SWOT analysis of eBay

This is an an eBay Inc. SWOT analysis for 2013. For more information on how to do SWOT
analysis please refer to our article.

Company background
Name

eBay Inc.

Industries served

Internet, Online retailing

Geographic areas served

Worldwide

Headquarters

U.S.

Current CEO

John Donahoe

Revenue

$ 14.07 billion (2012)

Profit

$ 2.60 billion (2012)

Employees

27,770 (2012)

Main Competitors

Amazon.com, Craigslist, Ubid, eBid Auctions, Google,

Overstock.com

eBay is an international online marketplace with a global customer base of 233 million. It is a
multibillion business operating in 37 countries. There are millions of items listed on eBay across
thousands of categories, including antiques, toys, books, computers, sports and electronics,
amongst many others.
You can find more information about the business in its official website or Wikipedias article.

SWOT

eBay SWOT analysis 2013

Strengths
1.
2.

Worlds largest internet marketplace

Business model (no strong direct
competition)

Weaknesses
1.

High fees

2.

No further growth strategy

3.

Economies of scale

4.

Localization

5.

Payment system

6.

Brand reputation

3.

Opportunities

Threats

1.

Growing number of mobile shoppers

1.

Online security

2.

Become a retailer

2.

Regional low cost online retailers

3.

Increase services and product portfolio 3.

through acquisition
4.
4.
Open more online stores in other
countries

Increasing competition from Amazon

Exchange rates

Strengths
1.

Worlds largest internet marketplace. eBay has more than 150 million live listings and
more than 105 million active users globally in 37 countries. That makes eBay the largest
marketplace online, having a great power over other online retailers.

2.

Business model. eBay only acts as a middleman between sellers and buyers, who bid and
sell items in eBays marketplace. Being a pioneer in online auctions, eBay had no competition
and currently has only few strong direct competitors. Thus, companys business model is a
competitive advantage over such giant retailers as Amazon.

3.

Economies of scale. In the beginning, eBay had to invest heavily to gain IT and customer
relationship management (CRM) knowledge and skills, but since then, used its skills to serve
over 100 million users and to create the largest online marketplace with little additional costs.

4.

Localization. The business operates in 37 countries. Each marketplace is using local

language and is adapted to local product offerings. No other global online marketplace is
localized to such degree.

5.

Payment system. eBay uses PayPal, its own payment system, to proceed nearly all of the
payments going from eBays marketplace. From eBays perspective, such tight integration has
the benefits of more fees collected (PayPal takes transaction fees from the businesses) and
tighter control over buyers shopping experience. From buyers perspective, PayPal provides
easy to use online payment method.

6.

Brand reputation. eBay is a trustworthy brand, known all over the world and is valued at
$11 billion.

Weaknesses
1.

High fees. eBays 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.

2.

No further growth strategy. eBay hasnt unveiled any plans on how the business is going to
sustain its growth. Firms 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 eBays future and
business direction.

Opportunities
1.

Growing number of mobile shoppers. eBay has a strong payments system PayPal that is
widely accepted and used by many online retailers and online shoppers as it is convenient and
easy to use. The growing number of mobile shoppers represents a huge growth opportunity for
PayPal as its one of the few payment systems that meets the requirements for convenient
shopping and payment processing on the go.

2.

Become a retailer. 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.

3.

Increase services portfolio through acquisition. The company has successfully acquired
many companies to extend its services offering and should continue adding new services through
mergers and acquisitions.

4.

Open more online stores in other countries. To sustain current growth levels, eBay could
open its online marketplaces in other large and growing economies in Asia and Europe.

Threats
1.

Online security. PayPal stores online shoppers personal information, such as bank account
details, which is a target for online thefts. The more online customers PayPal has, the more
attractive as a target for identity thefts it becomes.

2.

Regional low cost online retailers. Regional low cost online retailers could outrival eBay
on faster and cheaper shipping, more localized product offering and better knowledge about
home market.

3.

Increasing competition from Amazon. Amazons online presence has significantly

increased and now Amazons marketplace is just behind eBays.

4.

Exchange rates. eBay receives a part of its income from foreign operations. The profits that
are sent back to US have to be converted into dollars and may be affected by the exchange
rates, especially when the dollar is appreciating against other currencies

Strategic Analysis on Flipkart

Strategic analysis on Flipkart

The purpose of your analysis is to assess the current competitive position of the firm
and to make recommendations on how to improve that position.
Flipkart: Flipkart is a company founded in the year 2007 by Sachin Bansal and
Binny Bansal. It is an e-commerce company that made online shopping popular in
India. It offers various products on online like books, mobile phones, digital

cameras, laptops, watches etc. Initially, it has started selling books online and later
it has spread to offer many products.
1. SWOT analysis on Flipkart
2. Pestel framework.
3. About industry.
4. Competitor analysis.
5. Porters five forces model.
6. Current competitive position- generic porters framework.
7. Actions recommended to improve its position.
Strategy, mission, values of flipkart:
The mission of Flipkart is to provide their customers a memorable online shopping
experience.
The Vision of Flipkart is to become Amazon of India.
Core values of Flipkart:
1. Customer Obsession
2. Ownership
3. Impact
4. Honesty
5. Selflessness
6. Communication
7. Innovation
By seeing the mission and values of the organization, we can infer that they are in
sync with each other. For example, its mission statement reads out that it wants to
provide customers with online memorable experience and one of its values is
customer obsession. So, until and unless you are concerned about your customers
or obsessed with your customers, you cant provide delightful experience.

SWOT Analysis:

Strengths:

Weaknesses:

1.

Strong Brand value

2.

Own Logistics Arm e kart

3.

Own
Online
payment
solution Payzippy

4.

1.
2.
gateway
3.

Own Marketplace model

Opportunities:
1.
2.
3.

Secretive and Political Culture.

Excessive
focus
on
expanding
customer base rather than pulling
profits

Threats:

Online fashion and apparel business 1.

Providing logistics
competitors.

Investor driven organization Or lack

of Independent board

services

to

From
competitors
Snapdeal,Infibeam,
its
Homeshop18 etc.

like

Amazon,
Indiaplaza,

Growth in online retail sector in India

Reasons for Strengths:

Flipkart is a company which has entered into online E-Commerce industry very
early. It has strong brand value in India.

Flipkart has developed its own logistics arm E-Kart, which has been initially used
for in-house deliveries.

Recently, it has developed its own payment gateway solution provider, where
customers can save their credit card details, Payzippy.

Flipkart has its own marketplace model where sellers need to register in this
platform and buyers can negotiate with the sellers on varied service levels and it
also helps company to reduce its own inventory. Flipkart will just deliver those
products.
Reasons for Weaknesses:

Most of the money has been invested by Venture firms like Tiger global and Accel
Partners. SO, most of the decisions that are taken by founders of firm have to been
approved by Investors.

Secretive and political culture is followed in this company while they are recruiting
hires which is creating problems in this company.

Flipkart is excessively focusing on expanding customer base rather than pulling

profits in the process having cash burn.

Opportunities:

Flipkart can venture into online apparel and fashion business, where the gross
margins are higher.

Flipkart can offer its logistics services to its competitors in online retail sector with
its logistics arm E-kart. With online commerce sector going to boom in the coming
years, online transactions are going to increase. So, if Flipkart offers its logistics
services to its competitors, it can gain money from those transactions.
Threats:
Flipkart is facing a lot of competition from some of the online retailers like Amazon,
Snapdeal, Indiaplaza, Homeshop18 etc.

I would discuss briefly about industry in which Flipkart is operating. Flipkart is

operating in online retail industry.
Online Retail Industry: Online retail industry is 1.4-1.6 billion $. According to a
recent TechnoPak report, e-tailing has the potential to grow more than hundred-fold
in the next 9 years, to reach $76 billion by 2021. This growth will be driven by the
country's growing Internet-habituated consumer base, which will comprise 180
million broadband users by 2020, and a burgeoning class of mobile Internet users.
In the next five years, Indian online retail industry will grow to 10 billion $. Some of
the major challenges for online retailers are customer loyalty, trust, and education.
Most of the customers prefer Cash on Delivery option instead of credit/debit card
payment. So, this makes online retailers to lose some of the cash as the delivery
companies will keep the money for 15 days and later they pay to these online retail
companies. The major players in this industry are Flipkart, Snapdeal, Amazon,
Myntra, Jabong, Homeshop18, Indiaplaza etc.
Now, with some information about online retail industry in India, we will go for the
Porters five force framework and analyze this industry.
Porters five forces framework:
Supplier power:
In this industry, suppliers are the manufacturers of finished products like Nike, Dell,
Apple etc. Online retail companies sell various products ranging from books to
computer accessories to apparels to footwear. Since there are many suppliers for
any particular category, they cant show power on online retail companies. For
example, if you take computers category, there are many suppliers like Dell, Apple,
Lenovo, and Toshiba who wants to sell their products through these online retail
companies. So, they wont be having power to control the online retail companies.

Online customers can select the products on their own and the switching costs in
this case is zero. It is very difficult for manufacturers of finished products to come
into this industry because of challenges in Logistics. Online retail industry is
important to suppliers because it acts as one of the channel to sell the products.
Now, with most of the customers in India purchasing online through online retail
companies, they cant afford to lose this channel. So, they cant dictate terms with
online retail companies. So, in this industry the supplier power is low.
Buyer power:
Buyers in this industry are customers who purchase products online. Since this
industry is flooded with so many players, buyers are having lot of options to choose.
Switching costs are also less for customers since they can easily switch a service
from one online retail company to other one. Same products will be displayed in
several online retail websites. So, product differentiation is almost low. So, all these
factors make customers to possess more power when compared to online retail
companies.
Threat of New Entrants:

Threat of new entrants is very high in this online retail industry because of
following reasons:

Indian government is going to allow 51% FDI in multi-brand online retail and 100%
FDI in single brand online retail sooner or later. So, this means foreign companies
can come and start their own online retail companies.

There are very less barriers to entry like less amount of money required to start a
business, less amount of infrastructure required to start business. All you need is to
tie up with suppliers of products and you need to develop a website to display
products so that customers can order products, and a tie up with online payment
gateway provider like bill desk.

Industry is also going to grow at a rapid rate. It is going to touch 76 billion $ by

2021. Industry is going to experience an exponential growth rate. So, obviously no
one wants to miss this big opportunity.
Threat of substitutes:

Substitute for this industry as of now is physical stores. Their threat is very low for
this industry because customers are going for online purchases instead of going to
physical stores as it will save time, effort, and money. With the advent and
penetration of internet and smart phones, future in retail belongs to online retail.

When we compare relative quality, relative price of product that he/she buys
online with physical store, both are almost same and in some cases, online
discounts will be available which makes customers to buy products online.
Rivalry with in Industry:

Competition is very high in this industry with so many players like Flipkart, Myntra,
Jabong, Snapdeal, Amazon, Indiaplaza, Homeshop18 etc.
Environmental Analysis:
1.

Demographic trends: When it comes to online retail industry, for people to shop
online, they need to have internet. India is third largest country when it comes to
internet usage after U.S and China. Presently, above 200 million people are using
internet. Out of this, 110 million people access internet through mobiles. In India, 810% of online users transact online. So, it means it comes to 20 million people. And
also, with smart phones, tablets coming into picture, number of people who are
going to use internet is going to get increased. This means, increase in the online
retail usage in India.

2.

Socio-cultural Influences: Culturally, Indians tend to buy the products in

physical stores. They want to touch, feel the product before buying. If the risk
associated with product is very high, like in purchase of Television, Laptop, Washing
Machine etc., they tend to go to physical store, then see the features and if
satisfied, will buy the products. Indians will mostly influenced by peers, friends while
purchasing the products. They will ask their friends or peers suggestions and only
will buy the product. So, these factors are negatively affecting online retail industry.
But slowly, culture of buying is changing. They are going for online purchases but
this rate is less when compared to offline purchase. But with 30 day replacement
guarantee, if the product is not functioning properly, by E-commerce companies,
and with the availability of peers or friends feedback about products online, they
are slowly moving from offline to online purchases.

3.

Political-Legal factors: India is a democratic country where its people elect the
government through elections for every five years. For those five years, elected
government will rule the country. So, in terms of political climate in India, it is
stable. Now, with general elections going to happen this year, most of the people in
India are predicting that Bharatiya Janata Party (BJP) will come into the rule. Prime
ministerial candidate NarendraModi of BJP is investor friendly. Previously, when he
was the Chief Minister of Gujarat, he has implemented several policies and made
Gujarat, one of the state in India, a vibrant state. Indian business has in the past
applauded Modi as an investor-friendly chief minister who has led Gujarat to doubledigit economic growth.
India is also pushing for Foreign Direct Investment in Online Retail Industry.

Technological Factors: With the advancement of technology at a rapid pace,

online retail industry is going to benefit a lot. Several technological devices like
smart phones, laptops, tablets etc. are going to help this online retail Industry
because with the penetration of these devices, Indian consumers are going to
purchase their products online. Even Smart phone market is growing at a very rapid
rate in India. People in India are going to smart phones as these phones provide
various features when compared to traditional phone models. Other technology
which is going to help this industry is big data and Predictive Analytics. Since

companies can gather the data about their customers when they are doing business
with them, they can use these data to personalize the services by using predictive
analytics

5. Macroeconomic factors: Indias current GDP is 1.842 trillion $ and tenth

largest economy in terms of GDP.
Growth Outlook: Economy poised for gradual recovery in 2014-15. Reserve Bank of
India, an apex bank of India is expecting A GDP of 5.6% in the year 2014-15. Even
investor confidence is going to boost after general elections because investors are
confident about BJP prime ministerial candidate NarendraModi. Also, India is going
to become third largest economy after China and U.S. So, on an economic front, this
is going to help online retail industry.
Actions recommended for Flipkart:
Flipkart has not been into fashion and apparels business in online retail. Since the
margins are very high in this space, Flipkart can cash this opportunity by venturing
into this space. Currently, only Myntra and Jabong are leading players in this space.
Flipkart can venture into this space either by starting on its own or by merging with
one of these firms.
Since online retail is going to boom in the coming years, it is necessary for this
industry to have logistics support. So, since Flipkart is already having its own
logistics arm E-kart, it can provide this logistics service to its competitors in online
retail industry.
In this type of industry, price matters a lot to customers. If same product is offered
by two e-tailers at two different prices, customers will go for the lowest price. So,
Flipkart should try to offer the products at lower prices. This can be done by
optimizing its logistics services. Since logistics cost plays an important role in
determining the price of the product. Filpkart should try to optimize its supply chain
in such a manner that its supply chain costs should be very less and try to offer
products at lower price compared to its competitors.
Big data and predictive analytics are going to play a big role in the future. There are
many tools like R, SQL available to mine the data and to find out the patterns. So,
Flipkart can use data about its customers like what are they buying, what are their
buying patterns and can target them by using predictive analytics. For example,
Amazon uses customers purchase history and suggests products according to it.
Flipkart can also employ relationship marketing into it. Instead of mainly focusing on
customer acquisition, it should also focus on customer retention. Because loyal
customers are more profitable when compared to new customers.

Reference Sources:

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