BW : New eBay Frontiers

Monday, June 11, 2007

eBay has been buying furiously to move beyond its auction-house identity, and a new raft of services will spread its reach even further…..When Pierre M. Omidyar founded eBay in 1995, the key to e-commerce success was relatively simple: Establish a Web site where Web surfers go to spend time and shop.  By that measure, became one of the Web’s most successful sites, with 233 million registered users looking to auction off items or find bargains.  Indeed, the average eBay user today spends nearly two hours a month on the site–still more than five times what people spend on  Today, though, insisting that everyone visit your solitary site seems so ’90s.  The action is wherever users make it–on a MySpace page, in a YouTube video, in their very own blog.  So where does that leave eBay?  Everywhere, if eBay has its way.  The company is stepping up efforts to break out beyond its own walls.  It’s a big reason why it has spent more than $6 billion over the past five years to buy up such tech assets as Internet-phone operation Skype, online payments service PayPal, ticket reseller StubHub, a host of classified sites around the world, including a 25% interest in Craigslist, and Kurant, whose technology is used to set up online “storefronts” separate from eBay.  How all those seemingly disparate businesses fit together may not be obvious.  Indeed, investor and analyst uncertainty about them explains why eBay’s stock has languished in the past year.  But in essence, eBay Chief Executive Margaret C. “Meg” Whitman is taking a page from Visa International: She wants eBay to be everywhere you want to be.  The new thrust will become clearer beginning on June 11, when eBay kicks off back-to-back three-day conferences for software developers, eBay sellers, and shoppers in Boston.  At the developer conference, the company plans to unveil new services that let buyers shop for and purchase eBay items outside of the core site.  Just one example: eBay will release San Dimas, a product developed with Adobe technology, that lets buyers and sellers download software so they can monitor their auctions and make purchases while working on a separate desktop application.  It’s a fully functional eBay that you can have running on the same computer screen where you are crunching numbers on a spreadsheet.  “It puts eBay’s presence in front of users in a more ubiquitous way,” says John Donahoe, president of eBay Marketplaces and the person charged with expanding the brand globally.

It’s an ambitious strategy for a company that’s become so clearly identified with its core Web site–and which has built up such a loyal following among its customers and merchants.  But eBay executives believe future growth depends on evolving beyond a destination site and into a provider of tools and services that power e-commerce across the Web.  Whitman calls that strategy “the power of three,” referring to eBay’s shopping, payments, and Skype calling services.  PayPal, with revenues last quarter of $439 million, is a leader in the online payments market, second only to credit- card companies.  eBay sees a future where PayPal is the standard payment processor for online transactions everywhere.  Already, roughly 40% of the $11.4 billion in payments processed by PayPal are from non-eBay sites; that part of the business grew 51% last quarter from a year earlier.  Likewise, Skype, which had quarterly revenues of $79 million, is used to connect eBay sellers and buyers, however it is more of a global Web-calling service…..In April, eBay began testing a tool dubbed To Go that enables buyers and sellers to embed software, known as a widget, in a site.  That lets anyone on the site keep an eye on eBay auctions they care about–and monitor how bids are progressing–without actually having to switch over to  It may not seem like a big deal, but consider how much time people spend today on social networks such as MySpace and Facebook, where they can read their friends’ blogs, write their own entries, and share photos, videos, and other images.  Why not shop there as well?…..Grabbing buyers, as well as business, outside of eBay’s core shopping platform will be a significant challenge.  Competition on the Web is fierce, and eBay must contend not just with other e-commerce companies looking for buyers’ and sellers’ business but also with myriad Web entertainment and social sites seeking to grab their time.  “The off-eBay world is far more competitive,” says Derek Brown, an analyst with Cantor Fitzgerald.  “Success there is no certainty.”

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