Ebay, Inc. Company Overview Founded on Labor Essay

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eBay, Inc.

Company Overview

Founded on Labor Day weekend in 1995, eBay now operates the world's largest online trading community. The first sale by founder and computer programmer Pierre Omidyar was a broken laser pointer that was slated for the trash can; he sold it for $14.83. As of December 2010, 94.5 million users were active globally buying and selling practically anything. That user list compares to 90.1 million the previous year end. eBay brings together a diverse community of individual and small business buyers and sellers that trade goods worth more than $2,000 every second. In 2010, the total value of goods sold on eBay was $62 billion. (eBay, 2010)

With a highly active corporate development function, eBay has acquired such innovative businesses as PayPal (online payments), Bill Me Later (deferred payments for customers such as Borders, Continental Airlines and Walmart.com), Shopping.com (comparison shopping), Rent.com (home and apartment rentals), StubHub (online ticket sales), and Gmarket (Asia e-commerce), which have put the company in the global lead in the e-commerce and payments business. Recent activity also bodes well for the company to become a player in the area of services designed for hand-held mobile devices. (eBay, 2010)

In March 2011, eBay revealed its intent to purchase e-commerce behemoth GSI Commerce valued at $2.4 billion, one of the largest acquisitions ever for eBay. This move will strengthen the operations of eBay Marketplaces as well as PayPal. When finalized in August 2011, this combination should serve to increase cross-selling opportunities, especially with larger merchants. (Hoovers, 2011)

Through its subsidiaries and affiliates, eBay operates in about 40 markets worldwide through websites that are focused on Vietnam, Thailand, Taiwan, South Korea, Singapore, the Philippines, New Zealand, Malaysia, India, Hong Kong, China, and Australia in greater Asia/Pacific. In Europe, the company covers the U.K., Turkey, Switzerland, Sweden, Spain, Portugal, Poland, the Netherlands, Italy, Ireland, Germany, France, Belgium, and Austria. eBay reaches Mexico, Canada, Brazil, and Argentina in the Americas. In China, eBay has formed an alliance (it owns 49%) with TOM Online, the internet portal and wireless services company.

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In all, eBay does over half its business outside the United States. (S&P, 2011)

Corporate Strategy

eBay has stated its goal to create a truly global marketplace, providing a faster, easier, and safer trading experience for its users. In order to accomplish that goal, eBay must create a system that is efficient, abundant and redundant. The company still has nightmares about the "brownout" of 1999, when a service interruption persisted for 22 hours. Growth has increasingly come through acquisitions of savvy local partners with an increased focus on the international front. These acquisitions accelerate the "network effect" which means that an online service becomes more valuable to its users as the number of users increases. (S&P, 2011)

Another strategic move over the past five years has been the drive to win business selling goods not using the eBay platform. PayPal, Bill Me Later, Shopping.com and StubHub are examples of this trend. The company has also extended its product reach to include out of season, and antique/vintage items. (S&P, 2011)

The company continues to roll out its online classifieds services. The eBay Classified Group has expanded with seven brands leading the way: BilBasan, dba.dk, eBay Classifieds, Gumtree, Kijiji (Swahili for Village), Marktplaats.nl and mobil.de, serving more than 1,000 cities worldwide. eBay also owns a 28% minority share in Craig's List. (S&P, 2011)

Industry Outlook

The analysts at Standard & Poor's are generally positive on the outlook for the Internet Software and Services sector. The basic tenets of their position are that the global economy is stabilizing and will be conducive to greater corporate spending on advertising, a greater percentage of the total spend will be directed toward online advertising, and pricing for the online offerings is showing signs of improving. Online advertising in the United States grew by 15% in 2010 and S&P estimates an increase of 10% in 2011. S&P estimates that the United States represents about one-third of the total global online advertising market. Online retail merchandise….....

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