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Technology Stocks : eBay - Superb Internet Business Model -- Ignore unavailable to you. Want to Upgrade?

To: Tony C. who wrote (323)	9/25/1998 3:53:00 PM
From: JC Reddy	Respond to of 7772

I think it will drop to 20's in not too distant future. Already significant reduction in volume and drop in the price. Unless of course they find some means to keep hyping it.

To: Tony C. who wrote (323)	9/25/1998 4:20:00 PM
From: Don Wellington Jr.	Read Replies (1) \| Respond to of 7772

Targeting specific groups and WebSites for specific audiences, as you describe, is exactly the theme I mentioned previously relative to the "grunt" work of spreading the URL throughout the internet, manually, or with inexpensive launch engines. Much of this may already be done for the search engines, but researching, accessing, and then posting a link or banner takes time/energy, but it's well spent. Many of the target internet audiences can be reached and used for marketing a site, for free. Many of the specialty sites look for posting links and/or banners, free, to provide informative maps to more information. As an example, it would make sense to link a "stamp or coin collecting" site, to eBay's specific listing page for stamp and coin collecting. This is a less commercial approach, and won't turn-off the specialty site owners who don't want "crass" commercial sites using them for free advertising. On another note, I just reviewed the prospectus for the first time, with the intent to compare with OnSale, as a business. An interesting factor is that eBay posts their "Gross Sales" approx $243,000,000, as actually just an informational line listing, because this doesn't represent revenue stream actually running through the company. The fees and commissions are the source of the $18 mil gross revenues (I am going by memory without this in front of me). The importance of this is that eBay doesn't have responsibility for inventory (buying and selling) meaning working on a margin from cost of goods. eBay has no "cost of goods". The members who are selling have the'cost of goods" OnSale will post approx. $250,000,000 in gross sales this year, but will not make a profit, even though they have that large revenue stream. The actual revenues they can use for operations will probably be 20-25mil, very close to eBay's actual revenue. Bottom-line to this convoluted comparison, is that eBay appears to have actually succeeded in taking advantage of the real value of internet commerce, operating without expensive real property and leases, and little or no inventory. This makes the profitability potential fantastic. Other Internet sellers, retailers, auctioneers, whatever, get out of the real property or leases, but seem to end up having to deal with some level of inventory responsibility. That coupled with extravagant marketing and advertising, defeats the advantage. Amazon, OnSale, Internet Shopping Network, United Listings Network, and others. It will be interesting to see what results come from the established retailers like Barnes and Noble on the internet, and whether it improves their performance or becomes just another way to sell. Egghead will be another good test. Obviously, I like eBay, and intend to buy when I can get out of Syquest, Iomega, and Power Spectra with something equal to my shirt. Final note. very difficult to predict future earnings and volume because of the volatility and seasonality of eBay's business. A couple years more track record will be needed to develop a good statistical model.