Online Auctions Fred Lizotte

Mission and Vision Ebay’s mission Statement “ to provide a global trading platform where practically anyone can trade practically anything.”

History Ebay began in 1995 as AuctionWeb, a site that Pierre Omidyar launched. Our book says that Mr. Omidyar launched the site to find an outlet for his girlfriend’s Pez dispensers, but later we found out it was fabricated by a public relations manager in 1997 to interest the media. This was revealed in Adam Cohen's 2002 book[1] and confirmed by eBay. By 1997 AuctionWeb was boasting about 2.5 million in monthly transactions. Later that year in September the site was reengineered and launched under the name we know today as Ebay. [1] ^ a b Cohen, Adam. The Perfect Store. ISBN 0-316-16493-3. 

History Cont. In September 1998 Ebay went public with a total of 63 million in IPO’s. Ebay got more the next year in its second offering for 1.1 billion. In 2000, Ebay had started a powersellers program. Ironically 20% of the sellers on ebay accounted for 80% of the profits so ebay put these 20% in a category and made it known to other people that these people are powersellers.  Sellers who sustain a monthly sales of at least $2000 were considered part of it.

History cont. In 1999 ebay was seeing an evolution in the way consumers wanted to purchase goods. They wanted to start using credit cards to complete transactions to make the process faster. Paypal came into the picture offering an easy way for consumers to complete transactions with credit cards. In 2000 ebay has been expanded internationally to countries such as Australia, Canada, United Kingdom, Japan, Germany, and France.

Acquisitions Ebay has acquired many companies over the years of its existence. 1998, Up4Sale.com 1999 Billpoint an unsuccessful competitor to PayPal, which they closed following the 2002 acquisition of the latter. 1999 Butterfield & Butterfield, which it sold in 2002 to Bonhams. 1999 eBay acquired the auction house Alando for $43 million, which changed then to eBay Germany. 2000 eBay acquired Half.com for $318 million, which was later integrated with the eBay Marketplace. 2000 eBay acquired the Precision Buying Service portion of Deja.com. 2001, eBay acquired Mercado Libre and Lokau, Latin American auction sites. eBay also acquired iBazar, a French auction site. 2002 eBay acquired PayPal, for $1.5 billion in stock. 2003, eBay acquired CARad.com, an auction management service for car dealers. 2003 eBay Inc. acquired EachNet, a leading ecommerce company in China, paying approximately $150 million in cash. 2004, eBay acquired all outstanding shares of Baazee.com, an Indian auction site for approximately US $50 million in cash, plus acquisition costs. Baazee.com subsequently became eBay India. 2004, eBay took a 25% stake in Craigslist by buying out an existing shareholder who was once a Craigslist employee. 2004, eBay moved forward on its acquisition of Korean rival Internet Auction Co. (IAC), buying nearly 3 million shares of the Korean online trading company for 125,000 Korean won (about US$125) per share. 2004, eBay acquired Marktplaats.nl for €225 million. This was a Dutch competitor which had an 80% market share in the Netherlands, by concentrating more on small ads than actual auctions. Marktplaats is the Dutch word for Marketplace. 2004, eBay acquired Rent.com for $415 million in cash (original deal was for $385 million of the amount in eBay stock plus $30 million in cash).

Acquisitions 2005, eBay acquired Gumtree, a network of UK local city classifieds sites. 2005, eBay acquired the Spanish classifieds site Loquo. 2005, eBay acquired Shopping.com, an online comparison site for $635 million. 2005, eBay acquired the German language classifieds site Opus Forum. 2005, eBay bought Skype, a VoIP company, for $2.6 billion in stock and cash. 2006, eBay invested $2 million in the Meetup.com social networking site. 2006, eBay acquired Tradera.com, Sweden's leading online auction-style marketplace for $48 Million. 2006, eBay announced international cooperation with Google. Financial details have not been disclosed by either party. 2007, eBay acquired online ticket marketplace StubHub for $307 million. 2007, eBay acquired a minority stake in GittiGidiyor. 2007, eBay acquired the website StumbleUpon for approximately $75 million.

Management Team, Creator Pierre M. Omidyar  #32 of the forbes top 400 Americans in 2006 Chairman of the Board officer since: 05/96 Age: 39 Net worth: 7.7 billion

Margaret C. Whitman #322 of the forbes top 400 Americans in 2006 President, Chief Executive Officer and Director Officer since: 02/1998 Age: 51 Net worth: 1.2 billion

Robert H. Swan Chief Financial Officer, Senior Vice President – Finance Officer since: 03/16/2006 Age: 46 Mr. Swan served in executive positions at Webvan Group, Inc. from 1999 to 2001, including Chief Executive Officer from April 2001 to July 2001, Chief Operating Officer from September 2000 to July 2001 and Chief Financial Officer from October 1999 to July 2001.

William C. Cobb President – ebay marketplaces, North America Age: 50 Known as a professional in building and expanding brands for large companies such as Pepsico, inc and pizza hut.

John J. Donahoe President – ebay Marketplaces Officer since: 03/2005 Age: 46 Earned an M.B.A. from Stanford university

Rajiv Dutta President of Paypal Officer since: 08/1999 Age: 45 Mr. Dutta holds a B.A. degree in Economics from St. Stephen's College, Delhi University in India and an M.B.A. degree from Drucker School of Management.

Michael Van Swaaij Acting Chief Executive Officer Officer since: 10/01/2007 The CEO of SKYPE

More managers on team Niklas Zennstrom – Non-exectutive Chairman - Skype Michael R. Jacobson – Senior vice president of Legal Affairs, General counsel, and secretary Elizabeth L. Axelrod – Senior vice president – human resources.

Important stakeholders Butterfield & Butterfield – This company that was bought by ebay was designed to make ebay an online auction site for large ticket items such as vehicles. Paypal – Paypal was designed to replace ebays billpoint that failed. They provided a way consumers could use credit cards. Half.com – Half.com was designed to sell items at half price, it was not an auction site like ebay, but it was used nonetheless Foreign online auction companies – these companies that were already doing online auctions were bought out by ebay and the customers and inferstructure was already in place to use.

Goals and Strategies They are looking for heavy growth. Strong branding They were looking to create a community that allowed feedback and communication from buyer to seller. Key words: Trust and respect building from buyer to seller and visa versa. Treating their highest profit sellers with special privileges and features.

Goals and strategies cont. Ebay saturated the market and in 1999 ebay was trying really hard to encourage the selling of big ticket items, such as automobiles.

Facts of the case To Generalize what we see here with ebay we see the following: Up to 1995 The opportunity arises that online auctions can be utilized Ebay began in 1995 as AuctionWeb, a site that Pierre Omidyar launched. Some other online auction sites already existed, but were also just beginning. Ebay created a community of consumers and sellers to create trust and respect, making transactions easier. Ebay grew fast, and ate up its competition either by buying them out or simple competition to get them out. This continues and we see ebay evolving to the needs of the consumers, via paypal, ebaymotors.

E-Commerce opportunities The opportunities that ebay saw: They were ahead of the game, they saw the problem, and bam they would most likely get close to a company until they decided to buy it. Technology was changing, Meaning that ebay had to adapt to fit the needs of a technological world. They have deep pockets to buy out or compete with rival companies. The fact that auctions need many people in order to not have market inefficiencies, means that it is hard for new companies to compete with ebay.

Prospective analysis The company used the perspective of Economics of Internet-based commerce.

Why? Ebay did not sell products, they simply facilitated trade among consumers and buyers. In doing so they allowed for the goods that were purchased to be valued by many bidders and bought by one bidder. The amount of consumers on ebay allowed for a slightly efficient marketplace.

DSIR DSIR is this company. Ebay Used DSIR for these reasons. In order to create an efficient marketplace, there needs to be people valuating what is to be bought constantly, many items on ebay are unique in their own way and it is important that people valuate it. Ebay used this knowledge to their advantage and got rid of its competition. The switching cost was high, especially due to ebay’s community and feedback system.

Competitive risks Ebay has dealt with their fair share of competitive risks. They had other auction sites boast lower fees, different features, but the cost of switching seemed to high to reliable ebay users. Successful competitors was bought out as well and utilized in ebay’s plan, especially auction sites from overseas.

Competition Yahoo auctions Ubid Amazon.com Yahoo! US Auction sites will no longer be accepting listings as of June 3, 2007. Ubid Amazon.com

Missed opportunities Looking at ebay, we see a successful business from the start to the end. They have just about completed their vision of being the global trading platform where practically anyone can trade practically anything.

Ubid uBid.com's mission is to be the most recognized and trusted business-to-consumer and business-to-business marketplace, consistently delivering exceptional value and service to our supplier partners and consumers.

History uBid Inc., founded in 1997 and headquartered in Chicago,Illinois The online auction site that calls itself "The Marketplace you can Trust". The company claims this title based on the secure nature of transactions on the site compared to other companies such as ebay. The site tries to eliminate fraud by having products being sold by other Program. The site specializes in new, refurbished and overstock consumer electronics such as computers and cellular phones, but has recently expanded to offer other services such as travel packages and jewelry.

Not done yet, there is more The case study in the book, also included ubid as a major part of online auction, so I have a small section for them too.

Overview We see Ubid coming in two years later in 1997. They are ironically focusing on what ebay is doing wrong and trying to eliminate those problems. Ebay has a problem with fraud, they had in the past they are having it now and possibly it will continue in the future. Ubid designed a system that tries to eliminate fraud. They try to focus on how much it costs as well, they are not charging for a listing fee as ebay does, which means that if your item doesn’t sell, you don’t incur a cost. They get the money if the item does sell, then they will take the fees out. They have decided to have a payment system set up on ubid instead of having a third party payment system such as Paypal.

Analysis Unlike ebay, where they got in first and expanded fast, ubid was trying to get it right first. Its an interesting paradox that is going on right now. September of 2007, Ubid announced that Robert H. Tomlinson, Jr., the old CEO, is stepping down and a new CEO, Jeffrey D. Hoffman will be taking his place. Jeffrey D. Hoffman is known to launch businesses and make them successful, such as Virtual shopping, Priceline.com, and many more. I will be interested in seeing what Jeff is planning on doing to ubid.com.