Business Description

"I got it on eBay" is barreling its way into the lexicon of the new millennium and placing a cyber-grin on the corporate face of online auctioneer extraordinaire eBay. Operator of the eBay auction Web site, the San Jose, California-based company has furnished the world with a forum for the sale of some 8,000 categories of merchandise. Its more than 22 million registered users can buy and sell goods ranging from Beanie Babies to antiques from the comfort of their Web browsers. In a bid to foster a sense of cyber-community, eBay has added features such as chat rooms and bulletin boards to its Web site. It also has launched more than 50 smaller, location specific marketplaces around the US so users can purchase large items more easily. In addition, the company launched a business-to-business service, eBay Business Exchange, that auctions more than 60,000 goods (personal computers, industrial goods) to small businesses. eBay elevated its prestige factor through the acquisition of old-guard auction house Butterfields. It also made inroads in Europe through the purchase of iBazar. The company generates revenue through listing and selling fees, as well as through advertising on its Web site (in partnership with AOL Time Warner).

No longer the only online auction kid in town, eBay faces mounting competition from online powerhouses such as Amazon.com and Yahoo! In addition, the company's rising popularity has created technical glitches that expose its vulnerability to mechanical malfunctions. The manner in which eBay runs its system also is being questioned as a result of a slew of auction hoaxes -- such as postings for human organs and unborn babies -- and fraud.

eBay chairman and founder Pierre Omidyar owns 27% of the company; VP Jeffrey Skoll (who is on sabbatical from the company) and CEO Meg Whitman own about 15% and 5%, respectively.

History
Inspired by his fiancée's passion for collecting and trading Pez dispensers, Pierre Omidyar created a flea market in cyberspace when he launched online auction service Auction Web on Labor Day weekend in 1995. Making a name for itself largely through word of mouth, the company incorporated in 1996, the same year it began to charge a fee to auction items online. That year it enhanced its service with Feedback Forum (buyer and seller ratings) that year.

The company changed the name to eBay in 1997 and began promoting itself through advertising. By the middle of that year, eBay was boasting nearly 800,000 auctions each day and Benchmark Capital came on board as a significant financial backer.
Margaret ("Meg") Whitman, a former Hasbro executive, replaced Omidyar as CEO in early 1998. eBay made a blockbuster debut as a public company later that year. The company moved closer to household name status in 1998 by launching a national ad campaign and inking alliance deals with America Online (now AOL Time Warner) and WebTV.

eBay showed its acquisitive streak in 1999 with purchases of Alando (online auctions in Germany) and Billpoint (person-to-person credit card technology). It also made one of its first investments in an outside company with the purchase of 6% of TradeOut.com, an online seller of corporate surplus materials. The company set the jewel in its 1999 acquisition crown when it acquired upscale auction house Butterfield & Butterfield (now just Butterfields). eBay also expanded down under through a joint venture with Australia-based ecorp (formerly PBL Online). A bit of the bloom came off the rose in 1999 when online service interruptions (one "brownout" in June persisted for 22 hours) revealed a chink in eBay's armor. The company called its top 10,000 users to convey its apologies and pledged to improve its Web site's performance.

In 2000 eBay agreed to develop person-to-person and merchant-to-person auction sites for Disney's GO Network, announced plans to distribute information through wireless products, and joined with banking giant Wells Fargo to offer eBay sellers the option of accepting online checks. Also that year the US Department of Justice began an investigation to determine if eBay has violated antitrust laws in its dealing with competitors. In other legal news, a class-action lawsuit was filed against the company claiming that eBay is an auctioneer and therefore must authenticate the items on its site. (The case was dismissed by a trial court in early 2001; plaintiffs have said they'll appeal.)

Also in 2000 the company expanded into Japan through 70%-owned eBay Japan (computer firm NEC owns the rest) and launched Canadian and Austrian sites. In addition, eBay took an equity stake in Online used-car dealer AutoTrader.com and launched a co-branded used-car auction Web site. It also acquired Half.com, an online trading community with 250,000 registered users.

eBay moved to strengthen its European position in 2001 through the purchase of French Internet auction firm iBazar. It also launched sites in Ireland, New Zealand, and Switzerland. eBay made a deal that year to provide its e-commerce capabilities to Microsoft developers and to add business-to-business auctions to its consumer operations.

Management Team