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Last Updated: Thursday, 21 October, 2004, 15:47 GMT 16:47 UK
eBay cleans up online
By Clare Matheson
BBC News Online business reporter

Britney Spears in concert
One eBay seller claims to have Britney's wedding bra
EBay seems to be on the tip of everyone's tongue at the moment, either for selling Britney Spears' wedding bra or because Cherie Blair has been snapping up a bargain or two.

On Wednesday, the group reported a 77% rise in profits to $182.3m over the three months to the end of September, while sales surged 51%.

But how did the online auction house, which had its humble beginnings in 1995, manage to hit such heady heights?

A decade ago, the US had the biggest share of internet users in the world.

That figure has now fallen dramatically - 75% of the world's internet users are now outside of the US compared with just 25% 10 years ago.

EBay's success can in part be attributed to its gift for knowing when it should move into a new market.

It moved to Europe in 1999.

Then its nearest rival in the UK was QXL. Nowadays, that company's biggest market is Switzerland.

Market leaders

In contrast, eBay has gone from strength to strength. Its biggest market is Germany, helped in part by that country's restrictive trading laws, which means that shops are closed on Sunday.

1995 Set up in by Pierre Omidyar, although it is a myth that he did so because his wife, an avid Pez sweet dispenser collector, wanted to trade with other collectors over the net
1995 Mr Omidyar sells his first item - his own broken laser pointer - for $14
1997 Meg Whitman joins eBay
1999 Sets up in the UK, Germany
1999 Site crashes for 22 hours
2000 Sets up in Japan
2001 Overtakes Amazon as the most visited e-commerce site
2001 Moves into China
2002 Buys online payment service PayPal
2002 Pulls out of Japan
2004 moves into South Korea and India, giving it a foothold in 29 international markets
China was a key Asian target for the company. Boss Meg Whitman and eBay's then international vice president Stephanie Telenius snapped up a start-up firm called EachNet.

The rest is history - China is now eBay's fastest-growing market.

The group now has its eyes on India, snapping up Baazee.com - the country's biggest online retailer -in August for $50m, even though only 1.6% of its population is on the net.

But the firm doesn't always come up smelling of roses. It was too slow off the mark in Japan - setting out its stall there five months after Yahoo.

Two years later it pulled out of the market - but the firm says the disaster taught it a valuable lesson "not to rest on our laurels".

Lessons to learn

Some of its biggest errors have been technical ones.

In 1999, the website experienced a "near-death experience" as Ms Whitman calls it, and crashed for 22 hours risking its entire database of customers and transactions.

eBay chief Meg Whitman
Even boss Meg Whitman admits she's made mistakes at the group
Ms Whitman told US Magazine Fortune that she didn't "go with my gut" when she suspected that its tech group had not built a site sturdy enough to cope with huge and growing transaction volumes.

But she pounced on Gateway's technology boss Maynard Webb - offering him more than twice her salary and a massive chunk of share options.

Needless to say, he took the job (he's now the group's chief operating officer) and the site happily chugs away, capable of handling the 20 million items available and the 3.5 million new ones placed on the site each day.


Of course, you could say that eBay was a "no brainer" as a money-making machine.

As Ms Whitman herself likes to say: "It's our customers that have built eBay."

It doesn't handle the goods, stock, ship or advertise them - it just gives people a platform to set up their stall.

But it has managed to get maximum profits from a staff of 5,700 people, who handle the business's 114 million registered users.

When Ms Whitman, now 48, joined the firm in 1997, it had revenues of just $5.7m. The company estimates that this will rise to $3.2bn by the end of 2004.

In 2000, Ms Whitman pledged that the firm's revenues would reach $3bn by 2005 - so it looks like she will have reached her target a year early.

Bargain hunt

Few were surprised when she was voted Fortune magazine's most powerful woman this year - knocking Hewlett Packard's Carly Fiorina off the top spot for the first time since the poll began in 1998.

Koopa the turtle makes art for his US owner to sell on eBay
Koopa the turtle makes art for his US owner to sell on eBay, his paintings now hang in 36 US states and as far afield as Australia
Eurotunnel drill - 39,999
Gulf Stream jet - $4.9m (2.57m)- the most expensive item sold so far
Prehistoric skeleton of Max the mammoth - 61,000
Lady Thatcher's handbag - 103,000
Tesco carrier bag - 4.50
As for the future - it looks like more headlines, more business and more money.

And while the group has banned the sale of alcohol, tobacco, guns and most Nazi memorabilia there's still plenty on offer.

Fancy a soul - well if there's another Mephistopheles on the lookout, he'll be happy to know there are three available on eBay.

A prospective buyer has the choice of Lauren Dunn in Texas for a bargain basement 55 cents.

Mid range is sblackburn1's of Tennessee at the princely sum of $1.25.

While top of the range is the UK's bettyslavin, who has put a whopping 25,000 ($45,440) price tag on hers. Maybe the "slightly stained" description is putting off buyers as she hasn't received a single bid.

And with just two bidders for the others, there shouldn't be too much competition.

However, prospective soulseekers better get in fast - the first auction ends in four days.

International growth lifts eBay
20 Oct 04 |  Business
eBay's Whitman tops power poll
05 Oct 04 |  Business
10 things about eBay
28 Sep 04 |  Magazine
EBay tightens grip on Asia market
01 Sep 04 |  Business
eBay buys Indian auction site
23 Jun 04 |  Business
Online auction site clicks again
21 Jan 04 |  Business

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