EBAY INC. CASE STUDY.

EBAY INC. CASE STUDY

MET MG448
E-commerce & Web Designs
Julieta Hermosilla Rafecas
09/23/15

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EBAY INC. CASE STUDY.

TABLET OF CONTENTS:

TABLE OF CONTENTS

Abstract ............................................................................................................................. 3

Background ....................................................................................................................... 4

Business Description ........................................................................................................ 4

Client Description ............................................................................................................. 6

SWOT Analysis ................................................................................................................ 8

Strategic & Management Factors ................................................................................... 11

Solution through e-commerce ........................................................................................ 12

Conclusion ...................................................................................................................... 12

References ...................................................................................................................... 14

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EBAY INC. CASE STUDY.

Abstract

This paper will give a deep background on eBay, describing the business market and

analyzing the strategies of the company. Focusing in the customers trends and exploring

the evolution of the company in such a worldwide market.

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Background

EBay is the leading online auction site and pioneers in this type of transaction, was

originally called EchoBay.com. It was founded in 1995 by Pierre Omydiar in his city

home in San Jose where its headquarters are also located. The first item sold was a

broken laser point sold for $14.83. Years after its foundation its presence in the online

community was enormous, starting with about 40,000 users which until today has

grown to more than 157 million of active buyers and 25 million sellers. EBay started to

charge a fee to those who use the site, to the bidder it charged a proportion of the final

sale price and there is also an invoice fee when sellers list new items. In 1998 it went

public and in the 2000s the company expanded worldwide and purchased a similar

European auction web site and PayPal. Acquiring PayPal which is an auction site for

payments transactions, it facilitated how the customers pay.

Today it is a multibillion-dollar business, one of the most important sites in terms of

sales on the internet for users and in trading volume, with daily operations localized in

over thirty seven countries.

Business Description

EBay is the largest international online marketplace, where buyers and sellers meet to

exchange a broad variety of goods and can be purchased immediately by a fixed price

“Buy it now” or using the auction-style.

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In an auction, the auctions open with a certain specific price set by the seller and

remains on eBay for a certain number of days. The buyer bid on the item and when the

announcement ends, wins the buyer with the highest bid.

“Whether you are buying new or used, plain or luxurious, commonplace or rare, trendy

or one-of-a-kind – if it exists in the world, it probably is for sale on eBay. Our mission

is to be the world’s favorite destination for discovering great value and unique

selection.” This is the mission statement of eBay that reflects the identity of the

company.

To define more clearly what the eBay business is, how they are and what they do is

through their web site: “We give sellers the platform, solutions, and support they need

to grow their businesses and thrive. We measure our success by our customers'

success… eBay is where the world goes to shop, sell and gives”.

As for the future of the company, it is said: “Our vision for commerce is one that is

enabled by people, powered by technology, and open to everyone.”

Getting to clarify how eBay functions and the process of the exchange, we can have a

better understanding of the business itself. The company has this platform in which any

local, national or international buyers and sellers can participate. Sellers listed the items

at eBay (they are charged a small fee) along with a description and photo of the product,

buyers do their bidders and the highest one wins or pays the fixed price if applicable.

Then buyers now pay for the item plus shipping and the handling fees and sellers

packages and send the item to the buyer. What is really needed is both parties (seller

and buyer) to keep the agreement and the full process will succeed.

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The eBay web site success is due to the huge variety of products offered at a really low

price and the user-friendly page. The web site is divided into different categories such

as Motors, Fashion, Home & Garden, Toys….that simplifies all the service.

Client Description

EBay customer could be anyone; you could be a seller or buyer. The only thing you

need is access to internet that can be managed from any smart devices whether is a

phone, tablet or computer.

The wide range of products new our second hand, items like collectibles, computers,

cars, clothes, etc. available at the eBay website makes it harder to define just one

specific target.

In the early days the center of attention was the antiques and motors equipments basing

on the sales of the company. What first were more likely to sell and buy, were very

specific items collectibles, so it was the key market segment that was set to promote.

These targeted markets are usually people that are looking for something rare and are

willing to bid at a higher price. Then eBay Motors expanded becoming one of the most

successful target segments and now a days they are searching for new customers.

John Donahoe, eBay CEO since 2008, has a very interesting view of this. They have

over 800 million listing items and 79 percentages of market places comes from fixed-

prices listing. As Donahoe state in a conference in 2014:

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"I know you'll see eBay Marketplaces doing is beginning to focus more on our target

segment…eBay has a very clear target consumer who forms the bulk of our customer

base and frankly is a large part of the market.”

"We're testing a new user to eBay that's never been to eBay should when they show up

we only show them fixed price, brand new items from top-rated sellers. It's a more

familiar commerce experience and then as they learn eBay they get the wider

experience or should we be showing a woman buyer who buys in a clothing - with a

heavy Clothing, Shoes & Accessories buyer a different experience than we show up a

42-year- old man that buy steadily in auto parts."

We focus on the two types of customers that can be classifies in business and individual

consumers. Businesses, essentially small business, benefit from using the eBay

platform to find a large mass of potential consumers worldwide and are able to sell a

huge quantity. However Customer, can be anyone that want to sell, get rid of an old,

obsolete item, in a few minutes with only the access to internet and an eBay account.

It provides an open trading forum that connects sellers and buyers in an easy and rapid

way. EBay application for phones let you create an advertisement by filling in out a

simply form. Product prices are control by the market and demand.

EBay also has created an online community of users who build a very dynamic and

unique environment. Trading on eBay is easy and fun, and best of all you never know

what you might find.

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The firm creates value through the use of new technology like internet and new

payments methods. The channels access to any region of the world and all kinds of

public therefore increasing business possibilities.

The product options are unbelievable immense that will not be possible to find in

physical stores and with an extensive search database.

SWOT Analysis

EBay have done a big effort in implementing an e-commerce business model, let’s look

at some characteristics:

Strengths:

- EBay is the leading brand for online auctions. Having gained a giant market

place and an impressive brand reputation. The company has more than 105

million active users all over the world.

- It counts with a very easy system to list any type of item. You can customize to

the maximum indicating the material, the use, the recommended ages, photos.

All of this means that the final consumers can quickly strain the product they are

looking for over the enormous catalogue.

- A good combination of Business to Consumers (B2C) and Consumers to

Consumers models (C2C).

- Great access anytime, anywhere and buy anything.

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- Save time.

- The payment system which provides different and secure ways to pay like

PayPal and Credit card, worldwide accepted.

- Technology: you are able to track the status of your sales, bids and activity

related to products you follow with notifications on the eBay app for mobile

devices.

Weakness:

- The fraud and risk of buying online.

- EBay fees have risen over the years: they receive fees from listed products, sold

products and PayPal transactions fees. Increasing the cost for parties, sellers and

buyers.

- The lack of trust in the quality of the reviews and reports. Basically the problem

is that there is no control of who posted the comment, so it can easily be the

seller with a false account.

- Bad customer services. The average timeline to answer anyone question is

around 5 days.

Opportunities:

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- Constant increase in e-commerce business. Now days the rise in mobile devices,

online shopping represents a huge growth opportunity to attract new business

and costumers.

- Increasing the number of services it offers to consumers. It can do it

successfully by acquiring others companies which it has allow to raise its

revenues even more. For example, what they did with PayPal in 2002 and Skype

in 2005.

- Become a retailer. EBay has its online marketplace and to compete with

Amazon, Alibaba and other online retailers

- Focus in growing economies like Asia.

THREATS:

- International Competition. To give an example of competitors that affects the

sector is Asian competitors like Alibaba and Rakuten are constantly expanding

their share among the B2C.

- Customer’s choice. When purchasing on internet there is a huge variety of

options, websites and brands. Any incident that eBay might have can change the

consumers preferences for the company and it is difficult to recuperate them.

- Exchange rates. The eBay profits that are sent back to the US are obviously

affected by the exchange rates, sometimes winning and others loosing,

depending mostly when the dollar appreciate or depreciate.

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Strategic & Management Factors

The world is in continuous change; being able to adapt to the environment and to keep

up with consumer’s trends, then will be the company able to survive. EBay has been

using some strategies to improve their business. Creating the future and building the

new eBay.

EBay in September 2012 released the new logo and website. Looking for opportunities

to enter new markets like online sales-multi channel

The use of the internet and a online platform gives the company an advantage in the

infrastructure and physical cost are very low compare to others competitors like

Amazon.

EBay strategy provides a secure trading site on the internet, offering the sellers and

buyers a platform to meet and directly interact with each other. There are a large

number of people interacting daily, buying, selling, and interacting in the forum.

Under the previous business model only objects used where offered. Now, there is an

enormous up scale in terms of the diversity of all types of products: new or used. The

other new introduction was the fixed price offer. Moreover, took part the adaptation of

the services bringing the phones, tablets as new tools for the users. This is called

multichannel commerce.

The improvements also come from the part of partnerships with physical shops. Toys R

Us, a toy store, and others electronics chains like Best Buy that directly offer all kinds

of new products or specific sale prices.

Growth suggestion and next step of eBay will be:

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For eBay to truly compete with the new products and services developed by Google and

Amazon my recommendation is to take a proactive approach and allow users to list or

sell the items for little or no money. The cost can be recovered through the use of site

advertising and the increase in potential customers.

Solution through e-commerce

As I have mentioned before, eBay has some issues within the costumer’s services,

which can be enormously harmful for the company’s image and have long-run

consequences in terms of customer loyalty. This is why the firm must use some e-

commerce tools for finding a solution.

A possible alternative could be the creation of a section on their website in which

possible problems and issues are exposed and the explanation of how to solve them

rapid an easily.

Competitors are continuously increasing and taking market share from eBay. To try to

differentiate with their main competitors such as Amazon or Alibaba, I will encourage

the advertising and direct communication through buyers, sellers and eBay workers.

Conclusion

EBay creates value through the use of new technology not just with the normal use of

internet also by the implementation of different payments. The easy access of the users

of any part of the world and all kind of public, as long as they have internet access,

consequently increasing the possibilities of this business.

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The confident of the client in eBay, is the key of his success. Allowing the company to

expand and encourage millions of anonymous buyers and sellers to continue interacting

in the site.

Innovation rise, creating new ways for consumers to buy and pay from any connected

device, tablet, computer or phone.

Through the e-commerce business eBay has been able to gives all these variety of

services that in a traditional business may not be possible.

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References

Ebay Inc. – About Us

https://www.ebayinc.com/our-company/who-we-are/

SWOT analysis of eBay (eBay Company SWOT analysis 2013)

http://www.strategicmanagementinsight.com/swot-analyses/ebay-swot-analysis.html

Entrevistas ecommerce: Due-Home - Consultor ecommerce (Consultor ecommerce)

http://jordiob.com/2015/01/entrevistas-ecommerce-due-home/

Entrevistas ecommerce: Due-Home - Consultor ecommerce (Consultor ecommerce)

http://jordiob.com/2015/01/entrevistas-ecommerce-due-home/

eBay: annual revenue by category 2014 | Statistic (Statista)

http://www.statista.com/statistics/266196/ebays-annual-net-revenue-by-category/

eBay: The Market Place :) (eBay: The Market Place :))

http://es.slideshare.net/SambathMetha/e-bay-presentation-27761391

(Forbes)
http://www.forbes.com/sites/narrativescience/2015/07/14/forbes-earnings-preview-ebay-9/

eBay: ad spend in the U.S. 2014 | Statistic (Statista)

http://www.statista.com/statistics/298862/ebay-ad-spending-usa/

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El resurgir de eBay con un modelo de negocio nuevo - ERESEMPRENDEDOR.ES

(ERESEMPRENDEDOR.ES)
http://www.eresemprendedor.es/el-resurgir-de-ebay-con-un-modelo-de-negocio-nuevo/

Who Is eBay's Target Customer? (Who Is eBay's Target Customer?)

http://www.ecommercebytes.com/C/blog/blog.pl?/pl/2014/10/1414010502.html

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