Ebay inc is a multinational ecommerce company with its headquarters located in San Jose, California in the United States of America. The company was established by a computer programmer Pierre Omidyar in September, 1995. The company operates an online auction and shopping website that connects individuals and small businesses as they can buy, sell and pay for a diverse range of products and services online through the internet. At present the company has operations in over 30 countries employing 31,500 employees with estimated market capitalisation of $69 billion.
In todays fast moving environment, ‘on-the-go’ shopping has become very popular and ebay also caters for such needs through its iphone and ipad application that is available in 8 languages and 190 countries around the world. Statistics show that in 2012 4.3 million ebay users made their first purchase on mobile through the ebay application.
Ebay currently has a successful business model and strategy which has allowed it to build an online consumer-to-consumer trading community on the internet with over 112 million active users worldwide. Ebay.com is a platform where sellers sell items, buyers search for products they want and place bids while anyone can browse through ebays vast amount of product categories ranging from fashion, electronics, jewellery to home & garden, leisure and cars. This business model does not entail the company to carry any inventory as its operations are carried out by the means of its market mechanism. Ebays revenues come from various sources, one being direct advertising that the company allows. This is basically when other businesses pay a fee to ebay to purchase space on its website to advertise their own business; another source of revenue comes from sellers that put their item listings on ebay as they also have to pay a fee for that. However, the main source of revenue comes from taking a percent of the final price of every successful auctioned item.
Since its establishment in 1995, ebay has constantly expanded its business through strategies such as joint ventures, strategic alliances, mergers and acquisitions with acquisitions being its main growth strategy.This has allowed ebay to enter new markets and seek growth opportunities. The companies acquisition activities started in 1999 when Ebay purchased the largest auction houses in the world known as Butterfield & Butterfield, which took place in April 1999. A month later ebay acquired billpoint which was an online payment processing company.
Two of the most expensive acquisitions in the history of ebay are discussed in some detail below, one of which failed due to some reasons (Skype) and one that is currently a successful purchase for the business (Paypal).
Skype inc is a voice-over-IP and instant messaging service created by Janus Friis and Niklas Zennstrom, with its headquarters in Luxembourg. The service was first released in August 2003 and currently it is available in 38 languages with over 299 million active users worldwide. Its estimated revenues are $740 million as of 2010.
This popular online communication tool allows people to chat to anyone anywhere around the globe. Skype provides its users with three main modes of communication with peers; voice chat makes use of a microphone and allows telephone and conference calls between users, video calling requires a webcam so users are able to see each other, while the more traditional method of instant messaging allows for text chats amongst groups or pairs of users. Skype offers a free service to all its normal users which means that calls to and from other skype members are free of charge however, calls to and from cell phones and landlines are charged at a per-minute rate. Skypes premium members are those who pay a fixed monthly fee for receiving unlimited calls.
The basic requirements and equipment needed to use skype are; a computer or laptop with decent processing speed, keyboard, mouse, speakers,