SAN JOSE, CA – ebay, the California-based online auction house, has set up operations in the UK and Germany with a British startup and a German acquisition.
The ebay site in the UK began in March as a straight subsidiary with a British management team in place. In Germany ebay bought a 4-month-old startup, Alando, in June.
“It was a natural launching pad for ebay in Germany,” spokesman Russell Brady said. “They are the biggest site in Germany, and the founders shared ebay’s vision of what it takes to build a great person-to-person trading community.”
The company was founded by three brothers – Mark, Oliver and Alexander Semwer – and three of their former school mates. They are 24 to 29 years old and had worked for Web companies before striking out on their own.
“We really think Alando has established itself on the German marketplace,” said Brady. “The founders told us that they had looked to ebay as a model, and they’ve done a good job bringing that model to Germany.
“The reason ebay has been so successful in the US is that they have a great grassroots community who are really passionate about trading and collection. Alando understood that.”
After just six months in business, ebay’s German site has 160,000 items for sale and 100,000 registered users. The site is doing so well that ebay last month introduced a fee structure for the first time.
“None of the other Web sites have done that,” Brady said. “They were too busy building up market momentum, but we are gaining momentum in revenue as well.” Sellers pay a fee of 1.5 to 3 percent on sold items, but browsing is free.
“Alando’s idea was to build up a strong community and user base first and then transfer that to a business model. They were quickest out of the chute and I’m sure others will follow their lead.”
By then ebay expects to be active across Europe. “We plan to be wherever there is a vibrant Internet market or a critical mass of users,” Brady said, but he acknowledged that the company has not chosen any other European sites yet.
The building plan calls for developing strong local sites, and building an international auction trade once the individual sites are successful.
“Early adopters and hard-core collectors in some categories are happy to trade internationally,” Brady explained, “but your average consumer is not. He doesn’t want to go through the customs and shipping rigmarole that you still have to go through so most of the trading will be done on an intra-country basis.”
Payment will be local. “We’re offering local currency billing and local currency auction,” he said. “We’re looking at the euro and, over time, as it becomes the standard, we’d use it.
“We trade in German marks, Sterling and dollars. We’re setting up a billing infrastructure so you can pay with credit cards, COD or checks. We don’t want to impose payment modalities on customers just because it is simpler for us. Paying with money orders may be standard in some countries, and we will adapt to that. If you put up barriers your site won’t become popular.”
