E-bay

Presented By –

Gaurav Gupta
Karthik R
Ramit Bansal
Shubham Jain
Sushant Sharma
Tanuj Shukla
 History

• Pierre Omidyar, from California, USA build

the site.
• The site went online in 1995 with the name
“Auction Web”.
• Acted as an auction site, visitors were
minimum.
• In 1997 the site was renamed “EBay”.
 EBay Today

• Is ranked as the 8th most visited website in

USA.
• The company expanded worldwide
• Over 100 million users
• It makes more than $8 billion annual revenue
• It employees over 15,000 employees
 Selling On EBay
• Anyone can sell on EBay simply by
registering and providing certain information,
personal and financial.
• Sellers can sell in two ways:
• Auction – The highest bidder wins the item
• Buy It Now – A fixed price is given for an item.
• Sellers can sell their items all over the world.
• Sellers pay a fee to EBay when their item is
sold.
 Buying On EBay

• Customers can buy virtually everything from

eBay, from food, electronics, cars or even
houses.
• Customers do not pay any fees to eBay but
they must become registered members first.
• They can order items from all over the world
and delivered to their door.
• Customers can benefit from lower prices
than the prices high streets offer.
 Paying On EBay

• Usually most sellers request online

payments by PayPal which is more secure
for both seller and buyer.
• Some sellers offer other alternatives such as
e-cheques, postal order, credit card payment.
• When payment is received the seller sends
the item to the buyer.
 0 Registration 0 Registration

1 Lists item 3 Bids on item

eBay Trading
8 Auctions
Fees($$) Community

Seller Buyer
Notification of
• 1.26 million registered users
4 Feedback
Winning buyer! 2
on seller
• 800,000+ simulation auctions
5 Feedback 4 Notification of
On buyer Winning bid!

Buyers and sellers leave

7
Feedback on each other

6 Ships item (after exchanging e-mail)

6 Sends payment (after exchanging e-mail)

 eBay Strategies

• Provide an online global market place

• Provide a safe and easy to use environment
• Provide a global standard of payments (PayPal)
• Reduce online fraud.
• Increase the number of new users
• Increase sales from all users including buyers.
• Provide “eBay shops” for sellers with many
products for sale
• Increase the number of categories of items.
• Localize in as many countries as possible.
• Increase and maintain their Brand name
• Provide a reliable system
• Improve fees and search tools
 Advantages of Ebay
• Sellers can sell their products all over the
world
• Buyers can buy from anywhere in the world
• Buyers can shop from home and take
advantage of the low prices.
• More selection and variety of products
• Standard payment system.
• Buyers can order more confident through the
use of feedback system – if a seller has low
feedback score they know they must me
suspicious.
 Disadvantages Of eBay

• Online fraud still occurs.

• PayPal paying system requires a great deal of
personal and financial information which increases
security risks.
• Your personal information such as home address is
given to anyone you buy something from.
• Lack of item information from a specialist such as
the one provided in shops.
• Once a customers commits to buy an item is too
hard to cancel it. Unlike Amazon which is easier to
do so.
• Stolen items can be sold easier and faster by
criminals.
• Clothing items might be fake.
 PayPal

The Online Payment Company.

How The Service Works
 PayPal overview
• 50M user accounts
A growing community
• 5 currencies, 45 countries of users
50
46
• Alternative funding options
40
for buyers who don’t own
35
credit cards or prefer not to
32
use them:
27
23
19
• Bank account transfer 17
14
• eCheck 12
8 10
• Stored balance 7
• Buyer Credit 2 3 5
1

PayPal Member Account Growth through Q2 ‘04

 eBay is a premier growth company …

(Real $M)
1,000,000

100,000
GMV
10,000
STARBUCKS

1,000

100

10

1
11 45 7 10
10 13 15
16 19 2022 2525 28 30 34 35
31 37 40 40
43
Years from incorporation
Note: Sales and GMV adjusted to reflect 2003 dollars. http://www.bea.gov/dn/home/gdp.htm
Source: eBay; US Department of commerce; Bureau of Economic Analysis; BCG analysis.
 … and so is PayPal!

(Real $M)
1,000,000

100,000 TPV
GMV
10,000
STARBUCKS

1,000

100

10

1
11 45 7 10
10 13 15
16 19 2022 2525 28 30 34 35
31 37 40 40
43
Years from incorporation
Note: Sales and GMV adjusted to reflect 2003 dollars. http://www.bea.gov/dn/home/gdp.htm
Source: eBay; US Department of commerce; Bureau of Economic Analysis; BCG analysis.
 How PayPal works

Senders
Senders Receivers
Receivers

Visa/MC, Bank Account

Amex, Discover

PayPal Debit
MasterCard
Bank Account

Another PayPal
eCheck
account

Debit Card Paper Check

(e.g., Switch- Stored Value Stored Value
Solo in UK) Account Account
 Why PayPal works for buyers

• Free to use
• Pay anyone with a credit card or bank account: “online wallet”
• Fast, secure payment – 1 week → 1 minute
• Stores financial information securely to maintains user privacy
• Works cross-border
eCommerce
P2P/remittances

Importance PP competitiveness

Cost

Network
Convenience

Rewards/loyalty points
Security
 Why PayPal works for sellers
• Enables credit card acceptance
• Faster payment = faster inventory turn
• Easy to sign up
• No setup, monthly or gateway fees
• Competitive price with no minimum time commitment
• Fraud protection – 25 bp vs. 110 bp
 Complementary missions

The world’s
The world’s Powering online
online Online payments
marketplace Commerce
standard
 Symbiotic relationship with eBay

• Increases
velocity of trade
• Enhances trust &
safety
• Enables
• Provides the innovation
aggregation
point for small
business
• Drives critical
mass of buyers
& sellers
• Solved counter-
party problem
 PayPal enables global trade

Can be used in 45
countries

PayPal available Currencies Supported: US $, CA $, GBP £, Euro €, JP Yen ¥

PayPal available + Local Bank Acct. Withdrawal Localized: US, UK, DE, FR, BE, CH, NL, AT
 A Global Destiny
PayPal TPV
US$ Billions

$4.42 $4.46

$3.76
$3.07
$2.86
$2.63

$2.12

$1.41 $1.59
$1.10
$1.30
• Milestones
$0.88
$0.63 $0.74
• Multi-currency support in November
2002
• UK site: September 2003
01 01 01 01 02 02 02 02 03 03 03 03 04 04
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 • DE site: July 2004
• FR site: August 2003
% of PayPal revenues from Int'l
• PayPal will continue to support eBay
26.2%
28.7% in key geographies where eBay is
23.2% strong and payments solutions are
21.0% 21.4%
19.6% required

03 03 03 03 04 04
Q1 Q2 Q3 Q4 Q1 Q2
 Can banks profit from “remittances”?
• Yes, but…

• Market competition is fierce

• MTOs have 90% of the “official” market (Western Union, MoneyGram)
• MTOs have robust physical distribution, low access barriers, real time funds transfer
• Internet P2P players (e.g., Yahoo PayDirect)

• Need to overcome the “the first mile problem”

• Establish profitability to serve customers
• Customer-friendly interface
• Customer acquisition
• No real time funds transfer between institutions
• Legal/Regulatory barriers – USA Patriot Act, card associations, NACHA

• Need to overcome the “the last mile problem”

• Receivers are largely “unbanked,” exhibit low financial literacy
• Local bank networks (branches and ATMs) still in development
• FATF
 Possible market strategies
• Banks
• Learn from past experiences – C2it, from Citibank
• Acquire user base – lower barriers to access
• Offer a compelling product
• Compete on price, value

• MTOs
• Business model already works
• Compete on “real time funds transfer”
• Offer a customer-friendly UI, “fast and secure” payment to reach out new
customer segments
• Upgrade product line to offer P2P, “delayed payment” offering

• New technologies mean new opportunities

• Leverage ATM networks
• Use the proliferation of the Internet
 Partnering for success in remittances
PayPal offers
• User network of 50 million, with stored
financial information
• Millions of immigrants
• Convenient, “always on” front end in key
sender countries: US, UK, DE
• Pricing is 50% less than MTO
• Real time funds availability (instant ACH
or credit cards)
• Innovative products
• Trusted payments brand in US
• Secure platform
• Money transmitter license
• Compliant with USA Patriot Act
• International account-to-account transfers
PayPal needs
• Banked senders and receivers, who are
online; OR
• Partner to deliver funds from a user’s
PayPal account; OR
• Physical access points for offline or
unbanked receivers
• Access to customers in receiver countries
• Sponsorship into the ATM network
• Compliance – OFAC, AML, etc
• Trusted payments brand in receiver
countries
Thank You!