CASE STUDY

Group Members
Grace Chu
Eyo Chay Ni
Rachel Gomez
Monday, 10th Feb 2014

BACKGROUND
eBay is an American Multinational Internet

Corporation
Founded in 1995 by Pierre Omidyar
Online Auction Website
Phenomenal Growth
Net Worth

First Item Sold on eBay

Sold for USD 14 A laser pointer that was broken

Most Expensive Item Sold on eBay

for $140 million
Giga-Yacht, Sold in 2005

TODAY on eBay

Determining eBays Strategic Position

PESTEL
PORTER 5 FORCES
SWOT ANALYSIS

PESTEL ANALYSIS
Political
Economic
Social
Technological
Legal
Environment

Political
Globalization

able to break into a new market which previously closed

challenges from foreign competitors

High government investment on ICT infrastructure

faster, better and more reliable internet access user

Marketplace Fairness Act

US state sales tax

Increase the price of a product or service
people would probably stop buying
internet retail sales could decrease by up to 24% (Austan
Goolsbee, 2000)

Government Intervention

Chinas internet regulators have made it difficult for foreigners

to participate fully, giving local Chinese e-retailers an advantage
from the offset (Dean, The WallStreet Journal, 2006)

Economic
Exchange rate

conduct significant business outside United States but

profitability is
reported in US dollar

Global economic condition

weak economic condition would limit the growth of
revenue
change in consumer purchase pattern

Social
Lifestyle and attitude vary from country to country

they have to set different target, product or consumer categories

* eBay failed to break into China market, the hottest market

as they did not localize their services

Increase in online social networking

people are rely on internet

can get everything easily from online shopping

an opportunity to increase market share

Technological

Growth of internet

lower the barriers of entry

more competitors
growth of internet user will increase public online consumption

Rapid development of high-speed network service

eg: broadband broadband internet connection were used by

42% of household, up from 32% in 2012

Third party online payment system

PayPal

provide a safe, easy and secure way to make and receive

payment online
reduce the risks of transaction

Legal
Strategy developed which have to comply with

different legal obligations domestically and

internationally

The European Sales of Goods Act

Data protection act in UK
Federal Trade Commission in USA
EU Electronic Commerce Directive
The Electronic Signatures Law
Increase the use of e-commerce of both consumers and
business
ensure a certain level of security in online shopping
costs for online business

Environment
Global warming and pollution awareness

increase globally

more online shopping

have to be more green to attract consumer
eg: eco-packaging, work environment

Porters Five Forces

Bargaining
Power of
Customers

Threat of
Substitutes

Threat of New
Entrants

Bargaining
Power of
Suppliers

Rivalry among
Competitors

Bargaining Power of Customers

High Bargaining Power
Other Options
Online or Retail Stores
Price Comparison

Threat of Substitutes
Low Threat
eBay is more convenient
Substitutes cannot have much variety

Bargaining Power of Suppliers

High
Low fees and commission

Threat of New Entrants

High
Low Entry Costs
Depend on individual interest

Rivalry Among Competitors

High
Shopping Outlets or Online Retailers

Differences between eBay & Amazon

Auction Site

More Towards Fix Price

More Interaction
between Buyers and
Sellers
Pay-Pal

Less Interaction
between Buyers and
Sellers
Facilitates all its
payments
Middleman and also a
retailer

Middleman

Revenue of eBay vs Amazon

$80.00

Revenue
(million)

$70.00
$60.00
$50.00
eBay
Amazon

$40.00
$30.00
$20.00
$10.00
$-

2009

2010

2011

2012

2013

Net Income of eBay and Amazon

3500000

Net Income
in K

3000000
2500000
2000000
1500000
1000000
500000
0
-500000

2009

2010
Ebay

2011
Amazon

2012

2013

SWOT ANALYSIS
1)
2)
3)
4)
5)

STRENGTHS
Global Reach
Recognizable Brand Name
Wide Variety of Products
No Inventory Holding
No sales personnel

OPPORTUNITIES
1) Critical Foreign Market Not
Penetrated
2) (CLOP internet based
purchase)
3) Growth Through Acquisition

WEAKNESSES
1) Technology malfunction
2) Product Description Lacking

THREATS
1)
2)
3)
4)

Fraud
Increased Competition
Old and New Technology
Small entry barrier to
industry

QUESTIONS
Analyze the marketing environment and the

forces shaping eBays business over the years.

How has the change in the nature of eBay

sellers affected the creation of value for

buyers?
Do you agree or disagree with Donahoe that

eBays current strategy doesnt mean that

certain sellers will lose?
Is eBay doing the right thing by sticking its

current strategy? What changes, if any, would

REFERENCES
http://en.wikipedia.org/wiki/EBay
http://www.marketwatch.com/investing/stock/ebay/

financials
http://www.marketwatch.com/investing/stock/amzn/

financials
http://dspace.iimk.ac.in/bitstream/2259/510/1/543-

549.
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