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The company’s key products and services include the following: Online services for the sale of goods and services Online communication services Online payment and transactional credit services Online classifieds Advertising eBay Inc. is a global commerce platform and payment leader. eBay delivers one of the world's largest online marketplaces to customers via any connected device, connecting people with the things they need and love. PayPal (acquired by eBay in 2002) offers flexible and innovative payment solutions for consumers and merchants of all sizes. eBay Enterprise (formerly GSI Commerce, acquired by eBay in 2011) helps companies of all sizes drive commerce growth- delivering exceptional, engaging shopping experiences online and offline.
Industry Trend: 1) Mobile – more sales will occur using mobile devices and companies need to make sure that their sites are updated to be mobile 2) Free and faster shipping- this is the trend and companies need to keep up to compete. 3) Business without borders – companies will need to go global to continue to grow. 4) Content marketing is essential - marketing through content on websites emphasizing product information to engage customers 5) Growth of guided discovery – more online businesses will engineer the right mix of “guided discovery” to provide relevant suggestions to help consumers make purchases. 6) Consumer driven demand and personalization – businesses will empower customers to personalize, design or modify products that they want to purchase. This will increase efficiency and benefits both consumers and businesses 7) Its still about the brand- businesses will go back to the basics of building a brand.
Supplier：low supplier power because a large base of supplier in existence. The ease of being supplier is high. Switch cost is high because the feedback and custom system. Buyer: high buyer power because they can compare the price with others easily. Secondly, people can buy goods from somewhere else very easy, low cost of switching. Thirdly, compose price among sellers with eBay. Rivalry: high because the similar large scale in operation and infrastructure among major competitors. Second, large competitors like amazon has in place logistic & supply chain (warehouse/ inventory management) make it hard for ebay to catch up. Third, ebay can’t enter some international markets such as china & japan due to the strong market power from local competitor/market leader. 19% in e-commercial market and 2% in global retail. Substitutes: very high because a great number of alternative options: groupon (group buy); flash sells; retail (Walmart); classify fields (gifts). New entrance: middle because easy to enter which is for easy and economies of scale is high, brand equity, customer service, feedback system, in place by the existing major players which are for high.
Political ? Legislation, called the Marketplace Fairness Act, is in effect which requires collection of taxes after being passed in May 2013. This new legislation may cause a reduction in trading activity that would negatively affect several business segments, especially the small business vendors. In addition, tax compliance will increase costs such as the addition of tax department, accounting, and auditor. Legislation has also been proposed to prohibit the sales and sharing of certain information over the Internet, such as alcohol, credit cards, artifacts, and copyrighted products. The stronger restriction on the sales of copyright products will hamper Ebay from expanding its user's base. Furthermore, the stronger government censorship of products sales and data privacy protection policies might inhibit Ebay's from encouraging the development of online sales community.
Economic The resources of existing competitor firms, such as Amazon, are larger and as a result, competitors could weather an economic downturn. The company continued its turnaround strategy in a harsh climate for consumer spending. Global economic conditions emerge from the recession, as does consumer spending. The mortgage and worldwide credit related financial crisis, are expected to limit revenue growth, particularly in the Marketplaces segment, which is closely tied to consumer purchase patterns. Profitability is also affected by currency exchange rates. If the U.S. dollar weakens against foreign currencies, transactions conducted in foreign currency denominations will increase and inflate revenues, operating expenses, and net income. Alternatively, financial measures will be negatively impacted by a rise in the value of the U.S. dollar. Social ? - Lifestyle Trends: the use of internet is growing further more mainstream along with the popularity of mobile usage. This is a great opportunity for eBay and will affect them very positively. - Consumer buying patterns: Consumer might develop completely different buying patterns meaning that they might start buying everything online and getting it delivered urgently. eBay could make use of this and find new markets. - Brand image: eBay’s brand image might suffer over time and their competition might then overtake their position as market leader. - Demographics: In some countries the population is becoming older and in some younger. Older generations might not show much interest in a service like eBay while younger generations generally show more interests in innovations. This means that Ebay should use different strategies to attract and capture this growing generation of older people.
Technology ? Mobile advances in communication help people meet, share ideas, and offer goods/services at a local city or regional level. Competition is intense in communications services and subject to rapid technological Change. There's a need for substantial resource investments by Ebay in technology and marketing in order to remain competitive, especially in regards to the biggest trend in mobile ecommerce and payment system such as NFC.
eBay's mission statement is “eBay Inc. enable commerce by delivering flexible and scalable solutions that foster merchant growth”. A mission statement is a brief description of a company’s fundamental purpose. It seems that eBay’s mission is customer-oriented and provides more flexibility for the business to expand into other product markets.
Two core businesses eBay Global Marketplace segment, led by Devin Wenig Payment segment (Paypal), led by Dan Schulman CEO John Donahoe Oversees strategic and financial planning, marketing, operations, product development, and business development for eBay North America and eBay International businesses. Receives reports from various departments, including legal, marketplaces, communication, Shopping.com, international and human resource. Devin Wenig, Dan Schulman, CFO Robert Swan, and CTO Mark Carges report directly to John.
In November 2001 Burger King entered a strategic alliance with eBay where Burger King Customers can earn points that can be used to bid for items on eBay. EBay and Microsoft made a strategic alliance in March of 2001 to expand their global online presence.
eBay’s platform was the premier segment website in more than 18 countries and has 114 million registered members from more than 150 countries extended its operations to other countries, and rely on local sites that served Australia austral, Belgium, Canada, France, Germany, India, Ireland, Italy, south Korea, Singapore, Spain, Sweden, Switzerland, Taiwan, and the united kingdom. In addition, eBay had built a presence in Latin America, China and India.
- Acquisitions can be categorized into three groups: horizontal integration, vertical integration, and corporate diversification. - Acquisitions that helps eBay expands its business into areas that are at different points on the same production path can be counted as vertical integration. Horizontal integration includes the acquisition of additional business activities that are at the same level of the value chain in similar or different industries. Finally, diversification is for acquisitions that helps eBay branching into new business opportunities instead of just expanding its existing business.
Economic Scale The huge user base brings eBay economic scale. For example, eBay made heavy investment to establish its IT system and gain customer relationship knowledge.
Diversity in Products The huge user bases also diversified the products sold on eBay.
Strength in Technology Innovative technology such as its payment system - Paypal
Brand Reputation EBay’s successful operation and its globalization have already gained it critical reputation.
Users Data Base The giant user base and large volume of transactions give eBay huge data base.
Inability to measure illegal activity on site The hugest online auction market, large number of customers, and lots of categories of goods are eBay’s core competencies. However, these core competencies are also eBay’s weakness. People can easy to join eBay, and eBay did not check their customers very seriously. EBay is very difficult to manage their customers because all of It is easy to get two, three, even more ID in eBay. So it is hard to controlling fake or illegal auctions. eBay has taken many precautions to prevent illegal activity on their site. They estimate that only 1 percent of transactions on their site involve fraud. The customers however disagree to some extent. Some say that there are as much as 10 percent fraudulent transactions. EBay has no real way to measure the extent of illegality on their site. Technology malfunctions As with many technology companies, systems breakdowns could disturb the trading activities of eBay. In the past both eBay and its payment brand Papal have encountered shut downs and outages. As technology improves such a weakness is less and less of an issue. Cost of shipping Another problem with eBay is shipping cost. One is the price and other is the delivery time. Sellers would increase the cost of shipping as much as twice the price of the product. It is also expanding on foreign countries in which can be threatened by local competitors. Delivery time is a crucial factor to any of the online company include eBay. Different delivery time cost different but will all affect the satisfaction of the customers. High fee eBay’s fees for the sellers has risen significantly over the years. The firm receives fees on listed goods, sold goods, some adornment fees and PayPal transaction fees. The sellers often make zero profit on their low price products sold on eBay due to its high fees. The mode of eBay fee system is that when new business consortium is going to come in, start an alternative to eBay, and put eBay out of business with a year. They will do this by allowing sellers to list for free. Since the site takes a percentage of every sale, it is to their interest to list as many lots as possible. Charging listing fees limits the total number of lots for no good reason. Another high fee comes from eBay’s feedback system. eBay has a policy that after a few of fake negative feedbacks, left as a form of extortion, a seller's rating will drop below 4.6. At that point eBay punishes the seller by downgrading all his lots on the searches, and increasing his fees. It is control method but it also cause the high fees. No further growth strategy eBay hasn’t unveiled any plans on how the business is going to sustain its growth. Firm’s top management team is unsure whether eBay should become a retailer or to introduce new products and services and how to do that: developing its own products or acquiring new business. As a result, there is high uncertainty over eBay’s future and business direction. Inability to penetrate some foreign markets Penetration in foreign markets is crucial to the success of online auctions. EBay has done an outstanding job of penetration in foreign markets. However, they have been unable to take over one of the most crucial foreign markets, like Japan. Japan is one foreign market that is on the rise. They are becoming more prosperous and use of the internet is growing. If eBay is not able to gain ground in this market it could hurt its foreign market standing. PayPal maybe is another reason. PayPal currently has only limited global presence. In most countries, it is still associated as a payment means on eBay. Efforts similar to the ones underway in the U.S. can see PayPal beat the projections and continue at its current revenue growth for several years down the line. Lack of in-depth descriptions for products eBay is regarded as lack of in-depth descriptions for product. But its competitor amazon has this outstanding features. Amazon boasts in-depth product descriptions for all merchandise sold on their site. The lack of description in products could be a factor in the amount of counterfeit and wrongly identified products that are sold to customers. To tackle on their weakness, eBay should consider: Make it more difficult for scammers to be able to take people’s money. The fact that they do not have much protection amongst scammers on their website hurts them because consumers do not believe that it is are liable website. Technology malfunctions are always going to be a factor when dealing with websites and online shopping. eBay must take measures to keep malfunctions as low as possible to retain happy customers and to keep hackers out of personal PayPal and eBay accounts. The recommendation is to control the price of shipping. A lot of sellers on eBay charge whatever they want for shipping while others do not even charge for it. Revise and adjust the fee system. And all the fees and details should be shown explicitly on the 'Preview Listing' page.
Mobile usage Mobile usage is expected to grow over the forthcoming years. The increase in mobile usage will present eBay with an opportunity to boost the number of users it has, as well as its revenues and profits. It is predicted that future Internet usage will be boosted by factors such as the adoption of broadband technology. The NFC payment system presents an opportunity for the payment processing arm of the company to attract customers in using the system for eBay’s purchase as well as others. International expansion eBay has already had some success in its international expansion efforts. Revenues derived from international activities currently account for around 30% of the company’s overall revenues. New markets eBay could seek to diversify into new markets in which it does not operate at present. The company could look to diversify into markets where it can leverage the technological know-how and brand name it possesses to its benefit. Diversification into other markets will give the company the opportunity to generate increased revenues and profits. Market penetration eBay could also choose to penetrate the market to a greater depth in order to generate revenues and profits in the future. Although eBay has around 160 million registered users at present, there are many millions more Internet users in the world that could potentially become eBay users. This represents a very large untapped market for the company. eBay should look to pursue a business strategy that will allow it to capture as much of these potential eBay users as possible. Increase services portfolio thru acquisition. Changing lifestyles (people are using the internet more and more to pay bills, talk to family and shop. EBay can use this opportunity for continued market penetration and expansion. To capital their opportunities, they should: EBay can capitalize on the trend of NFC by enabling the process payment system in EBay’s exchange and earned service fees as it did with Paypal. The company could look to further its international expansion efforts in order to capture a leading share in markets that at present are untapped but have a high potential to generate revenues in the future. EBay should consider the retail markets. EBay has an access to hugest online marketplace in the world and is well placed to take an advantage of that by becoming a retailer. The company has its IT and CRM systems in place already and could easily stake out a market share from Amazon and other online retailers.
There are several threats that eBay faces. These threats include online security, competition from Amazon, exchange rates and regional low cost online retailers. These items are threats in the following ways. Online Security - PayPal stores customer information and that makes it a target for online thefts. The more customers PayPal has the more attractive it is to identity thieves. Regional Low Cost Retailers – they can outperform eBay in providing faster and cheaper shipping and better knowledge about the home market. Increasing competition from Amazon – Amazon’s online marketplace has significantly increased and is just behind eBay’s Exchange rates – Part of eBay’s revenue comes from foreign operations. These profits if sent back to the US need to be converted to dollars and may be affected by exchange rates.
Ebay - Presentation for Strategic Management class
Hien Le, Thinh Nguyen, Xuannan Le, Xiang Rong, Neil Cooper
Founded by Pierre Omidyar in 1995
Current CEO: John Donahoe
International online marketplace
Over 15000 employees in over 39 countries
Millions of items listed on eBay across thousands of
IPO in 1998
Traded as NASDAQ:EBAY
Market Capitalization: $68.18 Billion
Product and service
Key products and services:
Online services for the sale of goods and services
Online communication services
Online payment and transactional credit services
Global commerce platform and payment leader.
The world's largest online marketplaces
PayPal - flexible and innovative payment solutions
eBay Enterprise - exceptional, engaging shopping
experiences online and offline.
Porter’s 5 Forces Model
- Mobile – more sales
- Free and faster shipping
- Business without borders
- Content marketing is
- Growth of guided discovery
- Consumer driven demand
“eBay Inc. enable commerce by
delivering flexible and scalable solutions
that foster merchant growth”
Marketplace Payment CTO CFO SVP
Two core businesses
- eBay Global Marketplace, led by Devin Wenig
- Payment, led by Dan Schulman
CEO John Donahoe
- Oversees strategic and financial planning, marketing, operations, product
development, and business development for eBay North America and eBay
- Receives reports from various departments, including legal, marketplaces,
communication, Shopping.com, international and human resource.
Innovative business model
Large range of item
Technology platform (website, paygate, mobile)
Resources V R I O
yes no yes yes Temporary
Globalization yes no yes yes Temporary
Business level strategies
Quality control by offering
Alliances with numerous
Cost saving way to start
a business on eBay,
offering all types of items
and broad providers
Acquisitions and joint
ventures with global
Corporate Level Strategies
•UPS: improve delivery
•Microsoft: expand online
•Registered members: >
•Rely on local sites
- Where, Inc
- Bill Me Later
Financial performance in
the last 5 years
Changing payment model
Paypal acquired Bill Me
Later in 2008
Allow purchases without
using a credit (6 months to
pay their bill in full).
over time while
collection period went
It might be a
troubling signal for
Opportunities & Challenges
Diversity in Products
Strength in Technology
Users Data Base
Opportunities & Challenges
Inability to measure illegal
activity on site
Cost of shipping
No further growth strategy
Inability to penetrate some
Lack of in-depth
descriptions for products
Opportunities & Challenges
- Make it more difficult for scammers to
take people’s money
- Keep malfunctions as low as possible
- Control the price of shipping
- Revise and adjust the fee system
- Enable the process payment system
- Further its international expansion
- Consider the retail markets