eBay 2005 Annual Report Download - page 40

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A number of companies have launched a variety of services that provide new channels for buyers to find
and buy items from sellers of all sizes. We recently acquired Shopping.com Ltd., an online shopping
comparison site. Shopping.com competes with sites such as Buy.com, Google's Froogle, In-Store.com,
MySimon.com, Nextag.com, Pricegrabber.com, Shopzilla, and Yahoo! Product Search, which offer shopping
search engines that allow consumers to search the Internet for specified products. Similarly, sellers are
increasingly acquiring new customers by paying for search-related advertisements on search engine sites such
as Google and Yahoo!. We use product search engines and paid search advertising to channel users to our
sites, but these services also have the potential to divert users to other online shopping destinations.
We also compete with many local, regional, and national specialty retailers and exchanges in each of the
major categories of products offered on our site. For example, category-specific competitors to offerings in our
"Books/Movies/Music' category include Abebooks.com, Amazon.com, Barnes & Noble, Alibris.com, Blockbuster,
BMG, Columbia House, Best Buy, CDNow, Express.com, Emusic.com, Tower Records, and a host of local
bookstores, music stores and video stores. In addition, many competitors have been successful at establishing online
marketplaces that cater to a particular retail category, such as vehicles, tickets, or sporting goods.
Our international Marketplaces websites compete with similar online and offline channels in each of their
vertical categories in most countries. In addition, they compete with general online e-commerce sites, such as
Quelle and Otto in Germany, Yahoo-Kimo in Taiwan, Daum and Gmarket in South Korea, TaoBao and 1pai,
a partnership between Sina.com and Yahoo! in China, and Amazon in the U.K. and other countries. In some
of these countries, there are online sites that have much larger customer bases and greater brand recognition
than we do, and in certain of these jurisdictions there are competitors that may have a better understanding of
local culture and commerce than we do.
The principal competitive factors for eBay Marketplaces include the following:
‚ ability to attract buyers and sellers;
‚ volume of transactions and price and selection of goods;
‚ customer service; and
‚ brand recognition.
With respect to our online competition, additional competitive factors include:
‚ community cohesion, interaction and size;
‚ system reliability;
‚ reliability of delivery and payment;
‚ website convenience and accessibility;
‚ level of service fees; and
‚ quality of search tools.
Some current and potential competitors have longer operating histories, larger customer bases and greater
brand recognition in other business and Internet sectors than we do. Other online trading services may be
acquired by, receive investments from, or enter into other commercial relationships with larger, well-
established and well-financed companies. As a result, some of our competitors with other revenue sources may
be able to devote more resources to marketing and promotional campaigns, adopt more aggressive pricing
policies and devote substantially more resources to website and systems development than we can. Some of
our competitors have offered services for free and others may do this as well. We may be unable to compete
successfully against current and future competitors. In addition, certain offline competitors may encourage
manufacturers to limit or cease distribution of their products to dealers who sell through online channels such
as eBay, or may attempt to use existing or future government regulation to prohibit or limit online commerce
in certain categories of goods or services. The adoption by manufacturers or government authorities of policies
or regulations discouraging the sales of goods or services over the Internet could force eBay users to stop
selling certain products on our websites. Increased competition or anti-Internet distribution policies or
regulations may result in reduced operating margins, loss of market share and diminished value of our brand.
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