eBay

eBay Analysis

Table of Contents
1. 2. 3. 4. 5. 6. 7. 8. Introduction Business Model Value chain Competitive forces Financial Situation Challenges Long-term Growth Recommendations

eBay Overview
Founded in

1995 by Pierre Omidyar

#1 in e-commerce, online payment and

voice over Internet Store

no inventory & Produce no products

16,200 people (including temporary employees)

eBay Overview

81,000,000 average monthly visitors 133,096,249 concurrent listings $60,146,000,000 PayPal transactions

eBay:
technology has always been a key enabler of our growth and a tool to connect and empower millions of people globally

eBay Businesses
Marketplaces
Provide platforms for online commerce

Payments
Provide online payment solutions

Communications
Provide low-cost connectivity

eBay Business Model

Network Acquisition & Partnerships Pays Feedback Fees

Product categories
Seller Communication Buyer

Sells

eBay Value chain

Strategic Alliance and Acquisition

Legal
Human Resource Technology

Value Added

Marketing Word of mouth Partnerships Classifieds websites

Product Categories Old and new Variable

Purchasing process Traditional auction Buy it now Fixed price

Communicati on Ask a question Skype Click to call

Payment Variable Reliable

Peer review

Customer services A Rules, Trust and Safety committee Voices Community Wiki My Collectible

eBay Competitive Forces

New Market Entrants
- Froogle - The industry is very attractive with no significant barriers to enter

Substitutions
- Traditional retail - Switching cost from online auction to traditional retail is high

Rivalries
- Strong competitors (Amazon, Yahoo, MSN, FNAC) - Others (ubid.com, overstock.com, CQout.com, bidville.com)

Buyers

- Strong buyer
bargaining power with many options in the industry

Suppliers
-Strong bargaining power for software suppliers - Weak bargaining power for product suppliers

$ Millions 600 500

Net Income
50% 40% 30% Net income Link relative Year to year

400
300

20%
10% 0%

200 100

-10% -20% -30%

0 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3

-40%

MARKETPLACES
$ Millions 1600 1400 1200 1000 800 0% 600 400 200 0 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 -5% -10% -15% -20% Year to year 25% 20% 15% 10% 5%

Internet Auction
Link relative

PAYMENTS
$ Millions 700 680 660 640 620 15% 35% 30% 25% Paypal 20% Link relative Year to Year

600
580 560 540 520 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 10%

5%
0% -5%

INCOME FROM OPERATION

$ Millions 2300 2200 2100 2000 1900 1800 1700 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 30% 25% 20%

15%
10% 5% 0% -5% -10%

Total operation income Link Relative

Year to Year

STOCK PRICE IN 10 YEARS

STOCK PRICE IN 5 YEARS

STOCK PRICE IN 1 YEAR

Challenges
Exposure to large contingent liabilities due to litigations

Weaknesses

Insufficient screening process to control counterfeit products

Threats

Exposure to internet fraud and security concerns. Increased business risks because of technological obsolesces and reliance on third parties for licenses Unavailability of services leads to loss of income Increasing competition

Can eBay still Grow?

Valuable Assets
- Strong market position - Effective Integration of segments

Rareness
- Strong market position Imitability - Efficient business model Organization Support

- Efficient business model

- Rapid growth of internet display and classifieds ads - Increasing popularity of used goods - Increasing reliance on alternative payment systems due to safety issues - Rapid international expansion

- Efficient business model

Recommendations
Make eBay interface easier

to use

Improve value and selection by combining

fixed price with auction-style listing

Expand Payment segment, i.e. Paypal

Recommendations
Expand product and service base Acquisition or mergers must fit strategic business of the company.

Diversify, but unprofitable/unfit businesses

should be closed