A case study

On
“eBay-The Global Online Marketplace”

Course Name: E- Business

Course Code: MGT-405

Submitted To:
Habibur Rahaman
Lecturer
Department of Management Studies
Rabindra University, Bangladesh

Submitted By:
Group A1
Session: 2018-2019
Department of Management Studies
Rabindra University, Bangladesh

Date of Submission: December 06, 2022

 Group List

SL No Student ID Student Name Remarks

01 Md. Sabbir Hossain 19030108

02 Md. Mehedi Hasan (Leader) 19030115

03 Md Pias Uddin 19030119

 “eBay-The Global Online Marketplace”

Introduction:
eBay, global online auction and trading company launched by American entrepreneur Pierre
Omidyar in 1995. eBay was one of the first companies to create and market an Internet Web site
to match buyers and sellers of goods and services. The company, which caters to individual sellers
and small businesses, is a market leader in e-commerce worldwide. eBay is headquartered in San
Jose, California.
Customers can participate in Web sites set up within their own country or use one of the company’s
international sites. There are eBay Web sites for both the U.S. and Canadian markets, most
European countries, and several countries in Asia. Latin American Web sites are operated in
association with Mercado Libre, an e-commerce provider running similar operations. Although
auctions constitute the bulk of eBay sales, fixed-price sales also constitute a significant share of
transactions.
A key factor in eBay’s growth was its implementation of procedures to promote safe, transparent
trading, accessible nearly anywhere to anyone. PayPal, the online automated clearinghouse for
payments, has been a cornerstone of eBay’s transaction environment. In October 2002 eBay
bought PayPal, but it was spun off as an independent company in 2015. Other major acquisitions
in the 2000s included Skype (sold 2009), Shopping.com, Rent.com (sold 2012), and StubHub.
eBay relies on its users to self-regulate the trading community through a feedback system that
allows buyers to rate sellers on transactions. (Formerly, sellers also could leave negative feedback
on their buyers, but this feature was removed in 2008.) In theory, unscrupulous vendors are
exposed and lose the trust enjoyed by reputable sellers. In practice, some vendors received poor
ratings through no fault of their own but because of, for example, problems with package
deliveries, and other vendors garnered good ratings for a short period before setting up cybercrime
scams to defraud customers. In response, the company made available educational resources for
best-practice trading. Furthermore, eBay lists categories of potentially prohibited items; the
company sanctions would-be traffickers in goods that may be illegal or offensive.
Nevertheless, eBay came under increasing legal pressure in Europe, where several manufacturers
sued the company, charging that it was complicit in the distribution of counterfeit goods because
it took a commission on the sales that it facilitated without imposing adequate controls on the
transactions. In particular, some luxury fashion houses in France sued eBay for damages, with the
first judgment of €20,000 against the company in June 2008.
Since its founding, eBay has channeled a portion of its profits back into local community causes
around the world through its charity fund, the eBay Foundation.
Synopsis:
eBay serves as a platform by offering buyers and sellers a wide range of choice to by and sell
goods thought listing format. The digital media and the internet help management team to make
the strategic decisions on eBays continued growth. eBay growth strategy in focused on reinvesting
in customers by improving the buyer experience and seller economics by enhancing products and
services improving trust and safety and give customer support and implementing innovative
pricing and buyers’ retention strategies. The overall eBay aims are to increase the gross
merchandise volume and net revenues from eBay marketplace. eBay revenue comes from listing
commission on completed sales, purchases an additional fee is charged, advertising, auction. eBay
make life easier.

Question:
Assess how the characteristics of the digital media and the internet together with strategic
decisions taken by its management team have supported eBay’s continued growth.
Answer:
The current eBay Strategy is to provide the most compelling commerce platform on the internet to
help anyone buy or sell practically anything in the world. This is going to be done through strategic
acquisition of other companies broadening the trading platforms available to customers, adding
more features to the current platform, expanding the value-added services, diversifying
geographically by entering international markets, and b being a good corporate citizen across
cultures and national boundaries.
The current strategy presents several risks (CONS).
• eBay relies on the fact that the Internet will continue to grow an as a sales channel both in the
United States and abroad While this is certainly possible, several factors may slow the growth of
the 'Internet revolution'.
• Expansion through acquisition may dilute eBay's ability to maintain profitability and operational
effectiveness. Management and employee retention issues could make investments in other
companies wasted capital. Expansions into unrelated business in which eBay has no management
experience could damage or nullify any strategic acquisition.
• Transactions across the Internet could be harmed by a criminal activity. The stealing of credit
card numbers or other forms of payment may increase regulation and damage customer confidence
to the point where trading over the Internet is no longer profitable.
• Low barriers to entry may give rise to new competitors who could replace eBay on the Internet
as the preferred online trading platform. Additionally, new competitors in local areas may compete
with eBay by providing a brick-and-mortar trading solution.
However, eBay's current strategy has these strengths (PROS).
• The company has a strong management team that understands the market in which they operate.
Being one of the first true Internet businesses, eBay has a management team that understands the
operating environment in which they compete.
• The company has one of the strongest brand names on the Internet. By being first to a new market,
eBay has become the standard expectation for people who trade goods across the Internet.
• By being first, they have a large (and growing) customer base of over 22 million users and a loyal
core of traders who use eBay as their personal marketplace.
• The company is one of the few Internet survivors. They are profitable and maintain operating
cash flow.
• They provide a variety of services both in the United States and internationally that provides a
fully integrated solution for customers who want to trade items over the Internet.

SWOT Analysis
From input across all aspects of the business and from marketing to technology development,
below are the findings rolled up in a SWOT matrix describing the current state of eBay in its
market. As you can see, eBay has significant strengths that can be leveraged into new
opportunities. However, eBay does have some weaknesses that it must address in order to ensure
its external threats stay in check.

Strengths Weaknesses
• Seasoned management team. • Limited operating history.
• Strong brand name and visibility. • Inexperience in localizing service to conform
to local cultures, standards and policies.
• Huge on-line user community (22
million +). • Dependence on commercial partner's
performance.
• Variety of goods and services offered.
• Inability to contend online fraudulent
• Financially stable and consistently
activities.
profitable.
• Concentrated ownership of the company.
• Expanded international market.
• Dependent on key personnel.
• Fun, easy to use & efficient Internet
commerce platform.
• Fully integrated application into other
Internet Sites.
 Opportunities Threats
• Diversity of online user community. • Low entry barrier for current & future
competitors.
• Growing fixed-price/service-based
market. • Intense offline & online competition -
Reduced market shares.
• Ever-growing number of users
(Domestic & International) seeking • Increasing charges/service fees of search
broader categories of items. engine partners.
• Competition of internet-& land-based
auction business.

eBay Business Overview

eBay was initially formed in September 1995 and completed its initial public offering in September
1998. eBay operates an online marketplace and acts as the intermediary for buyers and sellers. The
online marketplace allows buyers and sellers to buy and sell practically anything and everything.
The sale price is determined via a bidding system and the highest bidder owns the right (and
obligation) to make the purchase. Items for sale are grouped into hundreds of logical categories
for each listed search. Each buyer and seller also accrue "points" and "comments" at the completion
of a successful transaction, based on feedback from others involved. This availability of
information regarding prior transactions via "positive " and "negative" feedback helps increase the
level of comfort for all parties involved in performing business over the Internet. eBay earns (part
of) its revenue through a listing fee for all items on sale, as well as a percentage commission for
successful transactions.
In addition to eBay.com, the company also both wholly or partially owns and operates a number
of other related business units.
• iBazar.com: Online trading business in Europe and Brazil.
• Half.com: Fixed-price online transactions for books, music, movies, and video games.
• Billpoint Inc.: Facilitates online financial transactions.
• Butterfields Auctioneers: Traditional offline fine arts and collectables auction services.
• Kruse International: Traditional offline collection car auction services.
Core Competencies
The CEO formally opened the session by outlining eBay's strategic intent in the next 5 years. With
this in mind, he led the group to examine the company's current capabilities and uniqueness in
relation with eBay' s future.
I. Excellent relationship with affiliates & partners.
2. Exceptional ability to attract buyers.
3. Cohesiveness of its buyer-seller interaction.
4. Strong & robust technology platform.
5. Outstanding customer support.
6. Commitment to its community & to less fortunate/underprivileged people.
7. Business focus & market know-how.

Gap Analysis
eBay is unique compared to its competitors since it has positioned itself to serve a broad market
with a customizable service at a low cost through the use of the latest open technologies. This
service offers the greatest customizable product options for the consumer while being the least
costly alternative in the current market space. Although eBay has many strengths, eBay needs to
continue to build its client base to ensure it maintains its leadership position as the largest online
trading forum. Financial and market trends indicate slowing growth patterns in both financial
resources and new online users.
Auction houses currently serve a fairly effluent segment that looks for unique and collectible
products at high prices. Retailers like Wal-Mart serve a broad market, but pass on their high
operating costs through higher prices. The new breed of e-tailers like Amazon.com has provided
the same type of value to consumers, but at lower costs. eBay with its unique business model is
serving as large of a market as the above three, but with the lowest potential cost, through its
product and dynamic pricing offerings. eBay is not only competing with other online trading sites,
but also the above broad environment competitors.
Therefore, eBay must provide a compelling multi-faceted trading environment for new and
existing users.
eBay has minimized its operating costs, distribution/ logistic needs and capital requirements by
forming strategic alliances, maintaining an open technology development platform and identifying
a business strategy that is focused on using and serving the broad market as a channel. It maintains
a low logistical inventory that is focused on providing an arena where the sale of products can
occur with minimal costs to a wider range of consumers. Since eBay's stock price is perceived to
be inflated, a large drop in stock value will undermine confidence of stakeholders and eBay's
ability to be an ongoing concern.
Conclusion:
eBay is the most effective marketplace the world has ever seen. Every year around 100 million
buyers across the glove buy from million of eBay sellers. Recently eBay shares were valued at
around 67 billion dollars that in more valuable than Facebook. After more than 15 years eBay has
emerged as an internet stalwart a visionary for the future of commerce. The eBay growth continued
observing the database of revenue model, competitors, following strategies, financial result, risk
management SWOT analysis and result we can say that one day it will be the largest marketplace
in the world.

Recommendation:
By overcoming the three above-mentioned key strategic risks – competitor risk, international risk
and supplier risk, eBay is able to provide wide product selections and superior services, which
eventually enable the company to not only fulfill its mission but also distinguish itself from its
competitors. Although the competitive rivalry within the industry is high, innovation and stable
strategic partnership and suppliers grow both eBay’s customer base and its online marketplace
effectiveness and reliability. Additionally, stable suppliers and reliable services can alleviate the
problem of overly high bargaining power of customers. Also, mitigation strategies mentioned
above are able to enhance the attractiveness and competitiveness of eBay, thus allowing the
company to overcome the threat of new entrants and substitutions.
When expanding its business worldwide, eBay should use different hedging methods to overcome
international business risks such as currency risk and other trade barriers so that it can reach more
consumers, increase sales and gain access to new talent pools. International expansion also allows
eBay to diversify its assets to protect the company against unforeseen events. For example, eBay
can offset negative incomes in one market by successfully operating in another. As for supplier
management, carefully reviewing sellers’ information and listings can make customers more
satisfied and trustful with eBay’s services and thus choose to stay with eBay. Building and
maintaining good relationship with sellers can boost communication, coordination and
collaboration, thus raising output and business profit level. Only if the sellers are well managed
and satisfied, eBay’s customers can enjoy better products and services. To sum up, eBay has to
apply different mitigations to overcome the three key strategic risks – competitor risk, international
risk and supplier risk, in order to move forward and remain competitive in the industry.