eBay 2001 Annual Report Download - page 2

To our Stockholders, Partners, Employees and the eBay Community:
Our Best Year Since Inception
In just six years of operation, the eBay marketplace has evolved into an economic phenomenon where
individuals, small businesses, manufacturers and retailers trade more than $30 million worth of goods every
day. In 2001 eBay had its best year since inception, with record results across the board from gross
merchandise sales (the value of goods traded on the site) and new user growth to net revenues and
operating margins.
In early 1998 we had only about 30 employees, and about 300,000 users who generated less than
$200 million in annualized gross merchandise sales, primarily in collectible categories. Just four years later,
our 2,500 employees and 42 million users have worked together to build the world's most abundant and
eÇcient online marketplace. In 2001, eBay's users generated more than $9 billion in gross merchandise
sales in thousands of categories around the world.
The outstanding momentum we achieved in 2001, and carry into 2002, validates our long-term
strategy and serves as a testament to the unique qualities of our business model. As we look back on the
year, four things are very clear:
First, the eBay marketplace is more vibrant than ever. Gross merchandise sales grew by 72% during
2001 to more than $9.3 billion at year-end. During 2001, the US business continued to be our strongest
growth engine, as our focus on expanding the depth and breadth of our categories, along with pricing
formats and end-to-end services, generated more than $7.2 billion in gross merchandise sales in our
original market. Worldwide, registered users grew to more than 42.4 million, an increase of 88% for the
year, from the 22.5 million users registered at year-end 2000. And those users listed more than 423 million
items over the course of the year, a 60 percent increase from the 264 million items listed in 2000.
eBay's technology platform reached major milestones in 2001 as well. We completed the changeover
to a distributed server system, strengthening our platform's overall performance and greatly improving site
availability. In the fourth quarter, we implemented the Ñrst components of our next generation
architecture, which we call V3, to provide even greater scalability, productivity and Öexibility for
innovation. As a result, today we operate what is arguably the most sophisticated web site in the world.
Second, the eBay marketplace has global relevance and appeal. Early on, we felt that eBay could
become a global trading platform, connecting people from all over the globe. Today, eBay and its aÇliates
operate web sites that serve 27 markets around the world, and eBay is available to more than 500 million
Internet users worldwide. More importantly, in the fourth quarter 2001, our international business turned
proÑtable and accounted for 18% of our net revenues, as compared to 7% in the fourth quarter 2000. It is
clear that online trading is as compelling in Korea or Germany as in the United States.
Third, the eBay brand and marketplace are rapidly evolving. No longer perceived as a collectibles-
only destination, eBay has become mainstream. Our users have grown the breadth and depth of the
marketplace, going from 8,000 categories in 2000 to more than 18,000 categories today. Three of our
top-level categories, autos, computers and consumer electronics, are now $1 billion businesses as measured
by gross merchandise sales, and three more, collectibles, books/movies/music, and sporting goods and
memorabilia, could reach the $1 billion milestone over the next twelve months.
This important change in our marketplace has come about through marketing initiatives such as our
holiday campaign, and through structural changes to our platform, such as the introduction of the Ñxed
price format and specialized services. We have created a marketplace that oÅers sophisticated tools for any
kind of seller, from the one-woman business to mega-retailers. And they, in turn, have attracted buyers
from every walk of life.
And last, the company is in a very strong Ñnancial position. From the beginning, our goal has been
to build a proÑtable company that our sellers can trust with their livelihoods, and that philosophy is paying
oÅ today. We ended the year with net revenue growth of 74% over 2000, a four percentage point gross
margin improvement, and a 301% increase in operating income.