eBay 2000 Annual Report Download - page 17

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Buyer Protection Policy. Half.com reserves the right to suspend the membership of any Buyer or Seller
that Half.com feels has attempted to commit fraud by misusing the Half.com Buyer Protection Policy for his
or her own personal gain. Half.com also reserves the right to reduce a Seller's account balance, withdrawal
from a Seller's ACH account or charge the Seller's credit card in order to recover damages related to fraud. In
addition, abuse of this policy is a criminal oÅense and violators will be prosecuted to the fullest extent of the
law.
Marketing
eBay's marketing strategy is to promote its brand and attract buyers and sellers to the eBay and Half.com
services. To attract users, eBay historically has relied primarily on word of mouth and, to a lesser extent, on
distribution or sponsorship relationships with high traÇc websites. Today, eBay 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 eBay believes it can reach its target audience. eBay also
engages in a number of marketing activities in traditional media such as radio, broadcast and national and
local TV advertising, print media, trade shows and other events. eBay also advertises in a number of category-
speciÑc publications. eBay continues to beneÑt from frequent and high visibility media exposure both
nationally and locally. While eBay does not expect the frequency or quality of this type of publicity to
continue, eBay promotes public relations through initiatives such as online eBay/special event tie-ins and
executive speaking engagements. In March 1999, eBay expanded the scope of its preexisting strategic
relationship with AOL. Under the amended agreement, eBay is given a prominent presence featuring it as the
preferred provider of online 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.
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 status of their current auctions. The system maintains user registration information, billing
accounts, current auctions and historical listings. All information is regularly archived for record-keeping and
analysis purposes. 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-speciÑed 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 Ñle 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 Ñle. 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.
Half.com's technology is similarly scalable and multi-purpose. Also based on internally-developed
software, the Half.com system facilitates the listing process and sale transaction for Ñxed price items in select
categories including books, movies, music and video games. The Half.com system allows a seller to list
inventory easily by providing the UPC, ISBN (or other similar product identiÑcation code), the price at which
the seller desires to sell the item and the quality of the item. All other product information and descriptions are
provided on the Half.com site. The Half.com system notiÑes a seller when a buyer places an oÅer, asks the
seller to conÑrm within two days and, if the sale is accepted, ship the item within one day. The Half.com
system further facilitates transactions by enabling a buyer's credit card or bank account to be debited (at the
member's choice), and enabling a seller's bank account to be credited or sending the seller a check (again, at
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