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Case Study
THE COHESION CASE: THE EBAY INC.
BY: Pabellano, Arnali Raiza Catapang
I. Introduction

What is EBay?

EBay, Inc. is the largest and most popular global online marketplace on the
Internet, where practically anyone can trade and allowing members to buy
and sell almost anything. Launched in 1995, about 152 million people now
use EBay; people in the United States make all or most of their living by
selling on eBay. EBays online payment service, called PayPal, enables
transactions nearly anywhere in the world. EBay proclaims trust between
buyers and sellers as the key to the success of the marketplace.

People come to the eBay marketplace to buy and sell items across multiple
categories: Product and Service including collectibles, motor vehicles,
electronics, entertainment, books, clothing, jewelry, shoes, accessories,
home and improvement (dcor, crafts, gardening, etc)

II. Background

The idea for eBay came from founder Pierre Omidyars wife, who wanted to
trade Pez dispensers with other collectors over the Internet. In truth Omidyar
had been pondering an Internet auction venture before he was ever aware of
Pez mania. He says that he had been thinking about how to create an
efficient marketplace-a level playing field, where everyone had access to the
same information and could compete on the same terms as anyone else.
After writing the code for the site, Omidyar launched eBay from his home in
mid-1995. The idea of an Internet marketplace caught on so quickly that by
the end of the year, eBay was getting a few thousand hits daily. Even more
impressive the website was profitable from its inception.

The objective at eBay was to develop the work ethics and culture of eBay as
a fun, open and trusting environment and to keep the organization focused
on the big picture objectives and key priorities. EBay Last campaign tagline
is, Anywhere you go, anything you see, you can be inspired by the things
around you and those things can be instantly shoppable on eBay. Afterwards
EBay went public in September 1998 at $18 a share. By early march 1999,
the stock was trading approximately b$282 per share. The company market
capitalization had surpassed that of even Amazon.com, making it the worlds
most valuable Internet retailer.
EBay is a online marketplace where you can buy and sell items across
multiple categories, including antiques and art, books, business & industrial,
cars & other vehicles, clothing & accessories, coins, collectibles, crafts, dolls
& bears, electronics & computers, home furnishings, jewelry & watches,
movies & DVDs, music, musical instruments, pottery & glass, real estate,
sporting goods & memorabilia, stamps, tickets, toys & hobbies and travel.
The Primary target markets of eBay are online auction and shopping. Key
segment is antiques and collectibles, and also motor lovers, art lovers.

EBays Payment segment is comprised of PayPay and Bill Me Later

transaction service. Paypal was founded in December 1998 and acquired by
eBay Inc. in 2002. Paypal is a global leader in online payment solutions with
70 million active accounts. PayPal is available to any online or offline
individual or business with an email addreaa and allows members to securely
send and receive payments online securely without sharing sensitive
financial information. It also reported as a very low percentage of 0.33
percent loss from fraud.Bill Me Later, acquired by eBay Inc. in 2008, offers
consumers instant credit at the point made through over 1000 online U.S
merchants. Bill Me Later earns from interest on the outstanding balances,
late fees and transaction fees.

The competitors of eBay worldwide namely: Amazon.com. The Largest

internet-based company, at first they are online bookstore or book seller and
now they are also selling CD, MP3, downloads, videogames, softwares,
electronics, furnitures, jewelry, food and etc. Alibaba Group an exponential
growth offers business to business. Groupon Deal-of-the-day website,
lunched in November 2008 also called flash sales, single product for sale for
a period of 24 to 36 hours. Le bon coin.fr a French classified advertisement,
created in 2006. Price Minister is an operating as third party which connects
supply and demand.

How the transactions on EBay Inc. happen as buyer or seller?

As Buyer:

Get the current list of eBay categories. View information about the item listed
on eBay. Display eBay listing on the sites. Leave feedback about other users
at the conclusion of a commerce transaction.

As Seller:
Submit items for listing on eBay. Get high bidder information for items you
are selling. Retrieve list of items a particular user is currently selling through
eBay. Retrieve list of items a particular user has bid on.

III. Problems Using EBay

One of the problem faces of the buyers on EBay is fraud by both the seller
and buyer. How? Ebay has a very strong buyer protection plan and policy,
but a weak seller protection policy. Some sellers offer or sell high end
product, then deliver to the buyer the lesser value one. On the other hand
some buyers want to return an item and replace the genuine and expensive
one to a lesser value. Even you reported the incident to the police, when the
police declined to get involved, there was nothing eBay could do. EBay
protects only the buyer and less with the seller. Because of that reported
cases EBay just attracting dishonest buyer and seller.

Another problem face with the side of the seller is that eBay punishes the
seller by downgrading all his lots on the searches, increasing his fees, and
making his life miserable in many other ways. It is given that EBay cannot
generate profit only by the buyers but through the sellers. If EBay keep
giving higher fees to its sellers, they just giving his competitors an
opportunity to established and dominate the online market by attracting the
sellers to list for them at free. If that happen eBay will fail his race.

IV. Alternatives

It was clearly stated that EBay Inc. focuses only its customers or buyers and
lesser with the real profit generator which is the sellers. So I proposed
alternatives for the stated problems.

A. EBay must have an equal treatment both buyer and seller. So that
EBay will generate more profit for the company and promote loyalty for
both buyers and sellers. This is also a good impact for the name of
company.
Advantages: Generate profit for EBay Inc. and seller and buyer
loyalty.
Disadvantage:
B. EBay must have a clear cut policy both when buying and selling. EBay
must assure that the product and service that is going to rendered by
the seller to the buyer is genuine so that both side will be benefited
and treated equally. These will avoid attracting dishonest and fraud
buyers and sellers, and EBay Inc. can monitor both sides.
 Advantage: Assurance that the product and service offer is
genuine. It will avoid the fraud buyer and seller.
Disadvantage:
C. EBay should lower the fee for the seller. It will attract the sellers to
make business with eBay knowing that the fee from eBay is not costly.
This is also a good shot for EBay Inc. that there sellers will choose their
company confidently.
Advantage: Benefited for the seller. It will attract more sellers.
Disadvantage: Lesser profit for EBay Inc.
D. Provide free list of product or service for the seller when they enlist at
least 5 products or services. It will generate a loyalty program for eBay
Inc.
Advantage: Generate loyalty for the company. It is advantageous
for the seller to enlist more product or service to offer.
Disadvantage: Lesser profit for EBay.

V. Proposed Solution

I chose alternative B stated as EBay must have a clear cut policy both
when buying and selling. EBay must assure that the product and service
that is going to rendered by the seller to the buyer is genuine so that both
side will be benefited and treated equally. These will avoid attracting
dishonest and fraud buyers and sellers, and EBay Inc. can monitor both
sides. Because it will cover all the problem faces by the buyer and seller.
If EBay implemented a clear cut policy to buyer and seller of them are
protected from dishonest and fraud buyer and sellers. It will create a
better customer experience. It is also benefited for EBay having the best
online service in the market and can dominate online marketplace. Good
choice for the buyer to buy and seller to sell. The buyer can also assure
that that the product they offer is genuine and from a good hand. EBay
can dominate the online market against his competitors for having the
most loyal online shoppers on internet.

VI. Recommendation

People from now a day are busy from different fields, works, hobbies and etc.
and online shopping is the best choice for them. Through shopping online
they will less their cost especially transportation, gas, taxes and some extra
payment. Through online shopping they can save, money, time, effort for
finding the best product or services that is suitable for them, they can also
save their time for finding the best shop to buy, just one click on EBay and
payment to PayPal, boom your product is ready to rendered.
I recommend that EBay must apply marketing strategies on making the
buyer and seller made them their first choice. EBay must put some twist or
gimmick to attract buyers to buy the product or service they offer. Try to
create value differentiation with competitors, to increase buyer satisfaction
and loyalty. Innovation is very important to attract new buyers and sellers.
Promote loyalty program to both parties. So that EBay can assure that even
there is a lot of competitors outside, they can assure that there company is
stable and there sellers and buyers are satisfied the way they do business
with them. EBay are hundred percent sure that they are trusted by the
customers will made them their first choice when it comes with online
selling.

EBay SWOT Analysis

Strengths Weaknesses

Worlds largest - High fees

internet - No further growth
marketplace strategy
Business model - Lack of clear
(no strong direct business strategy
competition) and competitive
Economies of advantage
scale - Complexity of
Localization business model

Payment system
Brand reputation

Opportunities Threats
 Growing number Online security
of mobile Regional low cost
shoppers online retailers
Become a retailer Increasing
Making a competition from
disruptive Amazon
innovation in Exchange rates
online retail Crash of the
industry website
Increase services Patent
and product infringement and
portfolio through other lawsuits
acquisition against the
Open more online company
stores in other arrival of some
serious

Pestle Analysis of EBay

Political

Globalization

- Able to break into a new3 market which previously closed

- Challenges for foreign competitors

Economic

Exchange rate- conduct significant business outside United States but

profitability is reported in US dollar

Global economic condition- weak economic condition would limit the growth
of revenue: change in consumer purchase pattern.

Social

Lifestyle and attitudes change from a country to another. They have to set
different target, product or consumer categories: eBay failed to break into
China market
Increase in online social networking. People are rely on internet: can get
everything easily from online shopping: an opportunity to increase market
share

Technological

Growth of Internet- low barriers of entry: more competitors, growth of

internet user will increase public online consumption.

Rapid development of high-speed network service

Third party online payment system- PayPal: provide an easy and secure way
to make and receive payment online: reduce the risk of transaction

Legal

Developed strategy have to comply with different legal locally and

internationally- increase the use of e-commerce of both consumers and
business: ensure a certain level of security in online shopping: costs for
online business

Environment

Global warming and pollution awareness increase globally: more online

shopping: have to be more green to attract consumer. E.g.: eco-packaging,
work environment