Meg Whitman says eBay transformation is under way

EBay Inc. is fast moving away from its roots as an online auction site and becoming an electronic-commerce site, President and Chief Executive Officer Meg Whitman said at a press conference Tuesday in Brussels.

More than a third of sales on eBay sites are bought instantly at fixed prices rather than through the online auctions that established its reputation, she said. “Globally, 34 percent of the gross merchandise value of sales are settled through the ‘Buy It Now’ fixed price format,” she told journalists. The total value of sales on eBay was more than US$10 billion over the last three quarters.

The trend in sales is driven by the need to satisfy “convenience-orientated buyers” who did not want to wait for the end of an auction period to see if they had bought an item or who do not want to run the risk of losing the item, Whitman said. She highlighted eBay’s plans to launch a new service called eBay Express that would further encourage the trend by collecting all items for sale at fixed prices in one place.

Commenting on the recent decision by U.S. jeweler Tiffany & Co. to sue eBay for failing to take adequate steps to prevent fake Tiffany items from being offered on its site, Whitman said eBay had been “disappointed” by the move as the company worked with intellectual property holders to combat the sale of fake goods. “Counterfeit items are not allowed [on our sites],” she said, adding that eBay has focused on the problem of fake items. “We have a number of technical tools to help intellectual property owners identify goods and remove them,” she said.

Having customers maintain trust in the eBay service is crucial, she said. The number of transactions resulting in disputes is “less than one hundredth of 1 percent” and is falling, she said. But the company wants to further reduce that figure. “We will invest in activities to fight the bad guys,” she said. Whitman pointed out that the company helps mediate disputes, with customer support representatives getting involved in cases.

Commenting on eBay’s acquisition of Internet phone company Skype, Whitman said that the purchase will help raise the average value of transactions by allowing buyers and sellers to communicate more easily. The more information buyers and sellers have about each other the more likely they are to carry out higher value transactions like buying cars, she explained. In any case, she said Skype has 75 million users and is attracting 200,000 new members a day. EBay will be adding Skype buttons to its sites in the Netherlands, Hong Kong, China and Taiwan, she said.

However, she ruled out further major acquisitions in 2006, saying that this is a year to “integrate and digest” companies eBay has bought, “making sure we exploit the synergies”.

She predicted that eBay faces increasing competition from Google Inc. and its PayPal online payment service.

EBay executives were in Brussels to lobby legislators in the European Parliament for harmonized tax and trading rules across the 25 European Union member states. “There’s a patchwork of rules at the moment, which can be very hard for small companies to manage,” she said.

According to eBay’s European manager, the biggest problem facing sellers in the E.U. is the variety of rules covering returns — such as how many days a dissatisfied buyer has to return an unwanted item — and questions of who pays the shipping costs in such cases. “It would be much easier if these rules were harmonized,” Philipp Justus said.

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