eBay 1998 Annual Report Download - page 4

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business-to-business and business-to-consumer transactions, a significant market opportunity exists to apply these
same advantages to facilitate person-to-person trading over the Internet.
The Person-to-Person Trading Market Opportunity
The exchange of goods among individuals and small dealers—person-to-person trading—traditionally has been
conducted through trading forums such as classified advertisements, collectibles shows, garage sales and flea
markets or through intermediaries, such as auction houses. These markets are highly inefficient for the following
reasons:
• their fragmented, regional nature makes it difficult and expensive for buyers and sellers to meet, exchange
information and complete transactions;
• they offer a limited variety and breadth of goods;
• they often have high transaction costs from intermediaries; and
• they are information inefficient, as buyers and sellers lack a reliable and convenient means of setting prices
for sales or purchases.
Despite these inefficiencies, the Company believes that the market for traditional person-to-person trading in the
U.S., based upon estimates of the amounts spent through auctions, classified ads and on collectibles, exceeded $100
billion in goods sold in 1998.
The Internet offers for the first time the opportunity to create a compelling global marketplace that overcomes
the inefficiencies associated with traditional person-to-person trading while offering the benefits of Internet-based
commerce to the person-to-person trading market. An Internet-based centralized trading place offers the following
benefits:
• facilitates buyers and sellers meeting, listing items for sale, exchanging information, interacting with each
other and, ultimately, consummating transactions;
• allows buyers and sellers to trade directly, bypassing traditional intermediaries and lowering costs for both
parties;
• is global in reach, offering buyers a significantly broader selection of goods to purchase and providing
sellers the opportunity to sell their goods efficiently to a broader base of buyers;
• offers significant convenience, allowing trading at all hours and providing continually updated
information; and
• fosters a sense of community through direct buyer and seller communication, thereby enabling interaction
between individuals with mutual interests.
In addition, this community orientation, facilitation of direct buyer and seller communication and efficient access to
information on a particular buyer or seller’ s trading history can help alleviate the risks of anonymous trading. As a
result, there exists a significant market opportunity for an Internet-based centralized trading place that applies the
unique attributes of the Internet to facilitate person-to-person trading.
The eBay Solution
eBay pioneered person-to-person trading of a wide range of goods over the Internet using an efficient and
entertaining auction format and has grown into the largest and most popular person-to-person trading community on
the Internet. The core eBay service permits sellers to list items for sale, buyers to bid for and purchase items of
interest and all eBay users to browse through listed items from any place in the world at any time. eBay offers
buyers a large selection of new and used items that can be difficult and costly to find through traditional means.