In January 2001 eBay launched eBay Premier, a new site for art, antiques, and rare collectibles available at www.ebaypremier.com. The site grew out of the previously existing eBay Great Collections site and was the result of the connections eBay had made in the art world. In March 2001 eBay Premier hosted an online auction of Marilyn Monroe memorabilia, including the famous "Red Velvet" nude photos from 1949, in conjunction with a live auction at Butterfield & Butterfield. Although bidding for the photos failed to reach the necessary minimum and they were not sold, other items were sold in the $15,000 to $20,000 range. eBay reported that close to 60 percent of the bids were placed through eBay Premier, as were about 20 percent of the items that sold.
In January 2001 eBay announced that it would acquire a majority interest in Korea's largest auction Web site, Internet Auction Co. Ltd., for about $120 million. The South Korean company had about 2.8 million registered users. About one-third of South Korea's citizens were online, making the country the sixth-largest Internet market in the world. At the time eBay was reported to be the number one online auctioneer in the United States, the United Kingdom, Germany, Canada, and Australia. It also operated sites in France and Japan.
At the end of January 2001 eBay raised its listing fees. The announcement came after Yahoo! Auctions began charging listing fees after being a free auction service since its inception. The fee increases on eBay were the company's first since December 1996. Analysts indicated that the fees could boost eBay's revenue by as much as five percent in 2001.
In early 2001 eBay attempted to address the problem of spamming that its registered users were experiencing. Through data mining, e-mail addresses were being harvested from the eBay system and used for unsolicited commercial mailings, or spam, by noneBay sellers. For example, bidders on software subsequently received spam e-mail offering them pirated software. To help protect its users from spam, eBay changed its e-mail policy to gain more control over online contacts between eBay users. The company announced that any users not involved in a particular auction would only be able to contact each other by sending messages through the eBay system. Sellers would still be able to obtain the e-mail addresses of bidders on their auctions, and winning bidders were able to contact sellers directly. All other contact would be channeled through a new "Contact an eBay Member" feature. Critics of the new policy said it was designed to stop offline sales between members. In December 2000, eBay announced that it would begin enforcing its ban on offline sales between members.
eBay also provided its members with some protection against auction fraud. Some analysts believed that fraud and the threat of losing money online were the biggest inhibitors to the growth of e-commerce in the 21st century. eBay users were covered for up to $200 worth of losses through an automatic insurance plan. In addition, an escrow program was in place that enabled users to hold their money in a neutral account until their transaction was completed.
In March eBay's unique audience grew by nearly 4 million to a total of more than 22.1 million unique users for the month. It moved up in the Nielsen/NetRatings ranking from 15th to 11th in terms of unique visitors. While eBay's number of unique visitors was comparable with that of Amazon.com, eBay did better in terms of the number of pages viewed and the time each person spent on its site. eBay ranked second among all Internet sellers, capturing 14.5 percent of all Internet shoppers. Amazon.com led with 15.1 percent. Analysts noted that combining eBay's numbers with those of recently acquired Half.com would make eBay the top Internet e-tailer.
In March eBay announced an alliance with Microsoft that would integrate eBay's auction marketplace into selected Microsoft Web sites. Other new partnerships included an alliance with Artnet.com that made Artnet.com 's fine art pricing database available to eBay Premier customers. An alliance with Eppraisals.com gave eBay users access to professional art and antiques appraisers. During the second quarter eBay expanded offerings on Half.com, adding millions of new items across four main categories: computers, consumer electronics, sporting goods, and trading cards. eBay's fixed-price formats, such as Buy it Now, also performed well. Buy it Now enabled buyers to instantly buy an auction item.
eBay's goal was to increase its annual revenue to $3 billion by 2005. The company had international operations in 18 countries. It completed its acquisition of the Paris-based online trading network iBazar S.A. in May 2001 for $112 million in stock. iBazar hosted online auction sites in eight European countries. In March eBay opened Web sites in Ireland, New Zealand, and Switzerland. The company's best performing international units were Germany and the United Kingdom.
Analysts were skeptical of eBay's $3 billion target, because it would require the company to grow 50 percent each year. For the first half of 2001 eBay again beat analyst expectations in both quarters. Quarterly net revenue was $147.4 million in the first quarter, a 90-percent increase from the same quarter in 2000, with quarterly net income of $21.1 million. In the second quarter revenue reached $180.9 million. As a result of its strong first-half financial performance, eBay raised its expectations for 2001 and projected that second-half revenue could reach $400 million.
In June 2001 eBay launched a two-week pilot test of eBay Stores. Some 18,000 merchants signed up to sell musical instruments, jewelry, electronics, and collectibles. President and CEO Meg Whitman called eBay Stores "the next step in eBay's evolution." The storefronts combined fixed-price retailing with eBay's auction system. eBay's entry into storefronts followed that of Amazon.com and Yahoo!, whose storefronts gave merchants that were too small to establish their own Web sites a way to sell goods online.
Other new initiatives included an agreement with luxury gift e-tailer Ashford.com to sell its leftover and closeout merchandise on eBay in both a fixed price and an auction format. eBay also formed a new alliance with Terra Lycos to integrate eBay auctions into the Lycos auction site and make eBay a featured advertiser on the Lycos network. The agreement gave eBay exposure to the 94 million unique visitors to Lycos sites each month.
In mid-2001 eBay launched a new service involving newspaper classified ads. The eBay Seller Classifieds program gave sellers the opportunity to market their items to a wider range of potential buyers. Sellers who had items listed on eBay for auction were given the option of advertising their items in a branded eBay section in local newspaper classifieds. The program was first offered in the Minneapolis-St. Paul area, with plans for expansion into Florida's St. Petersburg Times.
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