INTRODUCTION

A Research Report

On

E-COMMERCE IN INDIA- STUDY ON MARKETING PRACTICES

Submitted for the partial fulfillment of the requirement for the award of Master of Business Administration (MBA) degree from Uttar Pradesh Technical University (UPTU), Lucknow.

INSTITUTE OF PROFESSIONAL EXCELLENCE & MANAGEMENT, GHAZIABADSubmitted TO : Submitted by:

Mr. SHASHANK CHUDHARY OMANSHU SHARMA MBA 4 Semester

Roll No - 1311470021

DeclarationI OMANSHU SHARMA, Roll no 1311470021, student of MBA 4 Semester of Department of Management Studies, Institute of Professional Excellence & Management, Ghaziabad hereby declare that the project report on E-Commerce in India- study on Marketing Process , is an original and authenticated work done by me. I further declare that it has not been submitted else where by any other person in any of the university for the award of any degree Date

OMANSHU SHARMAACKNOWLEDGEMENT

I express my sincere gratitude to my guide Mr. SHASHANK CHUDHARY for his able guidance, continuous support and cooperation throughout my project, without which the present work would not have been possible.

I also like to thank the entire Teaching and administrative staff of INSTITUTE OF PROFESSIONAL EXCELLENCE & MANAGEMENT, GHAZIABAD for the constant support and help in the successful completion of my research project.

Signature

(Student)

TABLE OF CONTENTS

Sr. No

SubjectPage No.

1.Introduction05

2.Critical Review of literature 11

3.Research Objective15

3.Scope of Study16

4.Research Methodology17

5.Introduction to e-bay & Amazon.com19

6.Findings76

7.Analysis83

8.Conclusion86

9.Limitation 89

10.Recommendation 91

11.Bibliography98

INTRODUCTIONIn the emerging global economy, e-commerce and e-business have increasingly become a necessary component of business strategy and a strong catalyst for economic development. The integration of information and communications technology (ICT) in business has revolutionized relationships within organizations and those between and among organizations and individuals. Specifically, the use of ICT in business has enhanced productivity, encouraged greater customer participation, and enabled mass customization, besides reducing costs.

What is e-commerce?Electronic commerce or e-commerce refers to a wide range of online business activities for products and services. It also pertains to any form of business transaction in which the parties interact electronically rather than by physical exchanges or direct physical contact.

E-commerce is usually associated with buying and selling over the Internet, or conducting any transaction involving the transfer of ownership or rights to use goods or services through a computer-mediated network. [3] Though popular, this definition is not comprehensive enough to capture recent developments in this new and revolutionary business phenomenon. A more complete definition is: E-commerce is the use of electronic communications and digital information processing technology in business transactions to create, transform, and redefine relationships for value creation between or among organizations, and between organizations and individuals.Electronic commerce, commonly known as e-commerce or eCommerce, consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily since the spread of the Internet. A wide variety of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at some point in the transaction's lifecycle, although it can encompass a wider range of technologies such as e-mail as well.

A small percentage of electronic commerce is conducted entirely electronically for virtual items such as access to premium content on a website, but most electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail. Almost all big retailers have electronic commerce presence on the World Wide Web.

Electronic commerce that is conducted between businesses is referred to as Business-to-business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-qualified participants (private electronic market).

Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the exchange of data to facilitate the financing and payment aspects of the business transactions.

HISTORY

The meaning of electronic commerce has changed over the last 30 years. Originally, electronic commerce meant the facilitation of commercial transactions electronically, using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These were both introduced in the late 1970s, allowing businesses to send commercial documents like purchase orders or invoices electronically. The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of electronic commerce. From the 1990s onwards, electronic commerce would additionally include enterprise resource planning systems (ERP), data mining and data warehousing.

Perhaps the earliest example of many-to-many electronic commerce in physical goods was the Boston Computer Exchange, a marketplace for used computers launched in 1982. The first online information marketplace, including online consulting, was likely the American Information Exchange, another pre-Internet online system introduced in 1991.

THE WORLD AT A GLANCE

When the Web first became well-known among the general public in 1994, many journalists and pundits forecast that e-commerce would soon become a major economic sector. However, it took about four years for security protocols (like HTTPS) to become sufficiently developed and widely deployed. Subsequently, between 1998 and 2000, a substantial number of businesses in the United States and Western Europe developed rudimentary web sites.

In the dot com era, electronic commerce came to include activities more precisely termed "Web commerce" -- the purchase of goods and services over the World Wide Web, usually with secure connections with e-shopping carts and with electronic payment services such as credit card payment authorizations.

Although a large number of "pure" electronic commerce companies disappeared during the dot-com collapse in 2000 and 2001, many "brick-and-mortar" retailers recognized that such companies had identified valuable niche markets and began to add e-commerce capabilities to their Web sites. For example, after the collapse of online grocer Webvan, two traditional supermarket chains, Albertsons and Safeway, both started e-commerce subsidiaries through which consumers could order groceries online.

The emergence of electronic commerce also significantly lowered barriers to entry in the selling of many types of goods; many small home-based proprietors are able to use the internet to sell goods. Often, small sellers use online auction sites such as eBay, or sell via large corporate websites like Amazon.com, in order to take advantage of the exposure and setup convenience of such sites.

$259 billion of online sales including travel are expected in 2007 in USA, an 18% increase from the previous year, as forecasted by the State of Retailing Online 2007 report from the National Retail Federation (NRF) and Shop.org.

Currently there are 67 Fortune 1000 companies that have ecommerce revenues greater than $10 million. The 5 largest Internet retailers are Amazon, Staples, Office Depot, Dell, and Hewlett Packard. This indicates that the top categories of products sold on the Internet are books, music, office supplies, computers, and other consumer electronics. A list of Fortune 1000 companies ranked by ecommerce revenues can be found on AListNet.E-Commerce in IndiaThe past 2 years have seen a rise in the number of companies' embracing e-commerce technologies and the Internet in India. Most e-commerce sites have been targeted towards the NRI's with Gift delivery services, books, Audio and videocassettes e.t.c.. Major Indian portal sites have also shifted towards e-commerce instead of depending on advertising revenue. The web communities built around these portal sites with content have been effectively targeted to sell everything from event and moues tickets the grocery and computers. The major in this services being Rediff on the net (WWW.rediff.com) and India plaza with started a shopping section after

their highly successful content site generated WEB visitors . Inspite of RBI regulation, low Internet usage e-commerce sites have popped up everywhere hawking things like groceries, bakery items, gifts, books, audio & videocassettes, computer e.t.c. None the major players have been deterred by the low PC penetration and credit card usage in India and have tried to close the success worldwide of online commerce. BPB publication went online selling its complete range of computer books about 2 years ago, it might not have the success of either Amazon.com of Barnes and noble. But they definitely have promised the cause of e-commerce in India with at least 1 to 5 web sites like India bookshop coming online.

This is not to say that the e-commerce scenario has been bad in India as highly successful e-business like baba bazaar and India mart have proved. Indian Banks too have been very successful in adapting EC and EDI Technologies to provide customers with real time account status, transfer of funds between current and checking accounts, stop payment facilities. ICICI Bank, Global TRUST BANK AND UTI-Bank also have put their electronic banking over the internet facilities in place for the up coming e-commerce market speed post also plain to clone the federal express story with online package status at any moment in time . The future does look very bright for e-commerce in India with even the stock exchanges coming online providing a online stock portfolio and status with a fifteen minute delay in prices. The day cannot be far when with RBI regulations we will able to see stock transfer and sale over the Net with specialized services like schwab and e*trade.

Though with security and encryption being proven Technologies for transfer of funds over the Internet, the Indian Government still has problems with 'Digital signatures' and verification processes over the Internet. This combined with RBI norms and regulations has proved to a major handle for e-commerce even though VSNL India's monopolistic ISP does want to jump on to the electronic transaction bandwagon with the advent of private ISP's and India new and positive attitude towards IT and the prime ministers new 'IT policy " the future is very positive in India for doing commerce with a-e.

CRITICAL REVIEW OF LITERATURE

Experts have argued that the low cost of personal computers, a growing installed base for internet use, and an increasingly competitive Internet Service Provider (ISP) market will help fuel e-commerce growth in Asias second most populous nation. Dataquest, an Indian computer magazine, has found that the rise of Indian Internet subscribers will ultimately depend on the proliferation of network computers and Internet cable. Cyber cafes will also continue to provide low-cost access. The internet arm of textile giant, S.Kumars Group (SKG), is developing an extensive network of Internet kiosks to facilitate e-commerce.

Currently, the lions share of current e-commerce revenues is generated from an ever-expanding business to consumer (B2C) rather than business to business (B2B) market. As in the United States, B2C transactions have taken the form of on-line purchases of music, books, discounted airline tickets, and educational resources. In a recent McKinsey-Naccson report, it was estimated that some 80% of e-commerce in India over the next few years could be B2B if the correct environment were developed. The B2B market is expected to increase following greater investment in the Indian telecommunications infrastructure, and once intellectual property rights and legal protections for commerce over the Net are addressed.

There are still enormous challenges facing e-commerce sites in India. The relatively small credit card population and lack of uniform credit agencies create a variety of payment challenges unknown in the United States. Increased distribution of online purchases could be complicated by Indias complex postal system and an uncertain regulatory environment. Nonetheless, everyone from Yahoo, Microsoft, and IBM to local carpet vendors, hotels, and some 300 Indian ISPs are trying to claim a slice of the rapidly emerging Indian e-commerce market.Ajit Balakrishnan, CEO and Founder of Rediff on the Net, Indias first e-commerce site.New Delhi, Aug 24: The revolution in information technology and communication systems will completely change the way companies do business in the new millennium but it could still take 15-20 years before e-commerce catches on in India, according to PM Sinha, chairman of PepsiCo India Holdings.Sinha said the e-business benefits will clearly impact inter- and intra-business communication but large-scale buying and selling through internet in India was still many years away.

In a 45-minute presentation at a seminar on `Communicating in the New Millennium' organized by Genesis PR and International Public Relations Association here on Tuesday, Sinha said the biggest challenge which new technologies and internet pose will be protection of confidential information on product formulations and business strategies which may get leaked to competitors.

"From a CEO's perspective, business-to-business relationships will change, organizations internally will undergo change and media will play a greater role in the next millennium," he said.

Sinha said that from a business manager's perspective, there will be a need to review the market place and organisation and to understand the implications of technology transition on businesses of the next millennium."Consumer relationships will change as consumers will be more informed. They will expect greater transparency and better quality products and service," he said.

Interestingly, Sinha said media will player a greater role in the next millennium. "Media will take on a far greater responsibility and will influence consumers' lifestyle and business relations," he said. The next millennium will see greater and faster information availability and media will be more interactive.

He cautioned the CEOs that though ways of communicating with employees may change, they should not forget that its the human touch which creates teams. He said CEOs could also end up being more intrusive in the functioning of managers and day-to-day affairs as facilities such as video-conferencing and regular interface through latest communication technologies will increase between CEOs and managers.

He said that technology will also make education and training needs undergo a change in corporate but added that CEOs must watch out for informed but untrained users, information theft and incorrect usage of technology."The next millennium will be a `technology for consumer millennium' and will bring in `change'. Whether the change will be for the good or bad will be dictated by our ability to manage change," he concluded.

The following article is from business standard Dated: May 24th 1999

ON CHINA vs INDIA: Both countries are young Internet markets with great potential, though each, of course, is developing in its own way. I believe that in the long term both markets will be very important for eBays marketplace business. What were seeing in both countries, and in fact in every country around the world, is that people seem to have an innate desire to talk and trade. eBay is enabling this in a way that wasnt possible before the Internet.

ON BUSINESS MODELS: Since we are focused on e-commerce, thats the area we know best. What I can tell you is that the Internet is changing the way people buy and sell and, given its rapid growth in India, we see enormous opportunity for buyers and sellers here. Were focused on working with our local community of buyers and sellers to make eBay India an even more vibrant marketplace for trade. We think that with increased broadband penetration, more people will latch on to this concept. The Indian community is enthusiastic about the benefits they find on eBay and as e-commerce grows in India, Im sure eBay will too.

ON THE CHALLENGES: Weve seen revenues from eBays US business accelerate over the past three quarters so theres still upside in that market. But theres no question that our international business has been rapidly growing as well. Now more than half of our registered users and the gross merchandise sales they generate come from outside the US. While our top international marketplaces at the moment are Germany, the UK and South Korea; China and India will undoubtedly become strong e-commerce markets over time. What weve discovered is that the benefits eBay brings are universal.

ON ACQUISITIONS: Acquiring Baazee.com in India, for example, was a perfect fit with our own marketplace business and its been a great success. As the Internet evolves, new opportunities present themselves. With Skype, we saw a way to bring a new dimension, online voice communications, to online commerce. We believe the combination of eBay, Skype and our payment service PayPal will enable us to create an unparalleled e-commerce and communications engine for buyers and sellers around the world.

Whitman said the country was among the top three fastest-growing markets in the world.

(Meg Whitman CEO of e-commerce giant eBay, - 2004), President and

Commenting on IAMAI report, Dr Subho Ray, President, IAMAI, said: "Consumer eCommerce is a major driver of the economy and we are happy that it has achieved a very decent size in India. It is perhaps the only sector which has operated under sometimes hostile and at all other times indifferent policy environment. It is the right time for policy makers to extend its support to this industry as it has done for other so called sunrise industries and create an environment where this industry feels inspired, secured free to innovate"

RESEARCH OBJECTIVE

The Objective of the Report is to map the information required to assess:

1) To understand the concept of E-Commerce.

2) To understand the relevance of E-Commerce in Marketing.

3) To understand E-Commerce with reference to a specific product(eBay, Amazon.com)

Scope of study

What does the future hold for e-commerce? Many would say it is difficult to predict. The forces that determine the web's winners and losers are just taking shape and technological advances could add even more uncertainty. On the downside, some experts predict that it will be increasingly difficult for smaller companies to establish their presence. Public companies and traditional brand name retailers have deep pockets and a name recognition that will make it difficult for smaller sites and mom-and-pop shops to attract customers, thereby forcing them to compete with the big boys. On the Net, it's one big neighborhood. On the upside, nearly all experts believe that overall e-commerce will increase exponentially in coming years. Business to business transactions will represent the largest revenue. Online retailing will also enjoy a drastic growth. Areas expected to go include financial services, travel, entertainment and groceries. And for those considering opening a virtual storefront, forthcoming technology and standards agreements will make it easier to create a site, to protect it against payment fraud, and to share information with suppliers and business partners.

RESEARCH METHODOLOGY

SECONDARY DATA Collection has been undertaken through various journals, Business magazines and other magazines, websites and internet resources.

RESEARCH DESIGN

In order to proceed with the research it is necessary to establish the research objectives.

To accomplish this phase successfully following attributes were required:

Study of Indian e-commerce industry

History of Indian e-commerce industry

To do a extensive research on the marketing strategy of e-bay and Amazon.com.

The possible implication strategies and possible recommendation.

Internet also served as a valuable source of information

Various articles ad Journals were consulted regarding the subject (the Industry ad related environment)

EXTENT OF THE RESEARCH

The research primary objective is to know about the Indian e-commerce industry, and by taking some examples of different money churning companies (which here I focused on e-bay and Amazon) , a possible recommendation and tactics would be suggested.

SCOPE OF THE RESEARCH

The research will provide a possible understanding of Indian e-commerce industry and thus help us in knowing the future of this industry in India.

Amazon and e-bay have taken over the worlds e-commerce market today, it would be quite fascinating to understand their strategies which lead to continuous evolution.

The main objective would be specifically to give a recommendation and suggestion to Indian e-commerce Industry, and if possible some business ideas which could be implicated in the near future.

e-bayFounded in 1995, eBay Inc. connects hundreds of millions of people around the world every day, empowering them to explore new opportunities and innovate together. eBay Inc. does this by providing the Internet platforms of choice for global commerce, payments and communications. Since its inception, eBay Inc. has expanded to include some of the strongest brands in the world, including eBay, PayPal, Skype, Shopping.com, and others. eBay Inc. is headquartered in San Jose, California.

Company NarrativeDespite differences in language, culture and economic status, people around the world are united in their fundamental need to connect, discover and interact.

People seek fulfillment of these fundamental needs in their day-to-day activities. As we explore, learn, shop, share and talk with each other, we are also aspiring toward a more emotionally satisfying experience as human beings.

eBay's original vision was to create the world's first global economic democracy. We saw a "people's market" in which anyone in the world could sell or buy just about anything for a fair price. And today on the eBay marketplace, trust, honesty and efficiency are rewarded more than size or status.

But over the past 10 years, the Internet has expanded, and so has humankind's relationship with it. More and more of our day-to-day activities are conducted online. The Internet continually enhances our ability to connect with the world around us.

And eBay Inc. now plays an even larger role in our lives, as well. It's no longer just about fairness. It's about fostering that human connection through "Social Commerce," which we define as "a powerful combination of commerce, communication and community that enhances traditional buying and selling."

ebay Inc. will make Social Commerce a global reality. We will continue to expand economic opportunity by fostering an emotionally satisfying experience for people around the world to explore, learn, shop, share and talk with each other. We will do this by managing and growing some of the strongest brands in the world, including eBay, PayPal, Skype, Shopping.com, and others.

We will continue to innovate and integrate the technologies and policies that make these day-to-day activities even more trusted, fair and efficient than they are today.

Hundreds of millions of people who use eBay today are already experiencing this new way to connect. eBay Inc. will make it so easy and rewarding to engage in Social Commerce that we believe hundreds of millions of more will participate. And this next generation will bring with them new products, ideas and opportunities for everyone.

Ultimately, eBay Inc. will raise the expectationsand aspirationsof people around the world as they seek to connect, discover and interact with each other.

1Origin and early historyThe online auction web site was founded in San Jose, California on September 3, 1995 by French-born Iranian computer programmer Pierre Omidyar as Auction Web, part of a larger personal site that included, among other things, Omidyar's own tongue-in-cheek tribute to the Ebola virus. The very first item sold on eBay was a broken laser pointer for $14.83. Astonished, Omidyar contacted the winning bidder and asked if he understood that the laser pointer was broken. In his responding email, the buyer explained: "I'm a collector of broken laser pointers.The frequently repeated story that eBay was founded to help Omidyar's fiance trade PEZ Candy dispensers was fabricated by a public relations manager in 1997 to interest the media. This was revealed in Adam Cohen's 2002 book[2] and confirmed by eBay.Chris Agarpao was hired as eBay's first employee and Jeffrey Skoll was hired as the first president of the company in 1996. In November 1996, eBay entered into its first third-party licensing deal, with a company called Electronic Travel Auction to use SmartMarket Technology to sell plane tickets and other travel products. The company officially changed the name of its service from AuctionWeb to eBay in September 1997. Originally, the site belonged to Echo Bay Technology Group, Omidyar's consulting firm. Omidyar had tried to register the domain name echobay.com (the domain has recently been put up for sale) but found it already taken by the Echo Bay Mines, a gold mining company, so he shortened it to his second choice, eBay.com.[4]eBay went public on September 21, 1998, and both Omidyar and Skoll became instant billionaires.The company purchased PayPal on October 14, 2002.

2 Items and servicesMillions of collectibles, appliances, computers, furniture, equipment, vehicles, and other miscellaneous items are listed, bought, and sold daily. In 2005, eBay launched its Business & Industrial category, breaking into the industrial surplus business. Some items are rare and valuable, while many others are dusty gizmos that would have been discarded if not for the thousands of eager bidders worldwide. Anything can be sold as long as it is not illegal or does not violate the eBay Prohibited and Restricted Items policy.[22] Services and intangibles can be sold, too. Large international companies, such as IBM, sell their newest products and offer services on eBay using competitive auctions and fixed-priced storefronts. Regional searches of the database make shipping slightly faster and cheaper. Separate eBay sites such as eBay US and eBay UK allow the users to trade using the local currency as an additional option to PayPal. Software developers can create applications that integrate with eBay through the eBay API by joining the eBay Developers Program.As of June 2005, there were over 15,000 members in the eBay Developers Program, comprising a broad range of companies creating software applications to support eBay buyers and sellers as well as eBay Affiliates.

Controversy has arisen over certain items put up for bid. For instance, in late 1999 a man offered one of his kidneys for auction on eBay, attempting to profit from the potentially lucrative (and, in the United States, illegal) market for transplantable human organs. On other occasions, people and even entire towns have been listed, often as a joke or to garner free publicity. In general, the company removes auctions that violate its terms of service agreement within a short time after hearing of the auction from an outsider; the company's policy is to not pre-approve transactions. eBay is also an easy place for unscrupulous sellers to market counterfeit merchandise, which can be difficult for novice buyers to distinguish without careful studying of the auction description.

eBay's Latin American partner is MercadoLibre.

eBay's rivals include Amazon.com Marketplace.3 eBay Express

In April of 2006, eBay opened its new eBay Express site, which is designed to work like a standard Internet shopping site to consumers with United States addresses (eBay Express). Selected eBay items are mirrored on eBay Express where buyers shop using a shopping cart to purchase from multiple sellers. The UK version was launched to eBay members in mid October 2006 but on 29 January 2008 eBay announced their intention to close the site. The German version was also opened in 2006 (eBay Express Germany).

eBay Specialty SitesIn June of 2006, eBay added an eBay Community Wiki and eBay Blogs to its Community Content which also includes the Discussion Boards, Groups, Answer Center, Chat Rooms, and Reviews & Guides. Ebay has a robust mobile offering, including SMS alerts, a WAP site, and J2ME clients, available in certain markets.

eBay Matchups is a fun website created that allows users to put two items head-to-head and allow visitors to vote on their favorite item.

Best of eBay is a new specialty site to find the most unusual and unique items on the eBay site. Users can also vote on and nominate listings that they find.

eBay Pulse provides information about popular search terms, trends and most watched items.

Holiday Hot List 2007 is a comprehensive list of products that are in demand for the Christmas season.

Auction typeseBay offers several types of auctions.

Auction-style listings allow the seller to offer one or more items for sale for a specified number of days. The seller can establish a reserve price.

Fixed Price format allows the seller to offer one or more items for sale at a Buy It Now price. Buyers who agree to pay that price win the auction immediately without submitting a bid.

Dutch Auctions allow the seller to offer two or more identical items in the same auction. Bidders can bid for any number from one item up to the total number offered.

BiddingFor Auction-style listings, the first bid must be at least the amount of the minimum bid set by the seller. Regardless of the amount the first bidder actually bids, until a second bid is made, eBay will then display the auction's minimum bid as the current high bid. After the first bid is made, each subsequent bid must be equal to at least the current highest bid displayed plus one bidding increment. The bidding increment is established by eBay based on the size of the current highest displayed bid. For example, when the current highest bid is less than or equal to $0.99, the bidding increment is $0.05; when the current highest bid is at least $1.00 but less than or equal to $4.99, the bidding increment is $0.25. Regardless of the amount each subsequent bidder bids, eBay will display the lesser of the bidder's actual bid and the amount equal to the previous highest bidder's actual bid plus one bidding increment. For example, suppose the current second-highest bid is $2.05 and the highest bid is $2.40. eBay will display the highest bid as $2.30, which equals the second-highest bid ($2.05) plus the bidding increment ($0.25). In this case, eBay will require the next bid to be at least $2.55, which equals the highest displayed bid ($2.30) plus one bidding increment ($0.25). The next bid will display as the actual amount bid or $2.65, whichever is less. The figure of $2.65 in this case comes from the then-second-highest actual bid of $2.40 plus the bidding increment of $0.25. The winning bidder pays the bid that eBay displays, not the amount actually bid. Following this example, if the next bidder is the final bidder, and bids $2.55, the winner pays $2.55, even though it is less than the second-highest bid ($2.40) plus one bidding increment ($0.25). However, if the next bidder is the final bidder and bids an arbitrarily large amount, for example $10.00 or even more, the winner pays $2.65, which equals the second-highest bid plus one bidding increment.

For Dutch Auctions, which are auctions of two or more identical items sold in one auction, each bidder enters both a bid and the number of items desired. Until the total number of items desired by all bidders equals the total number of items offered, bidders can bid any amount greater than or equal to the minimum bid. Once the total numbers of items desired by all bidders is greater than or equal to the total number offered, each bidder is required to bid one full bidding increment above the currently-displayed winning bid. All winning bidders pay the same lowest winning bid.

eBay has established detailed rules about bidding, retraction of bids, shill bidding (collusion to drive up the price), and other aspects of bidding. These rules can be viewed on the help pages.

In 2007, ebay began using detailed seller ratings of one to five stars on feedback. eBay labels the detailed seller ratings when filling out feedback as 5 being very reasonable and 4 being resonable, however sellers with any detailed ratings of 4.3 and below are penalized and less visible in its search listings and having all 4.5 DSR rating is required to be a power seller, making the rating of 4 as unreasonable. Profit and transactionseBay generates revenue from a number of fees. The eBay fee system is quite complex; there are fees to list a product and fees when the product sells, plus several optional fees, all based on various factors and scales. The U.S.-based ebay.com takes $0.20 to $80 per listing and 5.25% or less of the final price (as of 2007). The Mexican ebay "mercado libre" takes 1% (price of the article number of articles to be sold), and 4.99% of the final price if there is a successful trade. The UK based ebay.co.uk (ebay.co.uk offices) takes from GBP 0.15 to a maximum rate of GBP 3 per 100 for an ordinary listing and from 0.75% to 5.25% of the final price. In addition, eBay now owns the PayPal payment system which has fees of its own.

Under current U.S. law, a state cannot require sellers located outside the state to collect a sales tax, making deals more attractive to buyers. Although state laws require purchasers to pay sales tax to their own states on out-of-state purchases, most non-professional sellers ignore this requirement. However, most sellers that operate as a full time business do follow state tax regulations on their eBay transactions. However for the tax called Value added tax (VAT), eBay requires sellers to include the VAT fees in their listing price and not as an add-on and thus eBay profits by collecting fees based on what governments tax for VAT. The company's current business strategy includes increasing revenue by increasing international trade within the eBay system. eBay has already expanded to over two dozen countries including China and India. The only places where expansion failed were Taiwan and Japan, where Yahoo! had a head start and also New Zealand where TradeMe, owned by the Fairfax media group is the dominant online auction websiteCustomer supporteBay offers various online help features, including a library of self-help resources, e-mail contact forms and "Live Help," which lets users chat with customer service representatives via instant messaging. Although this is not available to users on international sites such as eBay.co.uk, members of international eBay websites are welcome to utilize eBay.com's Live Help service. Excepting Live Help, eBay does not offer phone support to its customers except to sellers of the rank "Bronze Power Seller" and above, the company's term for members who sell at least an average of $1,000 worth of goods per month on the site, as well as to eBay Store owners.

SWOT ANALYSISStrengths.

eBay is the leading global brand for online auctions. The company is a giant marketplace used by more than 100 million people to buy and sell all manner of things to each other. Pierre Omidyar, a French entrepreneur, was just 28 when he sat down over a long holiday weekend to write the original computer code for what eventually became an Internet megabrand. The brand has grown tremendously over the decade or so since its conception.

The company exploits the benefits of Customer Relationship Management (CRM). Buyers and sellers register with the company and data is collected by eBay on individuals. This is the Business-to- Consumer (B2C) side of their business. However the strong customer relationships are founded on a Consumer-to-Consumer (C2C) business model, where strong interrelationships occurs, for example where buyers and sellers leave feedback for each other, and whereby awards are given to the most genuine of eBayers.

The term 'eBay' has become a generic term for online auctions. Other companies with such a strong position include Hoover for vacuum cleaners and Google for search engines. Today it is common to hear that someone is 'ebaying' or is an 'eBayer,' or that someone is going 'to eBay.'

Weaknesses The organizations work tremendously hard to overcome fraud. However, the eBay model does leave itself open to a number of fraudulent activities. Often the company deals with such activities very quickly. Fraud includes counterfeit goods being marketed to unsuspecting (and suspecting!) eBayers. Other forms of theft could include the redistribution of stolen goods. It should be pointed out that fraud and theft are problems with individuals, not eBay. The weakness is that unscrupulous individuals can exploit the C2C business model.

As with many technology companies, systems breakdowns could disturb the trading activities of eBay. In the past both eBay and its payment brand Paypal have encountered shutdowns and outages. As technology improves such a weakness is less and less of an issue.

Opportunities.

Acquisitions provide new business strategy opportunities. eBay has agreed to buy online telephone company Skype Technologies in a deal reported to be worth $2.6 billion. Skype's software lets PC users talk to each other for free and make cut-price calls to mobiles and landlines. eBay has been buying up firms - including payment system PayPal - in an effort to increase the number of services it offers to consumers and keep its profits growing.

New and emerging markets provide opportunities (Market Development). Countries include China and India. There, consumers are becoming richer and have more leisure time than previous generations. Aspirating consumers are a growing segment in many developing nations.

There are also still opportunities in current markets (Market Penetration). Western Europe and the USA still have many potential consumers that have yet to discover the benefits of online auctions. Remember products have life cycles that eventually come to an end, and such products are ideal for selling and buying on eBay.

Threats As with many of the global Internet brands, success attracts competition. International competitors competing in their domestic markets may have the cultural experience that could give them a competitive advantage over eBay. In fact eBay has found that it has met with other USA-based Internet companies when trading overseas. For example, Yahoo! dominates the Japanese market.

Attack by illegal practices is a threat. As with weaknesses above, the brand is attacked by unscrupulous individuals. For example e-mails are sent to unsuspecting eBayers pretending to come from eBay. Logos and the design of the pages look authentic. However they are designed so that you input private information that the thieves can use to take passwords and identifications. -so beware!

Some costs cannot be controlled by eBay. For example delivery charges and credit card charges. If fuel prices were to rise, the cost is passed on to the consumer in terms of delivery and postal fees. This could make the overall cost of an auctioned item too expensive. Similarly, if a credit card company such as Visa or Mastercard imposed a charge for online transaction, the total cost of the same items would increase with similar consequences.

STRATEGIES FOR SUCCESS: e-bayThe eBay way

In September 1995, Pierre Omidyar created the online auction conglomerate known as eBay. Omidyars vision was to create a virtual marketplace for the sale of goods and services for and by individuals.

To get the business off the ground, Omidyar and cofounder Jeff Skoll enlisted the help of Meg Whitman, branding guru and Harvard Business graduate. Whitman, who formed her management team with senior level executives from industry leaders like Pepsico and Disney, helped create a strong mission for eBay, which was to be in the business of connecting people not selling products to them. Rather, they've created a person-to-person marketplace on the Internet, where sellers list items for sale and interested buyers bid on these items. When eBay first launched, the site immediately became a popular channel for auctioning collectibles, but it soon segued into other markets such as automobiles, business and industrial equipment, and consumer electronics, where the average sales price (ASP) is higher. Increasing the ASP was a critical component of increasing sales for eBay, as eBay's transaction fees are based on a percentage of sales. The higher the ASP, the more money eBay makes on each of the million transactions it facilitates.

EBay has pioneered and internationalized automated online person-to-person auctioning. Previously, such commerce was conducted through garage sales, collectibles shows, flea markets, and classified advertisements. An online marketplace facilitates easy perusing for buyers and enables sellers to list an item for sale within minutes of registering.

Browsing and bidding on auctions is free, but sellers are charged transaction fees for the right to sell their goods on eBay. There are two kinds of transaction fees:

When an item is listed on eBay, a nonrefundable insertion fee is charged based on the seller's opening bid on the item.

Once the auction is completed, a final value fee is charged. This fee generally ranges from 1.25 percent to 5 percent of the final sale price.

EBay also up sells its listing fees with enhanced auction features, including highlighted or bold listings, featured status, and other ways for sellers to increase the visibility of their items.

Once the auction is finished, eBay notifies the buyer and seller via email. Completing the transaction is then up to the seller and the buyer, and eBay collects its final value fee independent of payment and shipment.

A Concise Analysis

Following is a condensed analysis of eBay's business model, where the company's strategy and performance is studied in view of the industry in general.

eBay is the world's largest person-to-person trading platform, and currently is head and shoulders above the competition. This analysis tries to name the most important factors of eBay's success and predict eBay's future based on them.

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.

Adversity

Since eBay does at no point during the auctioning process take possession of either the item being sold or the buyer's payment for the item, user trust is a key issue for eBay. In the traditional model of trading forums the buyer and the seller usually exchange the item for the payment at the same time and place, meaning that trust does not play as big a role. For eBay to be able to convince users to participate, they must deal with the inevitable delay between the buyer buying the item and receiving it, which is not an issue in the tradition model.

To reduce this anonymity and uncertainty of dealing online, eBay introduced Feedback Forums. At the completion of a transaction, users are encouraged to submit compliments or criticism to the trading profile of the trading partner to the Feedback Forum. By looking at the trading partners history of trades, the user will be able to estimate more accurately the trustworthiness of the trading partner.

This is by no means a foolproof way to combat misuse, since users may be tempted to wait until their reputation is good enough that they can start to trade in expensive items before running away with the buyer's money. This argument may mean decreased scalability of eBay in terms of item price, at least for person-to-person auctions more users may be tempted to use traditional modes to decrease their risk.

Competition

Since participating in the auction industry requires only a web presence, at first sight the threat of competition looms heavily over eBay. In fact, two online heavyweights have entered the market, Yahoo and Amazon. Amazon in partnership with the well known auctioneer Sotheby's.

These (and many other) competitors have not only longer operating histories, but larger customer base and greater brand recognition. So why does eBay currenly control more than 80% of the online auction market, with Yahoo and Amazon lagging far behind?

In my opinion, the answer lies in a combination of penny pinching and first mover advantage. eBay utilized their first mover advantage admirably, quickly and constantly building a community of buyers and sellers.

FY 1997FY 1998FY 1999FY 2000

Year-end registered users (000)3412,18110,00022,500

Annual Gross Sales (000)$95$745$2,805$5,450

The network effect is important in this market, since the number of buyers and sellers increases the value of the service for other buyers and sellers. If eBay remains price competitive with its competitors there is minimal incentive for the users to switch between auction sites, meaning it becomes more and more difficult for a competitor to displace eBay's trading community.

A different kind of threat is not a direct competitor but a service which can act as a substitute to auctioning, of which Half.com is a good example. Half.com designed a site which allows people to sell used books, music, movies and games at a fixed price. eBay dealt with that threat by buying the company and experimenting with adding their own fixed-price option to their auction listings.

eBay's Position in the Industry

Because access to the online trade channel (i.e. Internet) is universal, and the physical assets required to setup an auctioning site are all commercially available, barriers to entry in the auctioning industry are minimal. What comes stronger into play is the network externalities effect, as was mentioned before.

Being in a market with huge network externalities makes it extremely difficult for a competitor to get a large share of the userbase, since most users tend to gravitate towards the service which already offers the most users (since it will presumable have the greatest number of offerings.) This tremendous switching cost has the effect of locking in customers to a single auction service provider in this case eBay.

Given network externalities and the relative ease one company can mimick and duplicate another company's innovations online, the main tact rivals can deploy is to lower the price of their service, which is exactly what Amazon and Yahoo have done.

Currently eBay is extending to markets overseas; it is now operating in eight of the top ten countries by online market size outside of the United States. In Asia eBay is in 80% of its largest e-commerce markets. eBay is gaining users 50% faster in Europe than in the United States, and gross merchandise sales are growing 135% faster. The faster it grows, the more securely will it hold its top position in the auctioning service market.

In a very open market, where anyone can enter, the threat of substitute service is greater. An example of which, Half.com, was mentioned before. In fact, the management of eBay believes that fixed-priced trading as is done on Half.com has as much, or even more, potential than eBays core auctioning service. The Future of eBay

eBay has become an online middleman for buyers and sellers in a way which traditional brick and mortar companies cannot touch. Using the web has also brought along with it some challenges, especially regarding trust issues between buyers and sellers.eBay seems to have dealt adequately with those trust issues, since users don't seem to mind and continue to use their service.

eBay is operationally sound, especially considering it is still in its buildup period and it has a business model that scales extremely well. The management has shown that it responds quickly and well, and has been working hard to expand the business without jeopardizing the core business.

Even though eBay's stock may still be overvalued, the business fundamentals are solid and the only risk is if eBay doesn't grow as fast as it has estimated. A conversation with Kevin Pursglovee-bay as we know is one of the leading e-commerce website , it wouldnt be that easy to find their exact strategy they applied , as we know a company faces different trouble every now and then , so I thought it was just feasible to find the answers through the interviews their leading personalities gave .So here is an interview with e-bay leading spokesperson Kevin Pursglove.

Q.1: - How did your company get started selling over the Internet?

A There's a great Silicon Valley story here about a gentleman named Pierre Omidyar. He was working as a software developer here in Silicon Valley, and he had always been fascinated by how you can establish marketplaces to buy and sell goods and services. He had also been fascinated by how you can bring together fragmented audiences. Because of his interest in the Internet, and his background in software, he developed a software program that allowed people, in one spot, to list items of various interest and various degrees. It allowed people to be able to come to that very same site and look at what's for sale and bid on and buy those items. He used the auction process as the method for establishing how merchandise is valued and eventually how it is exchanged between buyer and seller.A key component that prompted him to do this was at the time his fiance -- now wife -- was interested in her Pez collection. She was experiencing a frustration that many collectors have experienced, and that is often times when you're collecting a particular item or you have a passion for a particular hobby, your ability to buy and trade or sell with other people of similar interests is limited by geographical considerations. Or if you trade through a trade publication, often volunteers produce those publications, and the interval between publications can often run several weeks if not months.

All of that was shortened down when Pierre, at the prompting of his wife and interest in Pez dispenser collections, used his interest in fragmented markets and efficient marketplaces as a laboratory for what eventually became eBay.

Q.2: - Where is eBay located, and how many employees does the company have?

A San Jose, California is the headquarters for eBay, and overall we probably have something in the neighborhood of 400 employees now.

Q.3: - What does eBay offer online consumers?

A eBay is the world's largest online trading community. What we're offering our users is an opportunity to come together in one Internet site and be able to buy and trade a wide range of items, including fine collectibles. It allows people to pursue their interests and their passions in the areas of their hobbies and their collectibles.

We have found, since we started the service back in 1995, that it has received great favor among the population. We zoomed from something in the neighborhood of a very small handful of users in the very early stages of 1995 to nearly eight million users as we come to the close of 1999.

Q.4: - What type of store software products are you using on your site, and how do you process your payments? A We mostly use Oracle (Nasdaq: ORCL) software, and payment processing is outsourced.

Q.5: - What has helped to make eBay as successful as it has been? A I think that it really allows people to often times connect with some very fond and special early childhood memories. It could be anything from collecting baseball cards to toy soldiers to Barbie dolls to doll houses, and so forth. It allows people to make that connection and relive a lot of those very vivid and very fond memories that they have from an earlier period of time.

Another factor to consider, I think, is that people really enjoy the experience of the shopping bazaar. They enjoy the hunt. They enjoy looking around for merchandise. The other component is that I believe they really enjoy the competition of the bidding process. Everybody likes to get a bargain, and everybody, I think, in some way, shape, or form, likes to haggle a little bit over the price. Our auction format allows users to do that.

The other thing is that as it has grown, it has become a very practical place to buy and sell collectibles or commodities.

Q.6: - What unique challenges exist for companies in the online auction space?

A I think the first challenge that always confronts an online merchant is the idea of creating trust and confidence among users. There are still a large number of people who do not use the Internet on a regular basis, and there are, of course, a large number of people who have no interest in the Internet at all. Sometimes they stay away from it because they are worried about confidentiality, privacy issues and the broad area of trust and safety. I think that each Internet site that is going to engage in commerce must create an environment of trust and safety that will allow the users to come back over again and over again.

That's one of the biggest challenges facing e-commerce sites right now, creating an environment so that a novice online shopper can come to a particular site and feel comfortable shopping there and feel comfortable that they're getting a good price and a bargain and getting the merchandise that they want.

Q.7: - eBay has suffered a number of outages. What do you attribute this to, and what steps have been taken to prevent outages in the future?

A Quite simply, it's growing pains. We have grown at a phenomenal rate, both in terms of the amount of people who are using eBay, the amount of items that are being listed for sale every single day, and also the amount of transactions that close every single day.

So, with the phenomenal increases in all of those areas, we have attempted to listen to our users and develop and provide new services in addition to the ability to just buy and sell. Those new services include everything from allowing our users to list their items by a photograph in the eBay gallery, the feedback forum, establishing categories that deal with higher priced items and collectibles and automobiles. We've been attempting to provide those services for our customers while at the same time maintaining this level of growth that is just really phenomenal for any business, let alone an Internet business.

At one point -- and that point came in June of this year -- we realized that we were experiencing some growing pains. And part of that was creating new architecture and enlarging our infrastructure to provide the new services and continue to allow us to grow.

Q.8: - Whom does eBay view as its major competitors?

A We've got a very healthy respect for virtually all of the online trading auctions that have been established since eBay started back in September of 1995. They all offer different types of services and unique specialties that attract their users. They all know how much of a challenge it is to operate a site that is as dynamic as eBay.

With that said, clearly, doing $8 million (US$) a day in gross merchandise sales gives us quite a lead over the other competitors. We have looked at some other sites, however, and have noticed that Amazon.com auctions do about $300,000 a day in gross merchandise sales and Yahoo!'s auctions are somewhere in the neighborhood of $480,000 a day. So, in terms of gross merchandise sales, which is the key factor in determining success in the Internet space, they're probably the two closest competitors to eBay.

Q.9: - What unique problems have you encountered, and what has been done to address those problems?

A From time to time, we have found out that individuals are attempting to list items that are in direct violation of our user agreement.

In many cases, we've looked into and investigated the listings and have found out that they are isolated incidents in which an individual user opens an account on eBay for the sole purpose of listing an item, such as the couple in Chicago that were going to put their baby up for auction and the person who put a human kidney up for auction. In each of those cases, they were pranks. But that does generate a good bit of media interest in eBay.

Although we were able to find those individuals and suspend their accounts, suspend them from eBay and remove the items from the auction site, we continue to develop new ideas, new programs and new services, in cooperation and conjunction with the eBay community, that will allow us to reduce those infrequent occurrences to a much greater extent. Earlier this month, we required all new users to eBay, who are going to sell items, to provide us with a credit card.

I think that's going to do two things. It's going to discourage people from coming to the site to engage in fraud or listing pranks. The second thing is that if they get that far, we now have a credit card to assist us in working with the law enforcement community.

Q.10: - What have you done on a regular basis to promote eBay?

A We have had isolated campaigns through radio and print, and we've also done some tradeoffs and some banner ads on other sites. But the really unique thing about eBay is that when you compare us to traditional businesses or other e-commerce sites, we have done very little external promotion to build membership.

eBay is such a unique community that we've been able to build our membership through the word-of-mouth of our users and we've also attracted new members due to the amount of media attention that has come to the site in the past four years. We're very, very fortunate.

Q.11: - What has been your biggest surprise in doing business online?

A The surprises never end. It's a fun place to work because, firstly, the great majority of people who are selling on eBay are really warm, decent, trustworthy and honest people. It's great to see how they interact and show those same characteristics toward their fellow eBay users. We also know that a lot of folks have been creative in how they sell items on eBay.

For example, one of our favorites is the fact that somebody, somewhere along the line, decided to list and eventually sell a used bulldozer on eBay. It went for $23,000.

We also had a person earlier this year that was doing their annual spring cleaning and pulled out the cushions from their sofa. They found pretty much what you would find in your sofa and I would find in my sofa, and that's a discarded piece of gum or two, a crumpled piece of paper, a few scattered notes, a broken pencil, a cap to a ballpoint pen and some loose change. They got it all together and arranged it rather nicely, took a photo, scanned it and listed it with eBay. I think that six or seven days later, whenever the auction expired, the "merchandise" had sold for about $7.00.

Q.12: - What has surprised you most about the impact that your business model has made?

A I think that eBay has had a phenomenal impact. It is probably the best hands-on example of how the Internet has changed commerce. People have been talking about this for a good number of years now. There have been many pundits and experts that have suggested that the Internet is going to change the way that business is conducted in the United States, and then we can certainly see that in a number of ways.

But eBay might be the first example where a commerce site has actually been built around a community where people are exchanging information and exchanging goods, services and merchandise. It's changed people because although we certainly have our share of hobbyists and very serious collectors, we have also learned that people who have established additional brick-and-mortar businesses are slowly moving a lot of that business over to eBay.

We've also heard that people with traditional businesses found that eBay was so enticing, so much fun and in many ways profitable that they created a brand new business for themselves on eBay. They've left behind their profession or careers and started a new business on eBay. I think that those are demonstrations where people have really changed their lives and changed the way that they are doing things and they way commerce is conducted. eBay has made that possible.

Q.13: - What are the traffic levels that you're seeing at your site?

A As of October, we were seeing 1.4 million unique visitors every single day.

Q.14: - Where do you see that traffic coming from?

A It comes from virtually everywhere. It comes from people of all economic backgrounds and from virtually every demographic group. We now have eBay members who are actively buying and selling on eBay and they have registered in 19 different countries. We have seen virtually all age groups on eBay. We have also heard, anecdotally, that many parents spend a Saturday or Sunday morning with their children on eBay, buying and selling goods. You have to have a parent, because on eBay, you have to be 18 years of age to be a member.

Q.15: - Have international auction orders brought up any unexpected challenges? If so, how were those handled?

A We now have trading sites in Canada, the United Kingdom, Germany, New Zealand and Australia, and of course people across the globe can access the core eBay site through the Internet. We're also moving into the Asian market in the early portion of the first quarter next year.

We sit down with people in each of those countries -- market specialists and government specialists -- to understand what particular rules and regulations may apply. I don't want to go into too much detail about that, but we generally try to get a lay of the land to understand how a business may or may not operate or what considerations a business may have to factor in, and then we proceed from there.

Beyond that, we're certainly working on ways to address the different languages and the currency exchanges that take place. For the most part, our sites are set up to allow for people to trade and buy in the appropriate language of the country and deal in the appropriate currency of the country.

Those are certainly challenges that we will face. We do find, to be quite honest, that there is a global marketplace for buying, selling, collecting and engaging in one's hobbies. We think that's going to be a real great opportunity for us as we move into the New Year. When you're getting into the business now of shipping merchandise across international boundaries, it's a little bit more difficult than shipping within your own state or from one state to another. But so far, we've been able to address those challenges and come up with solutions that allow people to join the eBay community and be very active and very efficient at it.

Q.16: - After going online, was there a specific turning point for your business when sales really began to increase?

A We started in September of 1995, and perhaps over the last 18 or 19 months we've really seen phenomenal growth. I'd say 19 or 20 months ago, you were looking at maybe 700,000 to 800,000 registered users who were buying and selling on eBay. Now here it is, in a very short period of time, and we're pushing eight million customers.

Certainly there was a tremendous amount of interest generated around eBay in the fall of last year as more and more reporters became aware of it, its unique features and functions and the unique community that was developing on eBay. There was a tremendous amount of media attention and then that was followed in September of 1998 with a little more attention as eBay offered its IPO.

Q.17: - What can you tell us about your strategic partnerships?

A We have many strategic partnerships, chief among them is America Online. We've created a series of co-branded sites through the AOL properties, and we have a number of arrangements with smaller sites that go back several years as an exchange to encourage people to come into the eBay site.

Q.18: - What, if anything, is eBay considering to improve or expand upon its business model?

A Well, there's nothing that we would want to disclose at this point. But I think you can look back at our track record and see that we, as a fairly small company compared to other large businesses in this country, are very flexible and are able to react to market conditions and to our users in a very rapid manner.

Earlier this year, we purchased Butterfield & Butterfield with the precise goal of creating a new service online for eBay, which is now called eBay Great Collections. It is designed to bring higher valued items to the site. We also purchased a company called Cruise International Auctioneers, which is an automobile auctioneer company in Auburn, Indiana, and we have since created an automobile site on our site that serves two functions. Firstly, it allows people to list automobiles in a separate category, and it also creates a site where collector automobiles can be auctioned off on eBay.

Those are just two examples, and in each case, the idea for those purchases came from our user community because they were sending signals to us that they were interested in listing additional higher priced items. We noticed that the higher priced items were not only being listed, but they were very active in the number of bids placed on them, and then there was a very high percentage of sales taking place in that area.

The same occurred with automobiles. We did not have an automobile category back in January or February. But we did notice that more and more users were listing cars on eBay, and more and more of those cars were being sold. We were prompted to look at that, begin the negotiations with Cruise and then eventually we purchased Cruise. Those are two examples of how our business changed.

Our primary goal and mission is to be an online person-to-person community, and that's really where we're going to stay focused. But we're certainly going to keep our options open.

Q.18: - Where do you see eBay one year from now?

A We're going to stay focused on the personal, online trading environment. We're also going to continue to offer new services to eBay users and to enhance those services that are already available to them. I think that's really going to be our goal. We really believe that we are just at the very beginning of the online trading business, and using the auction process as a format to conduct commerce.

We really see the opportunity to expand our core business. The opportunities over the next year are going to continue to expand into global regions, and also to expand the regional services that we started here within the past couple of months. We now offer about 50 to 55 markets on a regional basis. That's strictly within the United States.

Q.19: - What developments do you foresee over the next year that will have an impact on the world of e-commerce?

A Clearly, people are becoming more and more comfortable with shopping online. A lot of analysts use the holiday season as the benchmarks, and certainly the amount of online shopping this holiday season is predicted to swamp the amount from last year. So, I think more and more people are shopping online and they're getting more and more accustomed to doing that.

I also think you're seeing more and more traditional brick-and-mortar types of businesses making entryways into the Internet space. They're recognizing that this is going to be a critical component of future commerce. It doesn't mean that e-commerce is going to totally replace traditional retail outlets, or traditional commerce. But I think really sharp entrepreneurs and sharp business operators will recognize that the Internet can complement the success that they've experienced in the traditional retail world. So, I think you'll see more and more retail businesses complementing their traditional business by moving into the Internet space.

Q.20: - What advice do you have for beginners who are interested in getting started selling over the Web?

A The one piece of information that I hear from our sellers over and over again is, despite the fact that the Internet can be such an efficient means of commerce, there are still some old principles that carry over from the traditional world. That is, basically, customer service, knowing your product -- being able to develop that product and address concerns that your customers or users may have.

Source : http://www.ecommercetimes.com/story/2127.htmlThe recent breakthrough

eBay's Affiliate Program - New Powerful WidgetIn case you have not heard, eBay recently launched a new powerful affiliate tool for web site publishers. It's called eBay To Go and it is a handy piece of code called a widget that can be embedded and then executed on your web page.

iGoogle, Yahoo, Amazon and YouTube all have widgets, now the worlds largest marketplace has one also. Widgets have been around for years and are often described as a gadget, module or snippet and uses JavaScript or Adobe Flash. Ebay launched their widget in March of 2007 using Adobe Flash. eBay hoped to persuade social network users like MySpace and also bloggers to discuss famous listings like the Harry Reid/Rush Limbaugh letter that recently sold for 2.1 million.

After some BETA testing with the Blog's, eBay is now BETA testing "eBay To Go" as a new tool in their award winning affiliate program. With five different widgets to choose from you are sure to find one that will display dynamic affiliate listings, search results, eBay store items or items from your favorite seller.

Of the five different "eBay To Go" widgets we suggest using the Search Widget. With the Search Widget you can enter your favorite search term or a search term that will match the content of your web page and display live auction items. Search Widgets display 45 small images. A users can then mouse over the small image to take a peak at slightly larger image, then click on the image to preview the auction item without ever leaving your site. Previews include all the standard eBay auction information, such as title, time remaining, current bid, shipping cost, view the sellers ID, view the high bidders ID, number of bids and with the "View Bid" button go to the eBay landing page for that item. At the bottom of the widget users can also carry out a search.

Single Item Widget - This widget displays a single eBay auction. All you need is a current auction item number that can be found on most eBay listing in the upper right hand corner. Great for blog's and web sites and will only be current the life of the auction which is usually 7 to 10 days. After 120 days, all eBay item records expire, using a search term the widget remains active.

Multiple Item Widget - This widget displays up to 10 different eBay auction items, has the same features as the single item and uses a slide show to display the different items. Great for blog's and to promote your own items on a web site.

Seller Widget - Another great tool to promote your items or any sellers items. Will display all items offered by a seller or you can limited the number to 10. Displays a slide show of auction items.

Store Widget - Displays all items by keyword in a seller's store. Items are displayed in a list just as you would see them on eBay. Another widget designed for a seller with a web site.Acquisitions and investments In July 1998, eBay acquired Cincinnati, Ohio based online auction site Up4Sale.com.

In May 1999, eBay acquired the online payment service Billpoint, an unsuccessful competitor to PayPal, which they closed following the 2002 acquisition of the latter.

In 1999 eBay acquired the auction house Butterfield & Butterfield, which it sold in 2002 to Bonhams.

In 1999 eBay acquired the auction house Alando for $43 million, which changed then to eBay Germany.

In June 2000 eBay acquired Half.com for $318 million, which was later integrated with the eBay Marketplace.

In December 2000 eBay acquired the Precision Buying Service portion of Deja.com.

In August, 2001, eBay acquired Mercado Libre and Lokau, Latin American auction sites. eBay also acquired iBazar, a French auction site.

In July, 2002 eBay acquired PayPal, for $1.5 billion in stock.

On January 31, 2003, eBay acquired CARad.com, an auction management service for car dealers.

On July 11, 2003 eBay Inc. acquired EachNet, a leading ecommerce company in China, paying approximately $150 million in cash.

On June 22, 2004, eBay acquired all outstanding shares of Baazee.com, an Indian auction site for approximately $50 million in US cash, plus acquisition costs. Baazee.com subsequently became eBay India.

On August 13, 2004, eBay took a 25% stake in Craigslist by buying out an existing shareholder who was once a Craigslist employee.

In September 2004, eBay moved forward on its acquisition of Korean rival Internet Auction Co. (IAC), buying nearly 3 million shares of the Korean online trading company for 125,000 Korean won (about US$125) per share.

In November 2004, eBay acquired Marktplaats.nl for 225 million. This was a Dutch competitor which had an 80% market share in the Netherlands, by concentrating more on small ads than actual auctions. Marktplaats is the Dutch word for Marketplace.

On December 16, 2004, eBay acquired Rent.com for $415 million in cash (original deal was for $385 million of the amount in eBay stock plus $30 million in cash).

In May 2005, eBay acquired Gumtree, a network of UK local city classifieds sites.

On May 18, 2005, eBay acquired the Spanish classifieds site Loquo.

In June 2005, eBay acquired Shopping.com, an online comparison site for $635 million.

At the end of June 2005, eBay acquired the German language classifieds site Opus Forum.

In September 2005, eBay bought Skype, a VoIP company, for $2.6 billion in stock and cash.

In April 2006, eBay invested $2 million in the Meetup.com social networking site.

In April 2006, eBay acquired Tradera, Sweden's leading online auction-style marketplace for $48 Million.

In August 2006, eBay announced international cooperation with Google. Financial details have not been disclosed by either party.

In February 2007, eBay acquired online ticket marketplace Stub Hub for $307 million.

In May 2007, eBay acquired a minority stake in GittiGidiyor.

In May 2007, eBay acquired the website Stumble Upon for approximately $75 million.

In October 2007 eBay wrote off $1.43 billion of its investment in Skype, admitting that it "drastically overpaid" for the company.

eBay Global Strategy with PayPal and Skype

Yesterday eBay detailed what was talked about at their annual financial analyst conference in San Jose. A lot of what was detailed is stuff we already know. Skype passed 100 million users, PayPal is integrated with eBay, blah blah blah. They talk about the synergies between the three (eBay, PayPal, Skype), but to me Skype is still the odd man out right now. I still can't go to eBay, look up an auction listing and see the seller's Skype status to initiate a call to the seller.

Sure, eBay is in the early stages of this. In fact they do display Skype Me buttons in listings on several international eBay sites, but who cares about the international market? Doesn't eBay know that the U.S. is the end-all-be-all. If it ain't happening here in the U.S. who cares? I'm kidding of course. But seriously, you don't hear too much about Skype buttons on international eBay sites. All we think eBay would be smart to start offering Skype integration on the U.S. eBay site -- even if only in beta. They've owned Skype long enough to be able to do this, so why the long delay? You'd think several billion dollars in Skype's pockets would give them enough cash to hire developers to get the show on the road. Executives demonstrated how the continued focus on innovation enables each of the companys flagship brands eBay, PayPal, and Skype to grow as standalone businesses, participate in larger markets, and create entirely new ones. Management also described how these three businesses are complementing and reinforcing one another, which is leading to entirely new opportunities and monetization models. As examples of this Power of Three, company leaders referenced how the integration of PayPal on eBay increased adoption of the payments service, which made it possible for PayPal to successfully serve merchants selling outside the eBay marketplace. In addition, they cited how eBay and Skype, working together, can accelerate both businesses and also lead to the creation of new ecommerce formats and businesses. Similarly, integration of PayPal and Skype can result in accelerated usage of both offerings.MarketplaceseBay executives summarized the strength of the Marketplaces business, which includes eBay, Shopping.com, and classifieds websites. In the first quarter of 2006, eBays Marketplaces delivered more than $1 billion in revenue for the first time.

eBay North America leaders described its unparalleled value proposition to sellers and buyers, and highlighted its expertise at driving demand through integrated marketing initiatives including paid and natural search. In the past year, eBay has increased the size of its paid-search keyword portfolio more than twenty times to 15 million while simultaneously reducing cost per keyword by 74%. The international e-commerce market is evolving rapidly, and executives discussed how eBay is responding effectively to challenges. In Europe, eBay is on track to be a bigger business than it is in the , while Asia remains eBays fastest growing region with tremendous long-term potential. Executives detailed how eBay will build on its existing strengths and expand its market opportunities by meeting the needs of multi-channel sellers and buyers through a range of tailored shopping experiences and new monetization models. Properties such as eBay Express, ProStores, eBay Stores, and Shopping.com give eBay entry into the market for new, in-season products. Classifieds marketplaces, including Kijiji and Marktplaats.nl, allow eBay to address the local goods and services market. The company previewed eBay Motors 2.0, a new tailored shopping experience that will offer the best of eBay Motors national marketplace combined with a local offering. The continued integration of Skype will enable eBay to build ecommerce platforms based on lead-generation business models.

Payments PayPals management team reviewed the performance of the online payments service, which saw the first quarter of 2006 end with more than 105 million accounts worldwide and $8.8 billion in total payment volume. Executives described the three global business opportunities being pursued by the business: payments on eBay Marketplaces, Merchant Services, and areas beyond online payments.

When PayPal is integrated into an existing eBay marketplace, the company has consistently seen acceleration of growth in both businesses. PayPal plans to use product innovation, continued global expansion, and integration on new eBay properties, such as eBay Express, to grow the business in 2006 and beyond. Merchant Services remains a strategic priority for PayPal, and is experiencing accelerating growth in the . The company is expanding its focus from sole proprietors and small and mid-sized businesses to include large merchants.PayPal executives plan to expand PayPals reach beyond online payments into areas such as financial products, including PayPal Credit, and mobile payments. Leaders recapped the April launch of PayPal Mobile, which offers person-to-person, text-to-buy and text-to-give functionality.

Communications Skype executives outlined their vision to enable the worlds online conversations and the enormous business opportunities that exist for Skype. Company leaders detailed their success to date, highlighting that Skype recently surpassed the 100 million mark for registered users. Rapid product innovation in areas such as Skype Video and Web presence, a robust infrastructure and a thriving ecosystem of hardware and software developers, have created a sustainable leadership position for Skype in the online communications industry.

Company management detailed Skypes existing revenue opportunities from Skype Out, Skype In, voicemail and other services, and discussed several new areas of revenue opportunity for Skype. Communities and content revenue will be driven by innovative new offerings such as avatars, ring tones, and Skype casts, a platform for public discussions on any subject, making Skype the marketplace for the worlds conversations. Deeper integration with eBay and PayPal can increase usage of Skype, and the development of new Skype-powered lead generation-based businesses can enable the company to tap into entirely new addressable markets.

Power of Three Synergies As standalone businesses, eBay, PayPal and Skype have the ability to pursue new market opportunities and capture future growth. Working together, these three businesses can create entirely new opportunities for innovation and expansion, and redouble the strength of the companys leadership position.

Executives highlighted the companys track record of synergy between eBay and PayPal, recapping PayPals success at reducing friction in the payment process between buyers and sellers on the marketplace. PayPal accelerated the velocity of trade on eBay while millions of new users from eBay made PayPal more attractive to merchants of all types. eBay believes that the integration of Skype can create the same dynamic the company saw between eBay and PayPal. Company leaders described how Skype can help facilitate trade on eBay, especially in high involvement and high price categories, such as Motors, Business & Industrial and Real Estate. Early efforts, such as the inclusion of SkypeMe buttons in listings on several international eBay sites, are showing promising results. Officials also laid the groundwork for new integration ideas that are in the concept stage, such as a lead-generation platform. This pay-per-lead offering, powered by Skype, could address ecommerce segments that arent well served by eBays transactional model, such as local services and new cars.

Combining Skype and PayPal also opens up new opportunities. PayPal has already embedded its service into Skype payment flows, making paying for Skype services easy, which can boost Skypes revenues and increase PayPals payment volume, while accelerating adoption of both offerings. Executives previewed several deeper integration ideas between the two businesses. Building Send and Request Money functionality into the Skype client and giving a PayPal Wallet to every Skype user are two concepts that could help cement PayPals position as the preferred way to pay for millions of Skype users. Financial Review eBay Inc. CFO Bob Swan reviewed the companys attractive economic model, characterized by high growth rates on the top and bottom line, strong operating margins, low capital intensity, and strong cash flows. This combination has helped eBay outpace the growth of e-commerce as a whole since 2002. The company intends to leverage its portfolio of businesses to grow faster than e-commerce by extending its current offerings and expanding into new areas beyond ecommerce.

Swan detailed the financial objectives for each of the three businesses. For eBay Marketplaces, growth will be driven by expanding the core business, entering into new in-season product markets and monetizing classifieds platforms, with long-term non-GAAP operating margins for that business expected to range between 35 and 40%. PayPal growth will be driven by adoption on eBay around the globe, Merchant Services, and the expansion beyond online payments, with longterm non-GAAP operating margins expected to range between 20 and 25%. Skypes growth will come from acquiring new users, enhancing the product offering, improving monetization and building out its developer ecosystem. Ultimate longterm non-GAAP operating margins for Skype are also expected to range between 20 and 25%.

The companys long-term goal is to expand overall non-GAAP operating margins above the 33% projected for 2006. The company plans to offset the impact of the growth of PayPal and Skype, which are structurally lower-margin businesses, by delivering active customers at a lower cost, improving the effectiveness of product development, and optimizing efficiencies in the businesses.AMAZON.COMAmazon.com, Inc. is an American e-commerce company based in Seattle, Washington. It was one of the first major companies to sell goods over the Internet and was one of the iconic stocks of the late 1990s dot-com bubble. After the bubble burst, Amazon faced skepticism about its business model, but it made its first annual profit in 2003.

Founded by Jeff Bozos in 1994, and launched in 1995, Amazon.com began as an online bookstore but soon diversified its product lines by adding VHSs, DVDs, music CDs, MP3s, computer software, video games, electronics, apparel, furniture, food, toys, and more.

Amazon has established separate websites in Canada, the United Kingdom, Germany, France, China, and Japan. It ships globally on selected products

HISTORY

In a world where anyone can purchase just about anything online, it can be difficult to start and maintain a business selling goods online. Media such as CDs, books, and movies is a common ware being sold on the Internet. Over the last decade, online stores have come and gone so often, many people scoff at their inception. But Amazon.com is not such a company. It is one of the largest Internet sellers of media in the world today, and has expanded its selections to include clothing, beauty products, house wares, and thousands of other items.

Jeff Bozos founded Amazon.com in 1994. Originally the business was based out of his garage in his Bellevue, Washington home. A busin