exploring new formats for example through the acquisition in
2004 of mobile.de in Germany and Marktplaats.nl in the
Netherlands, as well as investment in craigslist, the US-
based classified ad format. Another acquisition is Rent.com,
which enables expansion into the online housing and apart-
ment rental category. Finally marketplace growth is achieved
through delivering specific sites localised for different geog-
raphies as follows. You can see there is still potential for
greater localisation, for example in parts of Scandinavia,
Eastern Europe and Asia.
Localised eBay marketplaces:
Australia India South Korea
Austria Ireland Spain
Belgium Italy Sweden
Canada Malaysia Switzerland
China The Netherlands Taiwan
France New Zealand United Kingdom
Germany The Philippines United States
Hong Kong Singapore
In its SEC filing, success factors eBay believes are impor-
tant to enable it to compete in its market include:
ability to attract buyers and sellers;
volume of transactions and price and selection of goods;
customer service; and
brand recognition.It also notes that for its competitors, other factors it
believes are important are:
community cohesion, interaction and size;
system reliability;
reliability of delivery and payment;
web site convenience and accessibility;
level of service fees; and
quality of search tools.This implies that eBay believes it has optimised these
factors, but its competitors still have opportunities for
improving performance in these areas which will make the
market more competitive.Risk management
The SEC filing lists the risks and challenges of conducting
business internationally as follows:
regulatory requirements, including regulation of auction-
eering, professional selling, distance selling, banking,
and money transmitting;CASE STUDY 1Consolidated Statement of Income Data Year Ended December 31
2000 2001 2002 2003 2004
(In thousands, except per share amounts)
Net revenues $ 431,424 $ 748,821 $ 1,214,100 $ 2,165,096 $ 3,271,309
Cost of net revenues 95,453 134,816 213,876 416,058 614,415
Gross profit 335,971 614,005 1,000,224 1,749,038 2,656,894
Operating expenses:
Sales and marketing 166,767 253,474 349,650 567,565 857,874
Product development 55,863 75,288 104,636 159,315 240,647
General and administrative 73,027 105,784 171,785 302,703 415,725
Patent litigation expense – – – 29,965 –
Payroll tax on employee
stock options 2,337 2,442 4,015 9,590 17,479
Amortisation of acquired
intangible assets 1,433 36,591 15,941 50,659 65,927
Merger related costs 1,550 – – – –
Total operating expenses 300,977 473,579 646,027 1,119,797 1,597,652
Income from operations 34,994 140,426 354,197 629,241 1,059,242
Interest and other income, net 46,337 41,613 49,209 37,803 77,867
Interest expense (3,374) (2,851) (1,492) (4,314) (8,879)
Impairment of certain
equity investments – (16,245) (3,781) (1,230) –
Income before cumulative effect
of accounting change, income
taxes and minority interests 77,957 162,943 398,133 661,500 1,128,230
Provision for income taxes (32,725) (80,009) (145,946) (206,738) (343,885)
Minority interests 3,062 7,514 (2,296) (7,578) (6,122)
Income before cumulative effect
of accounting change 48,294 90,448 249,891 447,184 778,223
Cumulative effect of accounting
change, net of tax – – – (5,413) –
Net income $ 48,294 $ 90,448 $ 249,891 $ 441,771 $ 778,223