Can eBay Continue Growing

1. OTHMAN YEOP ABDULLAH
GRADUATE SCHOOL OF BUSINESS
UNIVERSITI UTARA MALAYSIA
BPMN 6053
MANAGEMENT INFORMATION SYSTEM
GROUP ASSIGNMENT: CASE STUDY
“CAN EBAY CONTINUE GROWING”
PREPARED FOR:
DR ARFAN SHAHZAD
PREPARED BY:
OII MIN JIE 817464
ROSLINI BTABDUL RAHMAN 813632
RUZAIMAH BT JAAFAR 817370

2. CASE STUDY
1. What is eBay’s business model and business strategy? How successful has it
been?
- eBay’s business model is that of an online auction market. It stores no
inventory and ships no products. It derives its revenue from the movement of
information, and ideal task for the Internet. As such, eBay’s business model is
ideally suited to the Web. eBay has mass appeal because its fully automated
auction service helps buyers and sellers trade high-end articles as well as
more mundane and practical items. eBay has been a tremendous success
story.
- eBay has undertaken a number of initiatives to help it continue its growth.
They include:
• Introduction of eBay Motors as part of an effort to encourage the sale of
bulky items that are too expensive to ship.
 In combination with the standard eBay seller feedback ratings,
eBay added extra measures of protection in the form of used-
vehicle warranties and purchase protection up to $20,000.
 eBay Motors includes subcategories for boats, motorcycles,
parts and accessories, and more.
• Implemented the “Buy It Now” feature, which enables sellers to name a
price at which they would be willing to sell an item to any buyer. Buyers have
the option to purchase the item instantly without waiting for an auction to
end.
• Acquired Half.com, which offers person-to-person selling of goods such as
books, CDs, videos, and games without the auction process.
• Purchases of Shopping.com, an online shopping comparison site.
• Launched eBay Stores that enables sellers with a proven track record, a
verified ID, or a PayPal account to set up an online storefront and
offer fixed-price merchandise.
• Acquired VoIP service provider Skype Technologies to provide a service for free
or low-cost voice calls over the Internet.

3. 2. What are the problems that eBay is currently facing?
- eBay’s growth strategy is based on expansion in geography and scope and on
continuing innovation to enhance the variety and appeal of products on its sites.
eBay has taken its model to numerous foreign markets and been successful,
particularly in England, France, and Germany. It is also working hard to gain a
foothold in the Chinese online auction market.
- Problems that eBay is currently facing include:
• Growth rates have b e e n hindered somewhat in the U n i t e d S t a t e s and
Germany by an increase in seller fees.
• Domestic growth has slowed to about 20 to 30 percent annually.
• VoIP service may not be welcome by many of eBay’s top sellers.
• Concerns that VoIP may stimulate eBay’s “ gray market” consisting of items
sold outside the eBay structure to avoid seller fees.
• Expansion into Japanese market was successfully challenged by Yahoo!
• Attempts to expand into China i s being fiercely c h a l l e n g e d by Alibaba who is
40 percent owned by Yahoo!
• Market potential for services in China is unknown due to the low percent of the
Chinese population who have computers and actually use the Internet. Also
the per capita income in China is very low.
• eBay’s growing international presence may make it difficult to monitor
compliance with the variety of laws and regulations that apply in different
jurisdictions.
 The largest threat to eBay is the honesty and integrity of its auctions, over
which it has some, but not total control. They have opened themselves up to
lawsuits from buyers claiming to have been defrauded by online sellers. Some
buyers allege that eBay does not do enough to prevent unscrupulous
sellers from collecting inflated fees for goods that are not legitimate, or worse,
do not exist.
 eBay users have also been victims of identity theft scams that resulted in the
unauthorized use of their accounts.
 Onus on eBay to provide its users with a secure trade environment has caused
some users, and former users, to accuse eBay of not adequately
addressing the issue of fraud.
 Smaller auction sites are guaranteeing the authenticity and quality of
transactions and vendors.
• eBay struggles with the task of providing customer service.
 They have two types of “customers”: online buyers and online sellers
(can’t satisfy both).
 Fraud complaints often result in an automated response from eBay that
encourages buyers and sellers to resolve disputes on their own.
• Raising of eBay Store fees caused many store owners to shut down their stores
and look for other means to conduct their business.
 Exodus of dissatisfied customers is a concern for eBay however; it also
causes concerns for Wall Street investors.
 The more money eBay spends on customer service issues, the more it cuts
into profits, which also makes Wall Street nervous

4. 3. How is eBay trying to solve these problems? Are these good solutions?
Are there any other solutions that eBay should consider?
- eBay is making efforts to remain in touch with its community of users. Some
things that they have tried include:
 Program called Voices, which brings buyers and sellers together 10 times a
year at corporate headquarters.
 eBay monitors every transaction and uses statistics in real-time, enabling
timely troubleshooting.
 Rules, Trust, and Safety committee judges whether questionable listings
should be permitted on the site.
- On the whole, all of these are good solutions to some of the issues and problems that
e-Bay is facing. However, many eBay customers are not happy with even deeper
levels of customer service.
- The other solution that eBay should consider are:
 Need to focus more on monitoring their security and sellers merchandise.
 Need to offer better customer service or eventually the negative word of mouth
might catch up to them
4. What management, organization, and technology play a role in eBay’s response
to its problems?
- Management:
 Provide secure trading environment in light of the growth in online crime and
instill confidence in eBay customers. Demonstrate that fraud of any type is
taken seriously do everything in their power to stop it.
- Organization:
 Revamp policies to address issues such as security, fraud, and customer
service.
- Technology:
 Set up new Web-based business models.
5. Will eBay be successful in the long run? Why or why not?
- Yes, eBay will be successful in the long run. Because:
 Well established and profitable business model and strategy.
 Able to adapt rapidly changing of customer trends and competition.
 Well known and name recognition.
 Able to identify its current challenges and issues.