eBay 2002 Annual Report Download - page 69

privacy issues on eBay or generally over the Internet increase. Market acceptance for recently introduced
services and products over the Internet is highly uncertain, and there are few proven services and products.
In order to expand our user base, we must appeal to and acquire consumers who historically have used
traditional means of commerce to purchase goods. If these consumers prove to be less active than our
earlier users, and we are unable to gain eÇciencies in our operating costs, including our cost of acquiring
new customers, our business could be adversely impacted.
We are dependent on key personnel.
Our future performance will be substantially dependent on the continued services of our senior
management and other key personnel. Our future performance also will depend on our ability to retain and
motivate our other oÇcers and key personnel. The loss of the services of any of our executive oÇcers or
other key employees could harm our business. We do not have long-term employment agreements with
any of our key personnel, we do not maintain any ""key person'' life insurance policies, and our Chief
Executive OÇcer has fully vested the vast majority of her equity incentives. Our new businesses are all
dependent on attracting and retaining key personnel. In addition, employee turnover and other labor
problems frequently increase during the period following an acquisition as employees evaluate possible
changes in compensation, culture, reporting relationships and the direction of the business. Such increased
turnover could increase our costs and reduce our future revenues. Our future success also will depend on
our ability to attract, train, retain and motivate highly skilled technical, managerial, marketing and
customer support personnel. Competition for these personnel is intense, and we may be unable to
successfully attract, integrate or retain suÇciently qualiÑed personnel. In making employment decisions,
particularly in the Internet and high-technology industries, job candidates often consider the value of the
stock options they are to receive in connection with their employment. Fluctuations in our stock price may
make it more diÇcult to retain and motivate employees whose stock option strike prices are substantially
above current market prices.
Our industry is intensely competitive.
Depending on the category of product, we currently or potentially compete with a number of
companies serving particular categories of goods as well as those serving broader ranges of goods. The
Internet provides new, rapidly evolving and intensely competitive channels for the sale of all types of
goods. We expect competition to intensify in the future as the barriers to entry into these channels are
relatively low, as current oÉine and new competitors can easily launch online sites at a nominal cost using
commercially available software or partnering with any one of a number of successful electronic commerce
companies. Our broad-based competitors include the vast majority of traditional department, warehouse,
discount and general merchandise stores, emerging online retailers, online classiÑed services, and other
shopping channels such as oÉine and online home shopping networks. These include most prominently:
Wal-Mart, Kmart, Target, Sears, Macy's, JC Penney, Costco, OÇce Depot, Staples, OÇceMax, Sam's
Club, Amazon.com, Buy.com, AOL.com, Yahoo! Shopping, MSN, QVC and Home Shopping Network/
HSN.com.
We face competition from local, regional and national specialty retailers and exchanges in each of our
categories of products. For example:
Antiques: Bonhams, Christie's, eHammer, Sotheby's, Phillips (LVMH), antique dealers and sellers
Coins & Stamps: Collectors Universe, Heritage, US Mint, Bowers and Morena
Collectibles: Franklin Mint, Go Collect, Collectiblestoday.com, wizardworld.com, Russ Cochran
Comic Art Auctions, All Star Auctions
Musical Instruments: Guitar Center/Musicians Friend, Sam Ash, Gbase.com, Harmony-Central.com,
musical instrument retailers and manufacturers
Sports Memorabilia: Beckett's, Collectors Universe, Mastro, Leylands, ThePit.com, Superior
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