The Auction Network Making Dominance A Bid For On-Line Dominance - eBay Inc - Statistical Data Included

DSN Retailing Today, May 8, 2000 by Robert Scally

Disney plans to use its considerable media might to promote the new sites, along with a number of special events planned to help celebrate the centennial of Walt Disney's birth and Disneyland's 45th anniversary.

Aside from the Disney deal, eBay has also been taking its auction concepts in other new directions.

In March, eBay announced the launch of its Business Exchange service for the small business market. This new trading marketplace is aimed at businesses with less than 100 employees and offers 34 business related categories that represented nearly 60,000 listings at the time of the launch. Its categories include computer hardware, software, electronics, industrial equipment, office equipment and professional tools.

Tapping into the Internet's business-to-business marketplace could potentially link eBay to a huge source of new revenue.

"With thousands of business related items for sale at any given time, eBay has long been a vibrant marketplace for small businesses," said Brian Swette, coo of eBay.com. "Business Exchange is a natural evolution of the eBay business model, enabling businesses to obtain new, used and refurbished business merchandise, and providing businesses of varying sizes a targeted way to reach buyers of business items."

The business-to-business market worldwide will increase in revenues from $145 billion in 1999 to an estimated $3.95 trillion in 2003, according to the market research firm Gartner Group.

Businesses with fewer than 100 employees generate 34% of all sales of goods and services in the United States and represent approximately 33% of total payroll expenses in the U.S. economy. In the four years between 1994 and 1998, businesses with fewer than 20 employees created 78% of the nation's new jobs, according to figures from the Small Business Administration--cited by eBay as evidence of potential of the small business market.

"To date the business-to-business focus has been predominately on the exchange of goods and services between large businesses, which is a relatively efficient market with few players," Swette said. "Behind the power of the eBay brand, we expect an increasing number of businesses will buy and sell on Business Exchange, our first step in the business-to-business marketplace."

Swette added. "It is this fragmented small business segment where we believe compelling growth opportunities exist."

EBay is moving beyond its consumer-to-consumer beginnings in other ways as well. "They face a lot of the same challenges that other on-line retailers face," said Mike May, senior analyst with Jupiter Comminations, an Internet research and consulting firm. "They want to sell increasingly expensive merchandise, more frequently to a broader base of customers."

EBay is trying to raise the price of its average order in order to grow the business by grow revenue and increase profits. "It's very easy to send one Pok[acute{e}]mon card from one side of the country to another, but they trade for $15 so there's only so much commission revenue they can generate on those kinds of items," May said.