"I got it on eBay" has barreled its way into the lexicon of the new millennium, placing a cyber-grin on the corporate face of this online auctioneer. Trading goods every second of every day, eBay offers an online forum for selling merchandise worldwide, from fine antiques to the latest video games. eBay generates revenue through listing and selling fees and through advertising, and boasts more than 155 million users. Its online payments assets consist of PayPal and Bill Me Later; other e-commerce platforms include StubHub and Half.com. eBay also has a mobile version of its service, and owns e-commerce services provider GSI Commerce, as well as a minority stake in online classifieds service craigslist.
More than half of eBay's revenues are generated outside the US. eBay has a strong focus on Europe. Its top-earning foreign markets include Germany, the UK, and Canada. The company's classified websites are available in more than 1,500 cities around the world, and PayPal allows customers with credit cards to send payments from 200 markets and in about 25 currencies.
eBay operates through three segments: Marketplaces, Payments, and GSI. More than half of the company's revenue comes from its Marketplaces segment.
Its flagship eBay.com auction site is part of Marketplaces, whose websites consist of some 800 million listings in all. Marketplaces also houses Shopping.com and Half.com, as well as the StubHub ticketing business. In addition, the business segment is active in the global classifieds market through its eBay Classifieds Group, which complements eBay's minority stake in craigslist.
Meanwhile, its Payments segment is anchored by eBay's PayPal business, which boasted about 160 million registered users at the end of 2014. Payments also includes Bill Me Later, a service that processes deferred payments, and services both consumers and merchants such as Borders, Continental Airlines, and Walmart.com. Another component of Payments is mobile payments provider Zong.
eBay's GSI segment includes the e-commerce and interactive marketing services provided by GSI Commerce. The business offers website development and maintenance, order fulfillment, interactive marketing, and customer service functions, among others.
In addition to its three segments, eBay also operates X.Commerce, a platform for developers that is designed to house all of the company's major commerce and developer tools. With X.Commerce, developers can build commerce services such as virtual shopping carts, payment services, inventory control, and tax management. eBay’s developer community includes more than 800,000 members.
Sales and Marketing
eBay spent more than $1.3 billion on advertising during fiscal 2014.
eBay’s revenue increased by 12% in fiscal 2014 compared to 2013, from $16 billion up to $17.9 billion, driven primarily by increases in net revenues from each of company’s business segments. Marketplaces segment revenues increased some $175 million, or 12%. Its Payments segment revenues increased $437 million, or 16%.
Even with the increased revenue the company’s profits declined by 98% in fiscal 2014 compared to the prior period, from $2.86 billion down to just $46 million, due to increased operating costs which includes tax liabilities, sales and marketing, product development, and other administrative expenses. In fiscal 2014, cash generated by operating activities increased compared to 2013 even with the dip in net income.
Whether online, through the mobile channel, or offline, eBay’s monetization strategy remains the same. The company is primarily a transaction-based business model that generates revenue through its commerce and payments platforms. The company also generates revenue through marketing services, classifieds, and advertising.
EBay plans to separate PayPal into an independent public company during 2015. Dan Schulman will become CEO of the stand-alone PayPal company and Devin Wenig will become CEO of eBay.