eBay SWOT Analysis

Niraj Shrestha
Northwestern Oklahoma State University
About eBay
 The online auction site was founded
in San Jose, California by Pierre
Omidyar as AuctionWeb. The very
first item sold on eBay was a broken
laser pointer for $14.83. eBay’s first
target was collectors of antique
products and the sellers of antiques,
but later it changed into a global
market place for all buyers and
sellers.
eBay
 eBay is an Achilles of the online auction
industry, like Achilles its heels are its
weaknesses. eBay manages eBay.com, an
online auction and shopping website
where, buyers and sellers transact goods
and services worldwide. A company like
eBay must always know its strength,
weaknesses, opportunity and threats and
to reveal and evaluate this four things a
SWOT analysis is a must.
What is SWOT
 SWOT Analysis is a strategic planning tool
used to evaluate the Strengths and
Weaknesses considered internal and
Opportunities and Threats which are
considered external. It involves specifying
the objective of the business venture or
project and identifying the internal and
external factors that are favorable and
unfavorable to achieving that objective.
This technique is credited to Albert
Humphrey, who led a research project at
Stanford University in the 1960s and
1970s using data from the Fortune 500
companies.
Strength
 eBay is the worlds largest online
auction website. It is a giant
marketplace used by millions of
people all over the world to buy and
sell all things one can possibly think
of. It is capable of attracting vast
audiences with diverse needs.
Strength
 The company uses the power of
customer relationship management
by collecting data of buyers and
sellers registered with the company.
This is a big strength of the
company as the data collected can
generate reports and statistics that
can make the company better and
address its weaknesses and threats.
Strength
 eBay gives a whole new meaning to the
word middle man business. It does this by
providing extra ordinary tools to sellers
which, lets the seller target their products
to the buyers. It also provides buyers
with wonderful search tools, to get to the
products they are looking for. eBay has
made a very powerful platform for both
sellers and buyers by being seamless and
invisible but at the same time facilitating
Customer to Customer relationship.
Strength
 Diversifying has been a key policy
of eBay. It does this by not only
diversifying its products but also its
market, by branching and localizing
in countries like India, China and
U.K.
Strength
 Staying ahead of the competition
has always been a focus of eBay. A
fine example was acquisition of
Paypal to support its online auction
with a robust payment method. The
combination of these two has been
a knockout as it has given
opportunities new small startup
businesses and helped facilitate
enterprise businesses.
 Weaknesses
 eBay does a very bad job of controlling fake
or illegal auctions. There are numerous
auctions still out there whose main purpose
is to scam the buyers or are illegal auctions.
A good example would be scammers trying
to sell just the packaging box of the product
and claiming it to be the real product.
These sellers save themselves by claiming
that the information about the product
being just the packaging box is stated in
the auction description, which is true. But
the statement is in a very fine print.
Weaknesses
 The company uses the power of
customer relationship management
by collecting data of buyers and
sellers registered with the company.
This is a big strength of the
company as the data collected can
generate reports and statistics that
can make the company better and
address its weaknesses and threats.
Weaknesses
 One of the weaknesses of eBay is
the sellers being able to enforce the
payment method of their choice.
This is a big favorite among the
scammers as they choose a
payment method like money
transfers which does not protect the
buyers from losing their money and
buyers not retuning back to eBay.
Weaknesses
 Shipping has been one of the
biggest problems while shopping on
eBay. Sellers to make their products
on top of the search list practice
lowering the price of the product
while increasing the cost of the
shipping as much as twice the price
of the product. This has lead to
buyers fleeing away to retail stores
for better deal.
Weaknesses
 Another weakness of eBay is its
inability to control the contents of
the auction and auction items. Most
of the content is checked only after
the content or the auction has been
posted. Due to this inability it
facilitates large sale of copyrighted
and not for resale items.
 Opportunities
 One opportunity that eBay saw was, how to sell a
product like a normal website, an auction takes
three to fifteen days to end. This is a long time and
buyers tend to lose their interest. eBay saw a
weakness and an opportunity at the same time,
thus the Buy it Now button was created where,
sellers can offer their product with a static price and
offer it on buy it now. Buyers then can straight
away buy the product without having to wait for the
auction to end. Further more a new tool Make an
Offer is now available which gives buyers the power
to offer a price to the seller for a product, if the
seller agrees the transaction goes forward or the
buyer just deny the offer.
Opportunities
 Acquiring Skype the online telephony
company came as a shock to everybody
as eBay did not have anything to do with
VOIP technology. eBay brought Skype
Technologies in a deal reported to be
worth $2.6 billion. eBay now has
integrated Skype so that buyers can talk
directly to the sellers using skype voice
chat. This is altogether a new opportunity
for eBay as it helps bring the buyers and
sellers closer.
 Opportunities
 eBay has always believed in diversifying in
every possible way so using its diversifying
techniques, eBay has now started localizing
its website allover the world. A good
example would be personalized eBay
website for different countries like UK even
developing countries like India and China.
This is a big opportunity, as the out
sourcing booms in these countries have
significantly increased the spending limit of
the consumer.
Threats
 eBay as it is expanding and
diversifying on foreign soil, it may
be threatened by local competitors
in the domestic market as the
auction trends and the way they do
transaction might differ locally.
Threats
 One of the biggest threats to eBay
is the scammers and the phishers
which use eBay’s name to scam
people. For example name of eBay
and Paypal in scam email asking
user to update their account
information has been in high
numbers. This has lead to many
eBay and Paypal users distrusting
the services provided by these
companies and never coming back.
Threats
 eBay has lots of tools for the sellers
and buyers but there is no seamless
integration of eBay seller store. The
eBay seller store still looks like
eBay.
 Threats
 A recent threat that has appeared as a
competition to eBay is Google. Google has
introduced Google Checkout a rival to
eBay’s Paypal. Google has always been
threat to other IT companies and with
Google Checkout it has targeted Paypal. A
recent aggressive strategy being used by
Google is giving huge discounts on products
all over the internet to attract buyers.
Google has gone to a extend on setting up
a conference and a party for significant
eBay and Paypal users, the main goal of the
party was inviting people to switchover.
This was not well taken by eBay.
Alternatives
 eBay needs to do a better job in
controlling the content, it needs to block
certain illegal and fake auctions and at
the same time be able to protect
copyrighted material on eBay. This is
possible and eBay is doing this to counter
all the scammers however we can still find
auction that are fake, illegal and other
copyrighted materials. The advantage of
using this alternative may result is lower
amount of scams, illegal auctions and
happy.
Alternatives
 Shipping Calculator is must have for
eBay, due to huge number of sellers
exploiting this weakness of eBay
buyers have flocked to other
website where the price might be
higher on eBay but with shipping
price, it is cheaper than eBay’s
price. This tool would really bring
more buyers to the site and can
trust on the prices of the products.
Alternatives
 Standardize Payment method is a must for eBay to
be more reliable to the buyers. Everyday hundreds
of buyers are being scammed by sellers using an
alternate payment method like money order which
has no fund security. By using Paypal as the
standard payment method the buyers can use both
their checking account and credit card to pay the
sellers with some peace in their minds. eBay still
need to provide alternate methods to its sellers as
some countries do not allow Paypal transfers.
However, eBay should devise a strict plan or a
certification for sellers to offer alternate method of
payment. This method will filter out all the sellers
with bad intentions that just take the money and
leave the buyers hanging. A trust factor is
increased between the buyers and sellers. Also
buyers can be assured of sellers that offer
alternate payment as they are all eBay certified.
Alternatives
 Localization is a keyword, just imagine
being able to find an item in the city you
live in and not have to deal with the
hassle of shipping or waiting for the items
to arrive for days. This feature can be a
favorite among all as it can attract
furniture sellers and garage sale items.
eBay currently has a half of this option
but is located in a very hard to see
location. Making this feature full-fledged
feature and using it as one of the primary
option can help a whole new set of buyers
and sellers.
Alternatives
 A good way to get away from the
email scam would be using some
kind of digital signature, so a user
can just push a button to verify the
validity of the email. The advantage
of the solutions is no more fake
email to scam people.
Recommendation & Conclusion
 eBay has always done very well in
focusing its company’s goals and
has been fast in grabbing onto
opportunities. However, the
weaknesses and threats mention
above might just be the Achilles
heel for eBay. Looking at the list of
alternatives, it can be regarded and
a to-do list for eBay.
Recommendation & Conclusion
 The right path would be to first take care of the
email scams that are using eBay names and
scaring all the buyers off. Next would be to filter
the content of eBay shunning away all the
scammers and illegal auctions, then build a
shipping calculator of various delivery companies
that a seller can use to put the right price of the
shipping rather than sellers using this flaw to fill
their pockets. Further down the road implementing
a standard method of payment and certified sellers
with alternate method would be a best bet as this
would give the buyers a break and keep more
scammers away like the foreign sellers where a
buyer cannot take any action. Localization tab will
help draw more buyers and sellers to the website
as it connects them within their city limits. It’s just
like having a garage sale on eBay all week long.
Recommendation & Conclusion
 SWOT analysis should always be
considered by all companies as it helps
show companies all their weaknesses and
threats. At the same time it also shows
what the companies’ strengths and
opportunities are. Using this analysis
companies can focus on their good part of
the business and focus more on the bad
part to make it good. Also a company can
see what factors are external or internal
which helps the business in a long run to
be more efficient.
Thank You