EBay Analysis, Business Essay Example

Published: 2022-05-02 14:51:32
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E-commerce is rapidly gaining prominence due to the faster growth of internet users across the globe as many people have access to a faster internet connection and internet-enabled phones and computers. E-commerce creates a large market that is accessible anywhere and anytime. EBay Inc. is a good example of an online trading company that has capitalized on the ever-growing internet use to expand and grow. This paper describes eBay Company as well as a thorough analysis of its EC presence. The paper further synthesizes lessons learned from the business model of the company and what the company needs to do to ensure success continuity.

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The Description of the eBay Company

The company is a multinational company headquartered in San Jose, California, with Pierre Omidyar as its founder in 1995. The company has over the years, becoming a giant in auction-related activities. According to EBay Inc. (n.d), the company has over 200 million registered users and employs more than 13,000 people. This company derives its success from the booming e-commerce and increased internet usage.

The company offers an online platform in which traders meet virtually and exchange their products. This company is referred to as a non-merchant business since it facilitates sales and purchase of products without owning any goods or products. According to EBay Inc. (n.d), the official website of eBay is available on mobile Apps on iOs and android. In addition, the company website exists in the application programming interface that allows third party websites and applications to access the company's database and services. Other than marketplace services, the company offers ticket exchange and classified services. Notably, the company has grown to include instant shopping services, UPC or ISBN shopping, classified online advertisements, online money transfer, and online event ticketing. For instance, the company provides online classified adverts through its eBay Classifieds platforms, ticket trading through StubHub platform, and money transfer though Paypal. It is imperative to note that the company deals in all kinds of goods and products such as collectibles, cars, electronics, fashion, and so on (EBay Inc., n.d).

Business Model of the eBay Company

The company creates value by providing a platform for display and exchange of products by providing business to customer as well as customer to customer services through the internet. To finance itself, the company levies a non-refundable insertion fee in which the seller is expected to pay before listing his or her items on the company's website. The second type of fee is the commission charged on every transaction made during the exchange of displayed products. It is prudent to note that this commission is payable by the seller as the buyer is not subjected to any form of additional cost. Moreover, eBay captures value through advertising through offering new methods that other companies promote their brands and services.

Characteristics of eBay e-Commerce

Ubiquity

The marketplace for eBay is available everywhere: at home, at school, and at work. This enables shopping to take place anywhere as long as a person has access to an internet connection and a mobile phone or computer. This enhances customer convenience as well as reducing shopping costs.

Global Reach

The company, eBay Inc., enables trade to be carried out across national and cultural boundaries. This enables billions of customers worldwide to exchange their goods more conveniently. The company therefore creates a large market through which buyers and sellers interact (EBay Inc., 2014).

Universal Standard

The company adopts internationally accepted standard media and technology to aid in the exchange goods and services as well as interaction of sellers and buyers. The technology and media used is the internet that connects billions of people across the global.

Richness

The company uses various types of media to improve customer experience. It displays and advertises products through video, text, and audio messages. It is imperative that these media can be integrated into unitary marketing message to improve customer experience.

Interactivity

The eBay website enables interactivity with customers through a dialog box. This has the effect of dynamically adjusting customer experience as well as making the buyers to co-participate in product delivery to the market.

Information Density

The company's website stores voluminous amount of data which reduces information cost. This greatly increases quality, accuracy, timeliness, and availability of information required to facilitate exchange of goods and services.

Personalization/Customization

The market messages for eBay Inc. are personalized to allow for customization of goods that are delivered to groups or individuals based on given characteristics.

Social Technology

The company, eBay Inc., creates and facilitates social interactions between sellers and buyers. This is achieved through the use of various platforms such as web conference with clients, social media sites, and the company's website.

Porter Five Forces

Competitive Rivalry within the Industry

The competitive rivalry within the industry can be described as medium to high. Clients have the ability to purchase products from an extensive range of , distributors, retailers, auctioneers, search engines, and so on, which make the competition very intense. Moreover, EBay need to compete with some major competitors such as Amazon and AliExpress. However, EBay has already a strong brand name that can enable the company to stay competitive in this highly competitive market (Roy, 2011).

Bargaining Power of Customers

Customers have a high bargaining power since there is a huge competition in the e-commerce. Customers have the choice between a wide range of online and offline players. They can easily switch from one to another which makes them very sensitive to prices. For example, customers can easily switch to eBay's biggest competitor Amazon. Moreover, the fact that clients have access to a lot of information concerning online auction and similar services, increase the bargaining power of customers. This is due to the density of information that the internet offers. However, eBay uses a corporate social responsibility (CSR) in order to attract clients through appropriate management tactics that enhance the image of the global business.

Threat of New Entrants

There are low barriers to enter the e-commerce market because anyone can easily start selling products on any online platform and it doesn't require a high capital to start an online business. However, new entrants need to make a lot of marketing efforts in order to compete with big companies like eBay and Amazon and to earn market share.

Bargaining Power of Suppliers

There is a limited bargaining power of suppliers because there is a huge number of existing suppliers (sellers) that publish their products on eBay's website. If eBay implement new rules that will not please sellers or increase the insertion fee that they pay when listing their products on the website, they can switch to the Amazon or another auction website. Moreover, all the sources that create traffic on the company's website can be considered as suppliers (Walder, 2013).

Threat of Substitute Products

The threat of a substitute product is low to medium because on eBay's website, customers can find a variety of different products. Moreover, eBay has the ability to introduce new products which will enable them to respond to changing trends. However, supermarkets like Walmart and target can represent a major substitution to the company's marketplace while ticket offices and others online website can represent a substitute to eBay StubHub (online sales on ticket). Concerning eBay Classified, Yellow pages can represent a substitution (EBay Inc., n.d).

SWOT Analysis

Strengths

The company has a strong brand name, largest online auction forum, over 27000 different categories of products, and high service effectiveness.

Weaknesses

The company suffers from potential technological malfunctions and an imitable business model which threatens its profitability and future success.

Opportunities

There is rapid growth of Internet use among populations around the world of different cultures, age, religion, and so on. Additionally, there is a potential success of online shopping that the business can explore for its future expansion and growth.

Threats

The threats include increase of online trading sites, rapid growth of Amazon, high competition, and rising internet and litigation fraud which threaten the survival of the company.

The SWOT analysis for the company is as summarized below.

Strengths Weaknesses

Strong brand name

Largest online auction forum

Over 27000 different categories

High service effectiveness

Technological malfunctions

Imitable business model

Opportunities Threats

Rapid Growth of Internet use

Success of online shopping

Increase of online trading sites

Rapid growth of Amazon

High competition

Rising internet and litigation fraud

Lessons Learned From eBay Company in Inventing Business Model

Many lessons can be learned from the business model of eBay Inc. The first lesson is that for a company to achieve reasonable profit margin, it needs to diversify its activities. Rather than concentrating on a particular product, the company should adopt product differentiation to gain competitive edge, thus profitability. It is also worthy to protect the consumer, in this case the buyer, from over-exploitation by avoiding overcharging of the consumers who use the company services. This is tailored towards gaining competitive edge in the corporate market, thus profit realization. The last lesson learnt is that innovation in business is paramount in delivering quality products which ensure future success of the business (EBay Inc, 2014).

How eBay Company Can Ensure Continuity of its Success

The company can ensure continuity and success through enhancing of customer experience. This will give the company every reason to use the company's services over the company's competitors. To do this, eBay needs to design its website such that it helps online buyers or customers to limit their product search. This will facilitate faster product searches thus time conservation. The ramification for this will be a satisfied customer, thus customer loyalty. Furthermore, the company needs to encourage product reviews by its customers. This will help it to gather information about how best it can structure its operations that will ensure maximum customer satisfaction, leading to its success and continuity.

Conclusion

EBay Company has enjoyed dominance in the e-commerce industry due to its wide range of products as well as enhanced customer experience. The company has also diversified operations that make it to generate returns and profits. In addition, eBay has a well-structured business model that enables it be competitive in the market, thus enabling continuity and success of the business. In order for the company to compete with other e-commerce companies, it needs to customize its website to enable faster search of available goods.

References

EBay Inc. (2014). EBay Inc.'s Steve Yankovich Discusses Innovation Strategies. Viewed on 12 April, 2018, from www.ebayinc.com/stories/news/ebay-incs-steve-yankovich-discusses-innovation-strategies/

EBay Inc. (n.d). Our Businesses. Viewed on 12 April, 2018, from https://www.ebayinc.com/our-company/our-businesses/

Roy, D. (2011). Strategic Foresight and Porter's Five Forces. GRIN Verlag.

Walder, J. (2013). A critical evaluation of Michael Porter's Five Forces Framework. GRIN Verlag.

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