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Archive for Monday, July 9, 2001

In shaky world of e-commerce, eBay stands strong

July 9, 2001

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— While executives at nearly every Internet company have pulled their hair out in the past year, eBay Inc. has quietly gone about its business of making money.

Now with dot-com startups failing all around, eBay unabashedly talks about becoming the de facto operating system for Internet commerce.

With key partnerships and overseas growth, executives think revenue can soar from $431 million last year to $3 billion by 2005, which would require an average annual growth rate of 50 percent.

Analysts praise just about everything about eBay the company's conservative investing strategy, its decentralized management structure and above all, its pile of profits. Even the lawsuits that have tried to hold eBay liable for fraud on the site have gone the company's way.

"Looking at where the company was two years ago, and where they are today, they've exceeded expectations across the board," said Jeetil Patel, an analyst with Deutsche Bank Alex. Brown.

"It's probably the best model suited for the Internet today. They've executed in a tough environment for the Internet and e-commerce, but also in a difficult economic climate as well."

It is especially hard to discount such optimism when you consider that eBay barreled into pop culture in the late 1990s with hardly any advertising.

The effects have been notable. Amy Bruckman, an assistant professor of computing at Georgia Tech, told a recent technology conference at Santa Clara University that eBay "makes us a less wasteful society."

The site counts 29.4 million registered users, who pay between 30 cents and $3.30 to list an item for sale, plus up to 5 percent of the final sale price and optional extra fees for better placement on the site.

But just about everyone in eBay's bright and sleek headquarters says calling it an "auction site" is very yesterday they like to think of it as an online Nasdaq for merchandise. They point to eBay's increased fixed-price and buy-it-on-the-spot options.

Analysts also expect eBay to soon begin offering sellers "storefronts" entire pages to themselves for a fee, of course.

The company hopes to reach still more potential buyers by linking its trading platform to other sites and expanding overseas in many cases by buying competitors that copied the eBay model. There are already 12 eBay sites geared to other countries.

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