eBay SWOT Analysis

Niraj Shrestha
Northwestern Oklahoma State University
About eBay

The online auction site was founded in San Jose, California by Pierre Omidyar as
AuctionWeb. The very first item sold on eBay was a broken laser pointer for $14
.83. eBay’s first target was collectors of antique products and the sellers of ant
iques, but later it changed into a global market place for all buyers and seller
s.
eBay

eBay is an Achilles of the online auction industry, like Achilles its heels are
its weaknesses. eBay manages eBay.com, an online auction and shopping website wh
ere, buyers and sellers transact goods and services worldwide. A company like eB
ay must always know its strength, weaknesses, opportunity and threats and to rev
eal and evaluate this four things a SWOT analysis is a must.
What is SWOT

SWOT Analysis is a strategic planning tool used to evaluate the Strengths and We
aknesses considered internal and Opportunities and Threats which are considered
external. It involves specifying the objective of the business venture or projec
t and identifying the internal and external factors that are favorable and unfav
orable to achieving that objective. This technique is credited to Albert Humphre
y, who led a research project at Stanford University in the 1960s and 1970s usin
g data from the Fortune 500 companies.
Strength

eBay is the worlds largest online auction website. It is a giant marketplace use
d by millions of people all over the world to buy and sell all things one can po
ssibly think of. It is capable of attracting vast audiences with diverse needs.
Strength

The company uses the power of customer relationship management by collecting dat
a of buyers and sellers registered with the company. This is a big strength of t
he company as the data collected can generate reports and statistics that can ma
ke the company better and address its weaknesses and threats.
Strength

eBay gives a whole new meaning to the word middle man business. It does this by
providing extra ordinary tools to sellers which, lets the seller target their pr
oducts to the buyers. It also provides buyers with wonderful search tools, to ge
t to the products they are looking for. eBay has made a very powerful platform f
or both sellers and buyers by being seamless and invisible but at the same time
facilitating Customer to Customer relationship.
Strength

Diversifying has been a key policy of eBay. It does this by not only diversifyin
g its products but also its market, by branching and localizing in countries lik
e India, China and U.K.
Strength
•
Staying ahead of the competition has always been a focus of eBay. A fine example
was acquisition of Paypal to support its online auction with a robust payment m
ethod. The combination of these two has been a knockout as it has given opportun
ities new small startup businesses and helped facilitate enterprise businesses.
Weaknesses

eBay does a very bad job of controlling fake or illegal auctions. There are nume
rous auctions still out there whose main purpose is to scam the buyers or are il
legal auctions. A good example would be scammers trying to sell just the packagi
ng box of the product and claiming it to be the real product. These sellers save
themselves by claiming that the information about the product being just the pa
ckaging box is stated in the auction description, which is true. But the stateme
nt is in a very fine print.
Weaknesses

The company uses the power of customer relationship management by collecting dat
a of buyers and sellers registered with the company. This is a big strength of t
he company as the data collected can generate reports and statistics that can ma
ke the company better and address its weaknesses and threats.
Weaknesses

One of the weaknesses of eBay is the sellers being able to enforce the payment m
ethod of their choice. This is a big favorite among the scammers as they choose
a payment method like money transfers which does not protect the buyers from los
ing their money and buyers not retuning back to eBay.
Weaknesses

Shipping has been one of the biggest problems while shopping on eBay. Sellers to
make their products on top of the search list practice lowering the price of th
e product while increasing the cost of the shipping as much as twice the price o
f the product. This has lead to buyers fleeing away to retail stores for better
deal.
Weaknesses

Another weakness of eBay is its inability to control the contents of the auction
and auction items. Most of the content is checked only after the content or the
auction has been posted. Due to this inability it facilitates large sale of cop
yrighted and not for resale items.
Opportunities

One opportunity that eBay saw was, how to sell a product like a normal website,
an auction takes three to fifteen days to end. This is a long time and buyers te
nd to lose their interest. eBay saw a weakness and an opportunity at the same ti
me, thus the Buy it Now button was created where, sellers can offer their produc
t with a static price and offer it on buy it now. Buyers then can straight away
buy the product without having to wait for the auction to end. Further more a ne
w tool Make an Offer is now available which gives buyers the power to offer a pr
ice to the seller for a product, if the seller agrees the transaction goes forwa
rd or the buyer just deny the offer.
Opportunities

Acquiring Skype the online telephony company came as a shock to everybody as eBa
y did not have anything to do with VOIP technology. eBay brought Skype Technolog
ies in a deal reported to be worth $2.6 billion. eBay now has integrated Skype s
o that buyers can talk directly to the sellers using skype voice chat. This is a
ltogether a new opportunity for eBay as it helps bring the buyers and sellers cl
oser.
Opportunities

eBay has always believed in diversifying in every possible way so using its dive
rsifying techniques, eBay has now started localizing its website allover the wor
ld. A good example would be personalized eBay website for different countries li
ke UK even developing countries like India and China. This is a big opportunity,
as the out sourcing booms in these countries have significantly increased the s
pending limit of the consumer.
Threats

eBay as it is expanding and diversifying on foreign soil, it may be threatened b

y local competitors in the domestic market as the auction trends and the way the
y do transaction might differ locally.
Threats

One of the biggest threats to eBay is the scammers and the phishers which use eB
ay’s name to scam people. For example name of eBay and Paypal in scam email asking
user to update their account information has been in high numbers. This has lea
d to many eBay and Paypal users distrusting the services provided by these compa
nies and never coming back.
Threats
•
eBay has lots of tools for the sellers and buyers but there is no seamless integ
ration of eBay seller store. The eBay seller store still looks like eBay.
Threats

A recent threat that has appeared as a competition to eBay is Google. Google has
introduced Google Checkout a rival to eBay’s Paypal. Google has always been threa
t to other IT companies and with Google Checkout it has targeted Paypal. A recen
t aggressive strategy being used by Google is giving huge discounts on products
all over the internet to attract buyers. Google has gone to a extend on setting
up a conference and a party for significant eBay and Paypal users, the main goal
of the party was inviting people to switchover. This was not well taken by eBay
.
Alternatives

eBay needs to do a better job in controlling the content, it needs to block cert
ain illegal and fake auctions and at the same time be able to protect copyrighte
d material on eBay. This is possible and eBay is doing this to counter all the s
cammers however we can still find auction that are fake, illegal and other copyr
ighted materials. The advantage of using this alternative may result is lower am
ount of scams, illegal auctions and happy.
Alternatives
•
Shipping Calculator is must have for eBay, due to huge number of sellers exploit
ing this weakness of eBay buyers have flocked to other website where the price m
ight be higher on eBay but with shipping price, it is cheaper than eBay’s price. T
his tool would really bring more buyers to the site and can trust on the prices
of the products.
Alternatives

Standardize Payment method is a must for eBay to be more reliable to the buyers.
Everyday hundreds of buyers are being scammed by sellers using an alternate pay
ment method like money order which has no fund security. By using Paypal as the
standard payment method the buyers can use both their checking account and credi
t card to pay the sellers with some peace in their minds. eBay still need to pro
vide alternate methods to its sellers as some countries do not allow Paypal tran
sfers. However, eBay should devise a strict plan or a certification for sellers
to offer alternate method of payment. This method will filter out all the seller
s with bad intentions that just take the money and leave the buyers hanging. A t
rust factor is increased between the buyers and sellers. Also buyers can be assu
red of sellers that offer alternate payment as they are all eBay certified.
Alternatives

Localization is a keyword, just imagine being able to find an item in the city y
ou live in and not have to deal with the hassle of shipping or waiting for the i
tems to arrive for days. This feature can be a favorite among all as it can attr
act furniture sellers and garage sale items. eBay currently has a half of this o
ption but is located in a very hard to see location. Making this feature full-fl
edged feature and using it as one of the primary option can help a whole new set
of buyers and sellers.
Alternatives

A good way to get away from the email scam would be using some kind of digital s
ignature, so a user can just push a button to verify the validity of the email.
The advantage of the solutions is no more fake email to scam people.
Recommendation & Conclusion

eBay has always done very well in focusing its company’s goals and has been fast i
n grabbing onto opportunities. However, the weaknesses and threats mention above
might just be the Achilles heel for eBay. Looking at the list of alternatives,
it can be regarded and a to-do list for eBay.
Recommendation & Conclusion

The right path would be to first take care of the email scams that are using eBa
y names and scaring all the buyers off. Next would be to filter the content of e
Bay shunning away all the scammers and illegal auctions, then build a shipping c
alculator of various delivery companies that a seller can use to put the right p
rice of the shipping rather than sellers using this flaw to fill their pockets.
Further down the road implementing a standard method of payment and certified se
llers with alternate method would be a best bet as this would give the buyers a
break and keep more scammers away like the foreign sellers where a buyer cannot
take any action. Localization tab will help draw more buyers and sellers to the
website as it connects them within their city limits. It’s just like having a gara
ge sale on eBay all week long.
Recommendation & Conclusion

SWOT analysis should always be considered by all companies as it helps show comp
anies all their weaknesses and threats. At the same time it also shows what the
companies’ strengths and opportunities are. Using this analysis companies can focu
s on their good part of the business and focus more on the bad part to make it g
ood. Also a company can see what factors are external or internal which helps th
e business in a long run to be more efficient.
Thank You