eBay 2004 Annual Report Download - page 5

Whether provided by us or our commercial partners, services such as our global payments platform, trust and
safety programs, user veriÑcation, buyer protection and assurance programs, postage and other shipping
services, vehicle inspections, escrow, authentication and appraisal services are all intended to create a faster,
easier and safer trading environment.
Community
Our community of users is the largest and one of the most loyal online trading communities on the
Internet. We have aggregated a signiÑcant number of buyers, sellers, and items listed for sale, which, in turn,
has resulted in an extremely vibrant trading environment. Our sellers enjoy generally high conversion rates and
buyers enjoy an extensive selection of broadly priced goods and services. Key components of our community
philosophy are maintaining an honest and open marketplace and treating individual users with respect. We
seek to maintain the satisfaction and loyalty of our frequent buyers and sellers by oÅering a variety of
community and support features such as announcement and bulletin boards, customer support boards and
personal pages, as well as other topical or category-speciÑc information exchanges. By applying a consistent set
of policies and fees to our community, we have created a level playing Ñeld that lets individuals and businesses
of all types and sizes access broad markets and compete equally.
Our success has been largely dependent upon the success of our community of conÑrmed registered users,
which has grown from approximately two million at the end of 1998 to more than 94 million at the end of 2003
and to more than 135 million at December 31, 2004. In addition, at December 31, 2004, we had approximately
56 million active users, compared to approximately 41 million at the end of 2003. We deÑne an active user as
any user who bid on, bought, or listed an item during the prior 12-month period.
We attract buyers and sellers to our community by oÅering:
Buyers Sellers
‚ Selection ‚ Access to broad markets
‚ Value ‚ EÇcient marketing and distribution costs
‚ Convenience ‚ Ability to maximize prices
‚ Entertainment ‚ Opportunity to increase sales
We focus on three fundamental building blocks to grow the gross merchandise volume and net revenues
derived from the eBay Marketplace. These building blocks are:
‚ Acquisition Ì increasing the number of new registered users on our eBay Marketplace
‚ Activation Ì increasing the number of registered users that become active bidders, buyers or
sellers on our eBay Marketplace
‚ Activity Ì increasing the volume and value of transactions that are conducted by each active user
on our eBay Marketplace
The speciÑc areas of focus in each of our online trading marketplaces depend on the stage of local market
development and other considerations.
eBay Marketplace Value Proposition
We believe our online marketplace makes ineÇcient markets more eÇcient.
Traditional oÉine marketplaces can be ineÇcient because:
‚ They are fragmented and regional, making it diÇcult and expensive for buyers and sellers to meet,
exchange information and complete transactions;
‚ They oÅer a limited variety and breadth of goods;
‚ They often have high transaction costs due to intermediaries; and
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