eBay is acquiring Skype for approximately USD$2.6B, ($2.1B Euros), say both companies. From the press release:
“eBay Inc. (Nasdaq: EBAY; www.ebay.com) has agreed to acquire Luxembourg-based Skype Technologies SA, the global Internet communications company, for approximately $2.6 billion in up-front cash and eBay stock, plus potential performance-based consideration. The acquisition will strengthen eBay’s global marketplace and payments platform, while opening several new lines of business and creating significant new monetization opportunities for the company. eBay is already such a popular company, with many people looking for the best vouchers and deals they can get to keep purchasing from the website (find out here). By making this business deal, sales can only go up. The deal also represents a major opportunity for Skype to advance its leadership in Internet voice communications and offer people worldwide new ways to communicate in a global online era. Skype, eBay and PayPal will create an unparalleled ecommerce and communications engine for buyers and sellers around the world.” Ecommerce has enormous potential which has been strengthened by people preferring to make purchases using their mobile devices. If you click here, you can learn all about the fascinating world of ecommerce.
Skype generated approximately $7 million in revenues in 2004, and anticipates $60 million in revenues in 2005.
Four reasons why eBay says they are doing this (items in quotes after the emphasis are from their release):
Increase the velocity of transactions – “Buyers will gain an easy way to talk to sellers quickly and get the information they need to buy, and sellers can more easily build relationships with customers and close sales. As a result, Skype can increase the velocity of trade on eBay, especially in categories that require more involved communications such as used cars, business and industrial equipment, and high-end collectibles.”
Pay-per-call fees – “For example, in addition to eBay’s current transaction-based fees, ecommerce communications could be monetized on a pay-per-call basis through Skype. Pay-per-call communications opens up new categories of ecommerce, especially for those sectors that depend on a lead-generation model such as personal and business services, travel, new cars, and real estate.”
PayPal and Skype integration – “PayPal and Skype also make a powerful combination. For example, a PayPal wallet associated with each Skype account could make it much easier for users to pay for Skype fee-based services, adding to the number of PayPal accounts and increasing payment volume.”
Introduce emerging markets to eBay – “Skype can help expand the eBay and PayPal global footprint by providing buyers and sellers in emerging ecommerce markets, such as China, India, and Russia, with a more personal way to communicate online. And consumers in markets where eBay currently has a limited presence, such as Japan and Scandinavia, can learn about eBay and PayPal through Skype.” This might be a game changer for eBay in the race to be the most popular ecommerce platform. Currently there are many ways in which merchants can take their products online, from creating their own websites on WordPress and Squarespace, to using existing platforms like Zazzle and Etsy. They all have their benefits, such as the squarespace plugins, but will eBay’s collaboration with Skype push them to the forefront?
From my perspective, there are three really interesting implications of this:
It’s an opportunity to extend eBay communities to the desktop – The buddy list, collaboration, instant messaging, and communication features of Skype allow customers to create communities of interest, especially around the various areas highlighted in eBay Groups. Integration of eBay Groups with Skype makes these communities much easier to join, and greatly increases the possibility of interactions between the group members (all of which eBay can monetize).
A highly strategic move into emerging markets – For geographies that are rapdily moving up the Skype adoption curve, providing an easy means to drop right into a commerce environment via Skype gives eBay an opportunity for a huge presence, especially for peer-to-peer transactions.
Integration of PayPal into the Skype interface – There is a fantastic opportunity here for eBay. With Skype, they have the opportunity to control both the “first mile” and “last mile” of a communication that supports a transaction. Here’s the use case: You call the local pizza joint from Skype. (I do this already.) If the pizza joint is already on Skype, the path is easy…they say how much the pizza will be, I click the “PAY” button in my Skype interface that initiates a payment via PayPal, and I go pick up my pie. Even in the case where the pizza joint doesn’t use Skype, if they have an email address, the same mechanism could be used. No more fumbling for your wallet. It’s easy. It’s right there. It’s a click.
Now it’s time to see how the numbers pan out, and if eBay can execute on these opportunities…
tags: skype, ebay, paypal
