Carter 陈春慧 ys0581213
Ebay.com is now the biggest online auction company and the success of Ebay.com stimulates me to have a study on this unique e-commerce company, which has a positive income even at the very beginning. The study is carried out from the aspects of the management team, the business mode and finance analyses. Based upon this, the study further discusses the possible advantage of the merge between eBay and Amazon.
1. The History of eBay: management team
eBay was founded in Pierre Omidyar's San Jose living room back in September 1995. It was from the start meant to be a marketplace for the sale of goods and services for individuals. In 1998, Pierre and his cofounder Jeff Skoll brought in Meg Whitman to sustain the success. Meg had studied at the Harvard Business School and had learned the importance of branding at companies such as Hasbro.
Meg culled her senior staff from companies such as Pepsico and Disney, created an experienced management team with an average of 20 years of business experience and built a strong vision for the company -- that eBay is a company that's in the business of connecting people, not selling them things.
They quickly shed the image of only auctioning collectibles and moved into an array of upscale markets where the average sale price (ASP) is higher. ASP is a key metric in determining eBay's transaction fees, so increasing the ASP became an important item. By forging partnerships with namebrands such as GM, Disney and Sun, eBay has managed to do exactly that. Sun has sold $10 million worth of equipment and it now lists between 20 and 150 items per day.
We can see that the management team of eBay is of high educational level and they are professional at their academic fields. The management team clarifies the vision of the company, which serve the fundamental role in strategic management.
2. The Business Model
eBay has built an online person-to-person trading community on the Internet, using the World Wide Web. Buyers and sellers are brought together in a manner where sellers are permitted to list items for sale, buyers to bid on items of interest and all eBay users to browse through listed items in a fully automated way. The items are arranged by topics, where each type of auction has its own category.
eBay has both streamlined and globalized traditional person-to-person trading, which has traditionally been conducted through such forms as garage sales, collectibles shows, flea markets and more, with their web interface. This facilitates easy exploration for buyers and enables the sellers to immediately list an item for sale within minutes of registering.
Browsing and bidding on auctions is free of charge, but sellers are charged two kinds of charges:
When an item is listed on eBay a nonrefundable Insertion Fee is charged, which ranges between 30 cents and $3.30, depending on the seller's opening bid on the item.
A fee is charged for additional listing options to promote the item, such as highlighted or bold listing.
A Final Value (final sale price) fee is charged at the end of the seller's auction. This fee generally ranges from 1.25% to 5% of the final sale price.
eBay notifies the buyer and seller via e-mail at the end of the auction if a bid exceeds the
seller's minimum price, and the seller and buyer finish the transaction independently of eBay. The binding contract of the auction is between the winning bidder and the seller only.
From the business model, we can see the core competence of eBay.com， which lies in the internet auction. For small business owners, Internet auctions can be a cost-effective way to test-market products in an online sales environment and to liquidate dated or overstocked
merchandise. Ebay has developed a set of business model for auction and what’s more important, a platform for the auction practicing. Ebay has developed a set of system to ensure the business transaction, which is a manifestation of core competence.
3. Financial Analyses
3.1 Net sales and profit analyses.
Year
1996 1997 1998 1999 2000 2001
Net
Profit
Sales 32051 25248 41370 32966 86129 70035 224724 167136 431424 335971 748821 614005
Net Sales &Profit8000007000006000005000004000003000002000001000000199619971998199920002001Net SalesProfit
We can see that the curves of net sales and profit are positive, which means that both the net sales and profit are favorable
3.2. Total number of registered users and gross merchandise sales analyses.
Year users population sales
1996 41 7 1997 341 95 1998 2181 745 1999 10006 2805 2000 22472 5422 2001 42400 9320
User population & Sales450004000035000300002500020000150001000050000199619971998199920002001userspopulationsales
Like the analyses of part 3.1, the total number of registered users and gross merchandise sales analyses is O.K.
3.3 Ratio of marketing/revenue and Ratio of Product cost/Revenue analyses
Product Ratio of Ratio of
marketi
year Revenue develop marketing/revProduct
ng cost
cost enue cost/Revenue
1996 25248 13139 28 0.5204 0.0011 1997 32966 15618 831 0.4738 0.0252 1998 70035 35976 4640 0.5137 0.0663
1999 2000 2001
167136 335971 614005 96239 166767 253474 24847 55863 75288 0.5758 0.4964 0.4128 0.1487 0.1663 0.1226
0.70000.60000.50000.40000.30000.20000.10000.0000199619971998199920002001 At the year 1999 and 2000 we can see the decline of the two ratios, mainly because of the smash of IT industry.
3.4Net income with total number of registered users and number of items listed.
Ratio ofmarketing/revenueRatio of Productcost/Revenuryear Net income Users
1996 3338 1997 7061 1998 7273 1999 9567 2000 48294 2001 90448
Items
41
341 2181 10006 22472 42400
289 4394 33668 129560 264653 423000
450000400000350000300000250000200000150000100000500000199619971998199920002001
We can see that the three index are all rising between the year 1996 and 2001.
3.5 Ratio of sales/net income
Net incomeUsersItemsyear Net income Sales
1996 3338 1997 7061 1998 7273 1999 9567 2000 48294 2001 90448
7
95 745 2805 5422 9320
Ratio of sales/net income
0.0021 0.0135 0.1024 0.2932 0.1123 0.1030
Ratio of sales/net imcome0.35000.30000.25000.20000.15000.10000.05000.0000199619971998199920002001
Ratio ofsales/netimcome3.6 Ratio of operation income/sales and ratio of gross profit/ sales analyses.
year
1996 1997 1998 1999 2000 2001
0.90000.80000.70000.60000.50000.40000.30000.20000.10000.0000-0.1000
operating income
6420 9983 12765 -3373 34994 140426
gross profit sales
25248 32966 70035 167136 335971 614005
32051 41370 86129 224724 431424 748821
Ratio of operation income/sales
Ratio of gross profit/ sales
0.2003 0.7877 0.2413 0.7969 0.1482 0.8131 -0.0150 0.7437 0.0811 0.7787 0.1875 0.8200
Ratio of operationincome/salesRatio of grossprofit/ sales199619971998199920002001Year
current assets
92483 969825 1182403 1678529
1998 1999 2000 2001
current
inventories Current Ratio
liabilities null 0 #VALUE!
115696 0 8.38252835 168643 0 7.011278262 249391 0 6.730511526
Quick Ratio #VALUE!
8.38252835 7.011278262 6.730511526
3.7 Conclusions
From the financial analyses of eBay, we can conclude that eBay is doing well in auction and I believe eBay will have a bright future, for the previous studies show favorable results.
4．Further Analyses
4.1 Is eBay a retailer?
From the precious analyses, we know that the core competence of eBay lies in auction and I deem auction business will remain the most important in eBay business. eBay provide a platform
for the retailers and auction is and will be the main business. So eBay is not a retailer.
4.2 The merge of Amazon and eBay
I think the merge of Amazon and eBay makes sense: Amazon gets cash, eBay gets technology. Timing appears to be apropos: both companies have seen the value of their stocks plunge, and each could use a boost to its image and business model.
Amazon.com expects a strong revenue boost during the holiday shopping season (due in part to reduced competition after the failure of many retail dot.coms in recent months), which, in turn, could strengthen its bargaining power in eventual merger negotiations.
Regardless, a merger could suit Amazon.com just fine. It would give the retailer an instant leadership position in the online person-to-person (P2P) trading business, where it has tried, rather unsuccessfully, to gain market share for the past two years.
The union would also give Amazon.com a much-needed dose of positive cash flow -- eBay has been profitable practically since its inception in 1995 -- which would help alleviate recent investor jitters about Amazon.com's high debt load of $2.1 billion. As for eBay, a merger would give the company instant business diversification and a chance to reinvigorate top-line growth. Also, a union would give eBay a technological boost and allow the firm to tap a wide array of Amazon.com's coveted online commerce patents, including 1-Click ordering.
Besides individual gains, analysts say a combined Amazon.com-eBay could muster the power of two extremely popular Internet brands to establish a leadership position in nascent e-commerce markets overseas, like the United Kingdom, Germany, and France, where the \"first-to-market\" factor would still give the merged company a competitive privilege.
5. Conclusion
The miracle of eBay has set a successful model of online company. And we can see from the comparison of eBay and Amazon, they have similarity and difference in business model as well as their value delivery. But as a whole, I conclude that if we can keep the core competence of eBay and give the privilege to Chinese Culture like YiQu does, the company will be a great success.
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