eBay 2000 Annual Report Download - page 8

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‚ they may oÅer a limited variety or breadth of goods;
‚ they often have high transaction costs; and
‚ they are often information ineÇcient, as buyers and sellers lack a reliable and convenient means of
setting prices for sales or purchases.
The eBay Online Trading Platform
The core eBay online trading platform permits sellers to list items for sale, buyers to bid for and purchase
items of interest and all eBay users to browse through listed items from any place in the world at any time. The
eBay website oÅers buyers a large selection of new and used items that can be diÇcult and costly to Ñnd
through traditional distribution channels and oÅers sellers one of the most eÇcient and vibrant online
distribution channels available. The Half.com Ñxed price platform permits sellers to list books, recorded
music, movies (VHS and DVD) and video games for sale, buyers to purchase items at a price pre-established
by the seller, and all Half.com users to browse through listed items from any place at any time.
The eBay service was originally introduced in September 1995 to create an eÇcient forum for individuals
to trade with one another. Since its beginning as a grassroots online trading community, eBay has primarily
attracted buyers and sellers through word of mouth and by providing buyers and sellers a place to socialize,
discuss topics of common interest and ultimately to trade goods with one another. The number of categories
under which eBay users list goods for sale has grown from 10, when eBay was Ñrst introduced, to more than
8,000 as of December 31, 2000. The main categories on eBay.com currently include, antiques and art, books,
movies, music, coins and stamps, collectibles, computers, dolls, dollhouses, jewelry, photo and electronics,
pottery and glass, real estate, sports, toys and miscellaneous items (""everything else''). Specialty marketplaces
have also been added to serve the specialized needs of buyers and sellers, for example eBay Motors was
developed to serve the automotive marketplace, including vehicles, parts and accessories; eBay Premier was
developed to leverage the premium art and collectibles marketplace in conjunction with ButterÑelds and
Half.com is focused on providing a Ñxed-price trading environment, initially for books, music, videos and video
games.
The principal reasons for eBay's success to date are as follows:
Largest Online Trading Forum. Unlike other commerce trading forums, eBay has aggregated a critical
mass of buyers, sellers and items listed for sale, which in turn has resulted in an extremely vibrant and robust
trading environment. eBay sellers enjoy generally high sell-through or conversion rates and buyers enjoy an
extensive selection of broadly priced goods and services. At December 31, 2000, eBay had over 22 million
registered users, oÅered more than 8,000 product categories and listed more than 6 million items for sale in an
auction-style format and more than 8 million items for sale in Ñxed-price format on Half.com.
Compelling Trading Environment. eBay has created a distinctive trading environment by utilizing
entertaining pricing formats, establishing procedural rules and promoting community values that are designed
to facilitate trade and communications between buyers and sellers. The trading environment's eÇciency is
illustrated by the limited need for eBay to intervene or play a signiÑcant role in the trading process. The
auction pricing format found on eBay creates a sense of urgency among buyers to bid for goods because of the
uncertain future availability of unique items on the website. Similarly, by accepting multiple bids at increasing
prices, the auction pricing format provides sellers a more eÇcient means of obtaining a fair market price for
their products. While the dynamic and exciting auction format appeals to certain users and is particularly
appropriate for unique and other hard-to-value items, many mass-market product categories are more
eÅectively merchandised in a Ñxed price format, and certain users prefer the immediacy and convenience of a
Ñxed price purchase. Our acquisition of Half.com in July 2000, and the implementation of our ""Buy it Now''
Ñxed price feature on eBay.com, have expanded our marketplace by attracting a new consumer demographic
and accelerated the velocity of trading by reducing the length of time between listing an item and completing
the transaction.
Trust and Safety Programs. eBay has developed a number of programs designed to make users more
comfortable dealing with an unknown trading partner over the Web. eBay's Feedback Forum encourages every
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