eBay 1999 Annual Report Download - page 6

PART I
Item 1: Business
This Annual Report on Form 10-K contains forward-looking statements based on our current expectations
about our company and our industry. You can identify these forward-looking statements when you see us using
words such as ‘‘expect,’’ ‘‘anticipate,’’ ‘‘estimate’’ and other similar expressions. These forward-looking
statements involve risks and uncertainties. Our actual results could differ materially from those anticipated in
these forward-looking statements as a result of the factors described in the ‘‘Risk Factors’’ section of
Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this
report. We undertake no obligation to publicly update any forward-looking statements for any reason, even if
new information becomes available or other events occur in the future.
The Company
eBay Inc. (‘‘eBay’’ or the ‘‘Company’’) is the world’s largest and most popular personal trading community
on the Internet, based on the value of goods traded on the eBay service.
eBay, was formed as a sole proprietorship in September 1995, incorporated in California in May 1996 and
reincorporated in Delaware in April 1998. eBay pioneered online personal trading by developing a Web-based
community in which buyers and sellers are brought together in an efficient and entertaining format to buy and
sell items such as automobiles, collectibles, high-end or premium art items, jewelry, consumer electronics and a
host of practical and miscellaneous items. The eBay service permits sellers to list items for sale, buyers to bid on
items of interest and all eBay users to browse through listed items. The Company’s service is fully automated,
topically arranged, intuitive and easy to use. From December 31, 1998 to December 31 1999, the number of
registered eBay users grew from approximately 2.1 million to over 10 million. eBay users listed over 41 million
items for sale during the fourth quarter of 1999, up from 13.64 million items in the fourth quarter of 1998. As of
December 31, 1999, the Company had over 3.0 million items listed in over 3,000 categories. Browsers and
buyers can search listings for specific items or search by category, key word, seller name, recently commenced
auctions or auctions about to end. The eBay pricing format based on auctions creates a sense of urgency among
buyers to bid for goods and creates an entertaining and compelling trading environment. eBay also provides
buyers and sellers a place to socialize and to discuss topics of common interest. This compelling trading
environment fosters a large and growing commerce-oriented online community.
Industry Background
Growth of the Internet and Online Commerce
The Internet has emerged as a global medium enabling millions of people worldwide to share information,
communicate and conduct business electronically. International Data Corporation (‘‘IDC’’) estimated that the
number of Web users would grow from approximately 150 million worldwide in 1998 to approximately
500 million worldwide by the end of 2003.
The growing adoption of the Web represents an enormous opportunity for businesses to conduct commerce
over the Internet. IDC estimated that commerce over the Internet would increase from approximately $40 billion
worldwide in 1998 to approximately $900 billion worldwide in 2003.
The Personal Trading Market Opportunity
eBay’s trading platform has historically offered the exchange of goods among individuals and small
businesses, competing with classified advertisements, collectibles shows, garage sales, flea markets and other
venues such as auction houses. As eBay’s service has evolved, its applicability has expanded to broader
categories of items, and to a broader and more global user base. As a result, the Company’s product mix has
begun to shift from primarily collectibles to practical everyday items, such as household goods, office equipment,
1