Jose, Katarina, Patrick, Pete

Strategic Decision
 eBay purchased PayPal for $1.5B in 2002
 Different from other acquisitions at the time
 Based on a proven and workable model
 Significant impact on customer satisfaction
 Faster and safer transactions
 Compatible interfaces
 Immediate Performance
“Our Q4[02] results capped our most successful year
ever," said Meg Whitman, President and CEO of
eBay.

 For the period from October 4, 2002 through December 31,

2002, PayPal recorded net revenues of $74.7 million, driven
by total payment volume of $2.14 billion.
 The company’s PayPal business had 40.3 million total
accounts at the end of Q4-03, a 73% increase from the 23.3
million reported in Q4-02.
eBay’s Strategy Diamond
Arenas
Arenas

Staging
Staging and
and Economic Vehicles
Vehicles
Pacing
Pacing Logic

Differentiators
Differentiators
 eBay’s Value Curve
5

3
Traditional Retailer

1
Integrity Quality Prices Convenience Variety
 eBay’s Value Curve
5

3 Traditional Retailer
Amazon

1
Integrity Quality Prices Convenience Variety
 eBay’s Value Curve
5

Traditional Retailer
3
Ebay
Amazon

1
Integrity Quality Prices Convenience Variety
 Industry Forces
Degree of Rivalry
 Industry Growth

Complementors & Substitutes

Threat of New Entrants

 Industry concentration
 Industry Growth

Buyer Power
 Switching costs
 Current Performance

 Most popular shopping website by traffic

 2010 FYE revenues of $9.2 Billion
 PayPal produced an approximately $1 billion in operating profits
 Overall the purchase of PayPal played a key role in the
survival and growth of the company
Q&A Period