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44 Part 1 Introduction

Objectives and strategy Singapore Sweden United Kingdom
South Korea Switzerland United States
The overall eBay aims are to increase the gross
Spain Taiwan
merchandise volume and net revenues from the eBay
Marketplace. More detailed objectives are defined to In its SEC filing, success factors eBay believes are impor-
achieve these aims, with strategies focusing on: tant to enable it to compete in its market include:

1 Acquisition – increasing the number of newly regis- ability to attract buyers and sellers;
tered users on the eBay Marketplace. volume of transactions and price and selection of
2 Activation – increasing the number of registered goods;
customer service; and
users that become active bidders, buyers or sellers
brand recognition.
on the eBay Marketplace.
3 Activity – increasing the volume and value of transac- eBay stresses the importance of developing its ‘Value-
tions that are conducted by each active user on the Added Tools and Services’ which are ‘pre-trade’ and
eBay Marketplace. eBay had approximately 83 million ‘post-trade’ tools and services to enhance the user ex-
active users at the end of 2007, compared to approx- perience and to make trading faster, easier and safer.
imately 82 million at the end of 2006. An active user is It also notes that in the context of its competitors,
defined as any user who bid on, bought, or listed an other factors it believes are important are:
item during the most recent 12-month period.
community cohesion, interaction and size;
The focus on each of these three areas will vary according system reliability;
to strategic priorities in particular local markets. reliability of delivery and payment;
eBay Marketplace growth is also driven by defining web site convenience and accessibility;
approaches to improve performance in these areas. level of service fees; and
First, category growth is achieved by increasing the quality of search tools.
number and size of categories within the marketplace,
This implies that eBay believes it has optimized these
for example: Antiques, Art, Books and Business & factors, but its competitors still have opportunities for
Industrial. Second, formats for interaction. The tra- improving performance in these areas which will make
ditional format is auction listings, but it has been refined the market more competitive.
now to include the ‘Buy-It-Now’ fixed price format.
Another format is the ‘Dutch Auction’ format, where a Risk management
seller can sell multiple identical items to the highest
The SEC filing lists the risks and challenges of conducting
bidders. eBay Stores was developed to enable sellers
business internationally as follows:
with a wider range of products to showcase their prod-
ucts in a more traditional retail format. eBay says it is regulatory requirements, including regulation of
constantly exploring new formats, often through acqui- auctioneering, professional selling, distance selling,
sition of other comapnies, for example through the banking, and money transmitting;

acquisition in 2004 of mobile.de in Germany and legal uncertainty regarding liability for the listings and
Marktplaats.nl in the Netherlands, as well as investment other content provided by users, including uncer-
in craigslist, the US-based classified ad format. Another tainty as a result of less Internet-friendly legal
acquisition is Rent.com, which enables expansion into systems, unique local laws, and lack of clear prece-
the online housing and apartment rental category. In dent or applicable law;
2007, eBay acquired StubHub an online ticket market- difficulties in integrating with local payment providers,
place, and it also owns comparison marketplace including banks, credit and debit card associations,
Shopping.com. Finally, marketplace growth is achieved and electronic fund transfer systems;
through delivering specific sites localised for different differing levels of retail distribution, shipping, and
geographies as follows. You can see there is still poten- communications infrastructures;
tial for greater localisation, for example in parts of different employee–employer relationships and the
Scandinavia, Eastern Europe and Asia. existence of workers’ councils and labour unions;
difficulties in staffing and managing foreign operations;
Localised eBay marketplaces:
longer payment cycles, different accounting practices,
Australia France Italy and greater problems in collecting accounts receivable;
Austria Germany Malaysia potentially adverse tax consequences, including
Belgium Hong Kong Netherlands local taxation of fees or of transactions on web sites;
Canada India New Zealand higher telecommunications and Internet service
China Ireland Philippines provider costs;