eBay 1999 Annual Report Download - page 15

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In 1999, the Company partnered with Customer Cast, an online customer satisfaction survey company, to enable
eBay to understand and improve on how well it was serving its customers. Overall customer satisfaction for the
Company’s core support email services has improved significantly since launching the survey in July 1999. The
Company offers an online tutorial for new eBay users. In June 1999, the Company opened a new customer
support center in Salt Lake City, Utah. The center has grown rapidly and, by the end of 1999, was handling the
majority of customer support email. In addition, the Company offers the SafeHarboreprogram and has recently
introduced or is developing a number of trust and safety initiatives. See ‘‘—Trust and Safety Initiatives’’ above.
Marketing
eBay’s marketing strategy is to promote its brand and attract buyers and sellers to the eBay service. To
attract users to its website, eBay historically has relied primarily on word of mouth and, to a lesser extent, on
distribution or sponsorship relationships with high traffic websites. Today, the Company employs a variety of
methods to promote its brand and attract potential buyers and sellers. Currently, eBay uses strategic purchases of
online advertising to place advertisements in areas in which the Company believes it can reach its target
audience. The Company also engages in a number of marketing activities in traditional media such as advertising;
print media and at trade shows and other events. eBay also advertises in a number of targeted publications. The
Company continues to benefit from frequent and high visibility media exposure both nationally and locally.
While the Company does not expect the frequency or quality of this type of publicity to continue, the Company
does promote public relations through initiatives such as online eBay/special event tie-ins and executive speaking
engagements. In March 1999, the Company expanded the scope of its preexisting strategic relationship with
AOL. Under the amended agreement, eBay was given a prominent presence featuring it as the preferred provider
of personal trading services on AOL’s proprietary services (both domestic and international), AOL.com, Digital
Cities, ICQ, CompuServe (both domestic and international) and Netscape. eBay will pay $75 million over the
four-year term of the contract. eBay has developed a co-branded version of its service for each AOL property
which prominently features each party’s brand. AOL is entitled to all advertising revenue from the co-branded
sites. Subsequent to year-end, eBay entered into marketing agreements with Autotrader.com and GO.com
Operations and Technology
eBay has a scalable user interface and transaction processing system that is based on internally-developed
proprietary software. The eBay system facilitates the sale process, including notifying users via email when they
initially register for the service, when they place a successful bid, are outbid, place an item for sale, and when an
auction ends. Furthermore, the system sends daily status updates to any active sellers and bidders regarding the
state of their current auctions. The system maintains user registration information, billing accounts, current
auctions and historical listings. All information is regularly archived. Complete listings of all items for sale are
generated regularly. The system regularly updates a text-based search engine with the titles and descriptions of
new items, as well as pricing and bidding updates for active items. Every time an item is listed on the service, a
listing enhancement option is selected by a seller, or an auction closes with a bid in excess of the seller-specified
minimum bid, the system makes an entry into the seller’s billing account. The system sends electronic invoices
to all sellers via email on a monthly basis. For convenience, sellers may place a credit card account number on
file with eBay, and their account balance is billed directly. Sellers that are new to the eBay service are now
required to place a credit card account number on file. In addition to these features, the eBay service also supports
a number of community bulletin board and chat areas where users and eBay customer support personnel can
interact.
The Company’s system has been designed around industry standard architectures and has been designed to
reduce downtime in the event of outages or catastrophic occurrences. The eBay service provides seven-day-a-
week availability, subject to a maintenance period for a few hours during one night per week. eBay’s system
hardware is hosted at the Exodus and Abovenet facilities in Santa Clara, California, which provide redundant
communications lines and emergency power backup. The Company’s system consists of Sun database servers
running Oracle relational database management systems and a suite of Pentium-based Internet servers running
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