eBay By: Dan McLindon Kyle McDaniel Jeremy Smiley Tom Anderson Ray Moorman

Key Question for eBay How can eBay continue to grow as an online retailer?

Secondary Questions What are the values on which eBay was founded? Do eBay’s current actions and strategies align with their values? What has happened to the company culture at eBay? Does the eBay brand create a sense of trust, security, and community? Should John Donahoe be the CEO of eBay? How can eBay position itself for future success?

eBay Company Overview Founded1995 by Pierre Omidyar as an online auction site to bring buyers and sellers together. Vision “Create a place where people could do business just like the old days – when everyone got to know each other personally, and we all felt we were dealing on a one-to-one basis with individuals we could trust.” Strategic Business Units1. Marketplaces – online auction and direct retail sites 2. Payments – PayPal 3. Communications - Skype Organization Size15,000 employees, revenues of $5.9 billion in 2008

eBay Key Acquisitions CompanyYearAnticipated ResultActual Result PayPal2002Allow eBay users to make credit card payments. Success within eBay marketplace as well as adoption by other online retailers (57 million registered active accounts ins 2008). Rent.com1 st quarter 2005Natural extension of online real estate mkt. N/A Shopping.com2 nd quarter 2005Bolster traditional online retailer presence. 50 million visitors per month, world’s 3 rd largest internet shopping site. Skype2006Create synergies with Marketplace SBU, enabling buyers and sellers to communicate better had to take a $900 million writedown on value, synergies not realized. CEO indicates potential sale. StubHub2007Synergies with existing ticket business. Successful expansion into adjacent mkt.

PEST Analysis for eBay

Industry Overview (Supply) Porter’s five forces: Rivalry among existing competitors High Threat of substitute products High Bargaining power of buyers High Threat of new entrants High Bargaining power of suppliers Medium

Porter’s Five Forces

Internal Analysis – Core Values Core Values An honest, open environment can bring out the best in people Everyone has something to contribute People are basically good Recognize and respect everyone as a unique individual Treat others the way that you want to be treated Conclusion: eBay’s recent changes to their fee structure and feedback forum go against the company’s core values.

Management Timeline 1996: Founder Pierre Omidyar and Jeff Skoll run operation alone 1997: Meg Whitman hired as CEO : Omidyar recruits top talent to serve on eBay’s board including Scott Cook and Fred D. Anderson 2008: John Donahoe becomes CEO

Whitman vs. Donahoe Meg Whitman Took eBay from 30 employees with $86 million revenue to 15,000 employees with $5.9 billion revenue. Experience includes general manager at Hasbro, brand manager at P&G, CEO of FTD, president of Stride Rite, and SVP of marketing at Walt Disney. BA Economics from Princeton, MBA from Harvard. Approval rating of 75% at time of retirement John Donahoe % of eBay’s revenue generated from Marketplace fell from 72% to 56% during that time Started at eBay in 2005 as president of Marketplaces SBU Experience includes consulting firm Bain & Co. StubHub, eBay express, online advertising Focus in Marketplaces SBU has been growth through acquistion of other retail sites, getting away from simple auction. Approval rating at 22%

SWOT Analysis for Dell Strengths Well established brand. Large number of user accounts. PayPal acquisition. Weaknesses New CEO John Donahoe. Company culture becoming stale, employees not fully engaged. Skype acquistion. Fee structure has alienated some sellers. Limitations on feedback hurt ability to create sense of trust and community. Moving away from online auction, into direct retail. Opportunities Find a new revenue stream with online advertising with Skype. Growth in total online retail means more potential users of PayPal. Other competitors, Overstock.com and uBid.com are struggling, possible acquisition targets. Threats Sellers moving to other auction sites, taking the variety of items they supplied to the competition. Possible shift in online shoppers preferences from auction-based to traditional online retailing.

Registered & Active eBay Users Reg users continues to grow but Active users has flattened out

Core Business: Online Auctions # of online Auctions declining during same time frame as users are increasing

eBay’s Business Model – 3 Operating Segments

Net Revenues By Segment

Forrester Research: 2012 Prediction of Internet Sales B2B predicted to be 10x larger than retail sales

Worldwide Internet Users in m of NA was from US.

Recommendations 1. Fire John Donahoe, leverage strong board of directors to find a replacement that can lead eBay into the future. 2. Focus on restoring the eBay brand name. Make eBay.com a 100% auction site. Use Shopping.com and other possible acquisition targets to compete in traditional online retail space. 3. Revamp fee structure to be friendly to both small and large sellers. Tier the structure based on monthly or annual trade volumes.

Recommendations 4. Look into acquiring either or both Overstock.com and uBid.com