regions around the world and are designed to help people meet, share ideas and trade on a local level. Classifieds websites include Kijiji, Gumtree.com, LoQUo.com, Intoko, Marktplaats.nl and mobile.de. In addition, the company has a minority equity investment in craigslist, Inc., which operates the craigslist classifieds websites around the world.
Rent.com
Rent.com is an U.S. Internet listing website in the apartment and rental housing industry. The website is designed as a means of bringing apartments seekers and apartment managers together.
Services for Buyers and Sellers
The company has developed various features in eBay.com platform in the areas of Trust and Safety, Customer Support and Value-Added Tools and Services, as well as a Loyalty Program. These features are designed to make users dealing with unknown trading partners and completing commerce transactions on the Internet.
Trust and Safety
Feedback Forum: Its Feedback Forum encourages each user to provide comments on other users with whom he or she trades and lets every user view other users’ profiles, which include feedback ratings and comments by other users. Every registered user has a feedback profile that may contain compliments, criticisms and other comments by users who have conducted business with that person. The Feedback Forum requires feedback to be related to specific transactions and provides an easy tool for users to match specific transactions with the user names of their trading partners. This information is recorded in a profile that includes a feedback rating for the person with feedback sorted according to whether it was given over the past month, six months, or twelve months. Users who develop positive reputations have color-coded star symbols displayed next to their user names to indicate the number of positive feedback ratings they have received.
SafeHarbor Program: The company also offers the SafeHarbor program, which provides guidelines for trading, provides information to resolve user disputes and responds to reports of misuse of the eBay service. eBay’s SafeHarbor staff investigates users’ complaints of possible misuse of the eBay service and takes appropriate action, including issuing warnings to users, ending and removing listings, or suspending users from bidding on or listing items for sale. The complaints the SafeHarbor staff investigates include various forms of bid manipulation, malicious posting of negative feedback and posting of illegal items for sale.
Verified Rights Owner (VeRO) Program: The Verified Rights Owner (VeRO) Program lets intellectual property rights owners request the removal of listings that offer items or contain materials that infringe on their rights. This helps protect community members from purchasing items that may be counterfeit or otherwise unauthorized.
Value-Added Tools and Services
eBay users have access to a variety of ‘pre-trade’ and ‘post-trade’ tools and services. ‘Pre-trade’ tools and services are intended to simplify the listing process. ‘Post-trade’ tools and services are designed to make transactions convenient to complete. These tools and services include: Turbo Lister, eBay Blackthorne, ProStores, Selling Manager and Selling Manager Pro, which help automate the selling process; Picture Services, which enables sellers to include pictures in their listings; the Shipping Calculator, which makes it easier for buyers and sellers to calculate shipping costs; Shipping Labels, which allows sellers to print certain postage and UPS labels; Shipment Tracking, which enables sellers to track their shipped packages; the eBay Toolbar, which helps eBay users stay connected with eBay wherever they are on the Internet; eBay Sales Reports and eBay Sales Reports Plus, which provide sales and fee information to sellers; eBay Market Research, which enables sellers to analyze sales in categories across the site; Reviews and Guides, which assists shoppers in making more informed choices; and PayPal, which facilitates the online exchange of funds. The company provides these services directly or through contractual arrangements with third parties.
Loyalty Program
PowerSeller program: PowerSellers are eBay’s major sellers who have a consistent high volume of monthly sales. Members of the PowerSeller program get a range of special services, including prioritized customer support, promotional offers, eBay promotional merchandise, advanced selling education, opportunities to participate in research, and other special rewards.
PAYMENTS SEGMENT
The company’s payments platform, PayPal, enables any individual or business with an email address to send and receive payments online. PayPal delivers a product suited for all online merchants and individuals by allowing them to send and receive online payments. The PayPal network builds on the existing financial infrastructure of bank accounts and credit cards to create a global, real-time payment solution.
PayPal
Joining the Network: PayPal offers three types of accounts: Personal, Business, and Premier. A new account holder opens an account to send money for an eBay purchase or a purchase on another website, a payment for services rendered, or for a payment to an individual in lieu of cash. PayPal also offers customers who sell on their own websites the ability to accept credit card payments from buyers without requiring the buyer to open a PayPal account. Buyers make payments at the PayPal website, at an item listing on eBay.com or another online business or platform where the seller has integrated PayPal’s Instant Purchase Feature, or at the sites of merchants that have integrated PayPal’s Website Payments feature. PayPal’s services are integrated into the checkout flow of the eBay.com platform in its main markets, including the U.S., Germany, the U.K. and Canada.
Merchant Services
The company’s Merchant Services business offers a differentiated product solution for each merchant segment: sole proprietor, small and medium businesses, and large merchants — while providing a payment solution in all segments.
Financial Products
The company offers financial products like the PayPal branded debit card, PayPal branded credit card and the PayPal Buyer Credit Offering. It is in the process of developing a mobile payments solution and launched Go Mobile with PayPal during 2006 as a foundation for its mobile platform.
COMMUNICATIONS SEGMENT
Skype offers a way for people anywhere in the world to call landlines and mobile phones over the Internet. People around the world using Skype can make voice and video calls to anyone else on Skype, as well as send instant messages, transfer files and participate in Skypecasts, which are live, moderated conversations with up to 100 people. Skype is one of the Internet communication products, providing unlimited voice, video and instant messaging conversations between people using the Skype software. Skype features include making and receiving calls to and from landline and mobile phones, voicemail, call forwarding and personalization including ringtones and avatars. Skype is available in 28 languages.
User Base: As of December 31, 2006, Skype had approximately 171 million registered users. The Skype software enables people to make free voice and video calls to any other person on Skype, as well as send instant messages and transfer files. In addition to free calls to other registered Skype users, people can also use features, including SkypeOut (calls from Skype to traditional landlines or mobile phones), SkypeIn (a number which can be called from a normal phone anywhere in the world) and Skype Voicemail (takes calls when users are busy or offline).
Ecosystem
The company focuses on developing this ecosystem of approximately 50 hardware partners and approximately 150 Skype Certified devices.
Competition
Marketplaces
The company’s competitors include traditional department, warehouse, discount, and general merchandise stores (as well as the online operations of these traditional retailers), emerging online retailers, online classified services, and other shopping channels such as offline and online home shopping networks. These include: Wal-Mart, Target, Sears, Macy’s, JC Penney, Costco, Office Depot, Staples, OfficeMax, Sam’s Club, Amazon.com, Buy.com, AOL.com, Yahoo! Shopping, MSN, QVC, and Home Shopping Network. Shopping.com competes with sites such as Buy.com, Google’s Froogle, Nextag.com, Pricegrabber.com, Shopzilla, and Yahoo! Product Search. Other competitors include classifieds sites such as Oodle.com, Google Base, and Microsoft Live Expo.
Category-specific competitors to offerings in Home & Garden category include: Ace Hardware, Baby Style, Baby Universe, Bed, Bath & Beyond, Brookstone, Burpee.com, Crate & Barrel, Do-It-Best Hardware, Ethan Allen, Frontgate, Harbor Freight, IKEA, HomeBase, Home Depot, Kohl’s, Lamps Plus, Lowes, Linens ’n Things, OSH, Pier One, Pottery Barn, Restoration Hardware, Smith & Hawken, Spiegel, Tuesday Morning, True Value Hardware, and Williams-Sonoma.
International Marketplaces websites compete with similar online and offline channels, such as Quelle and Otto in Germany, Yahoo-Kimo in Taiwan, Daum and Gmarket in South Korea, and Amazon in the United Kingdom and other countries.
PayPal
PayPal competes with existing online and off-line payment methods, including, among others: credit card merchant processors that offer their services to online merchants, including Cardservice International, Chase Paymentech, First Data, iPayment and Wells Fargo; and payment gateways, including CyberSource and Authorize.net; money remitters such as MoneyGram and Western Union; bill payment services, including CheckFree; processors that provide online merchants the ability to offer their customers the option of paying for purchases from their bank account, including Certegy, PayByTouch and TeleCheck, a subsidiary of First Data, or to pay on credit, including Bill Me Later; issuers of stored value targeted at online payments, including VisaBuxx, NetSpend and Next Estate; and Google Checkout, which enables the online payment of merchants using credit cards.
Overseas, PayPal faces competition from similar channels and payment methods. In addition, PayPal faces competition from Visa’s Visa Direct, MasterCard’s MoneySend, and Royal Bank of Scotland’s World Pay and Webpay International’s Click & Buy in the European Community, NOCHEX, Moneybookers, NETeller and FirePay in the United Kingdom, CertaPay and HyperWallet in Canada, Paymate in Australia, Alipay and 99Bill in China and Inicis in South Korea.
Skype
Skype competes with Internet companies, including AOL, Google, Microsoft, and Yahoo.
History
eBay, Inc. was founded in 1995.
