1.

Summary of the Case

Zopa.com is the first ever peer-to-peer lending company, aiming to create a

better financial services experience by giving people access to simpler, better-
value loans and investments. Founded in 2005 by Richard Duvall, James
Alexander and David Nicholson,, Zopa is a british internet-based lending
website, currently having 75,000+ active investors who have lent over £3 billion
to borrowers.

Zopa’s business model is to provide a matching facility between people

who want to borrow and people who want to lend. The lender’s money is
parcelled out between at least 50 borrowers and charges 1% of their loan as a
fee. This is relatively a lot cheaper, and gets even cheaper when you borrow
more and for longer periods, which is the reverse of banks.

The Company is targeting borrowers who are having difficulty gaining

credit ratings from traditional financial services providers. For lenders, higher
returns are possible than through savings accounts, if there would be no bad
debts. Primarily, the business was developed for the “Freeformers”. Freeformers
are typically those who are self-employed or in project-based or freelance
employment, like consultants and entrepreneurs. Consequently, although their
incomes and lifestyles are irregular, they may still be assessed as creditworthy.
According to James Alexander, they are the people who are not understood by
banks, which value stability in people’s lives and income over everything else.

We have tried to summarize the business model of Zopa and how it works.
2. Statement of the Problem

How can Zopa ensure the growth and sustainability, considering the potential of its
business model?

3. Scope, Limitations, and Assumptions

1. This paper is only limited to the timeline mentioned in the case.

2. This paper is limited to the data provided and presented in the case.

4. Objectives
 1. To identify risk factors that may affect the business, results of operations and financial
conditions of the company.
2. To identify the company’s strengths and weaknesses and rooms for improvement
3. To identify the alternative courses of action for Zopa to maintain their competitive
advantage and sustainable growth moving forward.
4. To be able to identify different growth strategies for Zopa and take advantages of its
strengths in order to grab the opportunities available to the Company, and know its
weaknesses in order for the company to address the same

5. Case Analysis

SWOT Analysis

STRENGTHS WEAKNESSES

● Cost leadership - because of the ● Zopa has limited control over the
business model of Peer-to-Peer existence of bad debts and credits.
lending, the facility may allow ● Interest on investments on Zopa is
lower costs to the borrower on the not tax free. All interests will be
system (e.g. lower facilitation fees declared for tax purposes.
and banking fees) ● Cash investments of possible
● Zopa has a very specific target lenders may not be lent
market which is the ‘Freeformers’. immediately, thus, will not be
Freeformers are those who are not earning any interest.
in standard employment, self- ● Not covered by Philippine Deposit
employed or complete work that is Insurance Commission (PDIC),
project-based or freelance, thus has no government protection
including consultants and to lenders
entrepreneurs.
● Offers lower interest rate to
borrowers but a higher rate of
return for the lenders.
● Stability of the company, and
developed customers, both
lenders and borrowers, which
were gathered from its
incorporation in 2005
● In-depth credit rating history of its
customers

OPPORTUNITIES THREATS

● Market reach - Zopa can offer ● Primarily dependent on the

services, not only to the country of economy and the willingness of
its origin, which is the United people to extend credit.
Kingdom, but also globally ● Legal dependency, wherein some
 facilitate lenders and borrowers of the government does not allow
who are willing to try Peer-to-Peer Peer-to-Peer lending
lending. ● Dependence on the lenders’
● Focused type of product, which is disposable income
lending facility. Zopa can engage ● Lower costs of competitor entry
in other banking or insurance
facilities (e.g. Bills purchase,
Letters of Credit, Assignment of
Receivable, etc.)

6. Alternative Courses of Action

ACA 1: Market Development of the existing service or business model to new

customer markets (e.g. young professionals/employees, start up families, etc.)

PROS CONS

● Reinforces the quality of eBay ● Parcel returns impact financial

products because only the best returns as items may not be sold as
sellers can be authenticated. new.
● The authentication program and ● Policy is geared towards in favor of
money back guarantee attracts the buyer as sellers shoulders the
new and existing users as it offers refund.
secure transactions.
● Improves client retention and
provides the opportunity to create
a long-term relationship with
customer or client.

eBay, may conduct a mandatory review of suppliers, and require them to

submit necessary documents, including copies of their government issued
 licenses to conduct business, their granted intellectual property registrations,
contact information, business information, factory locations, among others, to
ensure sufficient information are verified as protection of both the sellers and
the buyers, as part of their authentication program.

These information shall be kept in confidence by eBay, however, they should

provide a checklist of verified information of suppliers (e.g. business license,
contact information, factory location, product certifications etc.), available to
the customers, so the customers will be ensured that eBay has verified the
legitimacy of such supplier.

This will enable eBay to block certain illegal and fake auctions and
transactions, while, at the same time, protect copyrights and not for resale
items on eBay.

Finally, eBay may partner with financing institutions like banks to enable
Letters of Credit or similar facilities, wherein payments of customers will only
be released to the suppliers upon proof of actual release (delivery receipt,
airway bill, packing list, bills of lading etc.) of the items by the supplier for its
delivery. This will ensure that the items actually bought by the customers will
be released, while also serves as protection of the suppliers, as to assure
payment before shipment.

Buyers and sellers from different geographic locations are usually hesitant to
either pay - in case of the customers, or release the items - in case of the
suppliers. However, they trust the banking system. Thus, if the bank
guarantees that the payment has been made and the same will be released
upon shipment of the items, the seller will not hesitate to actually ship the
goods. In the same vein, the customers will pay despite not actually receiving
the items yet if the bank guarantees money back if the transaction does not
push through.

ACA 2: Product expansion Strategy of adding new products (e.g. insurance and
security transactions) to be offered to existing customers

PROS CONS
 ● Delivery of products becomes ● Reliant on third party logistics
more reliable and secure. providers to fulfill the orders of
● Sellers can save from distribution sellers.
costs and position their products
closer to customers.
● Help sellers with high volume
inventory with faster turnaround
time.

In order to assure that there are actually products available on hand, and to
ensure swifter and faster transactions, eBay may opt to provide warehousing
services. eBay could even further improve its warehousing service if they coupled
it with packaging service, and logistics facilities for the suppliers.

This is to ensure the timeliness of the actual shipment, and address the pain
point of customers regarding delays in deliveries. This way, eBay can also ensure
that products are packaged and handled properly as it is being delivered to the
customers.

ACA 3: Market Penetration strategy where in, Zopa can introduce lower interest
rates

PROS CONS
 ● Gives avid and promising sellers
more power to promote and sell
their products, which in turn, gives
more sales and recognition to
eBay.
● The creation and maintenance of
the new portal is costly and time-
consuming.

eBay can separate the well established sellers or suppliers in a new hub similar
to Shopee Mall and LazMall where actual retailers or accredited distributors are
allowed to sell.

This new hub / marketplace for established retailers must go through a stricter
accreditation process, and that they may even be charged for lease of their
marketplace spot. In return, eBay may create and develop transactional
analytics over their deals in eBay. This way, the sellers may be able to conduct
proper analysis of their sales, purchases, basket size, inquiries, number of
people looking at their products, and number of people who clicked to check
their profile.

The analytics can even allow the sellers to monitor the ageing of their products,
to ensure that their products are shipped first-in-first-out (FIFO), and that
expiration dates are monitored.

FRAMEWORK USED:

Conceptual Framework by Eshaghi & TaeiZadeh (2015) that shows Factors affecting the online
consumer’s expectation, satisfaction and online purchasing behavior.

The framework encompasses the relationship between expectations, satisfaction and intention
in terms of online buying behavior.

The influence of expectations on satisfaction will be:

H5: Online customer expectations have a total positive effect on satisfaction.

H6: Online customer expectations have a total positive influence on online purchasing behavior.
Purchase intentions in online purchasing behavior are widely influenced by customer
satisfaction:

H7: customer satisfaction has a significant positive effect on online purchasing behavior.

Risk and Trust widely affect online purchasing behavior.

H8: perceived trust has a positive influence on online buying behavior.

H9: perceived risk has a negative influence on online buying behavior.

The results of the framework show four key factors that form online customer expectation:
customer service, Website design, Security and privacy, fulfilment and reliability.

Figure 1. Conceptual framework that shows factors affecting online consumer’s expectation,
satisfaction and online purchasing behavior.

Decision Criteria Score and Description

ACA 1 ACA 2 ACA 3 ACA 4

Customer 95 95 92 95
Service
With the Buyers will Feedback The ACA will
Will the ACA be guarantee on benefit from fast generated from help address
adequate in the quality of delivery, the new seller the quality of
improving the the items and reliability, free hub will help items as well
customer authenticity of shipping, quality sellers improve as the reliability
relations of the sellers, buyers packaging and their and turn
company? will be assured improved performance around time of
that their customer that will lead to their items.
expectations support better customer Feedback from
will be met. service and analytics will be
retention. used to
continuously
improve
customer
service thereby
improving
customer
retention and
acquisition.
Security and 92 95 90 95
Privacy
The ACA will The ACA will The ACA will The ACA will
Will the ACA be remove the provide a provide new provide
sufficient in barrier to dedicated tools that protection for
improving the purchase by eBay customer enable sellers both the sellers
data privacy and instilling trust service and to better and buyers.
adhere to with the enhanced manage their
legislative consumer. financial and business and
regulations? reputation provide
protections on protection for
shipments. sellers.

Fulfilment and 90 95 90 95
Reliability
For sellers to With improved The ACA will The ACA will
Will the ACA be be logistics help streamline have access to
able to resolve the authenticated, networks and delivery managed
fulfillment and performance high through delivery service
reliability criteria should warehouse insights that provides
challenges to be met capacity made provided by the cost-effective
improve relations including a delivery consumers fulfillment
between buyers seller's rating, service more thereby service to
and sellers. cancellation feasible for reducing the provide faster
rate, ship on eBay. fulfillment time and reliable
time, return for online delivery.
rate and shipments.
response rate.
Web Design 90 90 95 95

Will the ACA be eBay’s money The ACA will The ACA will The ACA will
able to help back guarantee use a global help sellers optimize
optimize the options and technology with the eBay’s platform
platform for better seller ratings platform to optimized web for both the
user experience? were connect with design layout . interest of the
highlighted third-party New/current buyer and
partners with customers of seller.
sellers. eBay will see
the wide range
of products that
the company
offers

ACA 4
ACA 1: ACA 2: ACA 3:

Decision Wt. Score WS* Score WS* Score WS* Score WS*
Criteria

Customer 25% 95 23.75% 95 23.75% 90 22.5% 95 23.75%

Service

Security and 25% 92 23% 95 23.75% 90 22.5% 95 23.75%

Privacy
Fulfilment and 25% 90 22.5% 95 23.75% 90 22.5% 95 23.75%
Reliability

Web Design 25% 90 22.5% 90 22.5% 95 23.75% 95 23.75%

Total 100% 91.75% 93.75% 91.25% 95 95%

7. Recommendation and Implementation

As reflected in the decision criteria above, we have chosen ACA 4.

Through the holistic approach of the chosen ACA, eBay may be able to maximize the benefits of
its e-business and e-commerce platform namely:

1. New Customers - with eBay providing assurance of legitimacy of transactions and

money back options in cases of unfulfilled orders, eBay may be able to tap on a new set
of customers which are previously hesitant to purchase online because of lack of trust
and fear of scammers and fraudulent transactions.

2. Existing Customers (repeat and cross-selling) - with the focus on Customer-centricity,

the customers will highly likely to repeat buying from eBay and that they would even
refer the same to other possible customers.

3. Marketing cost reductions and corporate image communication - banking from the
credibility of eBay, the sellers will be freely advertised if their profiles in eBay showed
that eBay has verified their legitimacy and the legitimacy of their products. This way, the
sellers are advertised continuously and without costs.

4. Administrative swiftness and customer service - with the availability of the warehousing,
packaging and distribution-logistic services, sellers would have an easier way of making
its promise of providing the goods or services at the most convenient way and period of
time.

5. Better convenience for its sellers - eBay may also emphasize on its expertise in handling
the platform making it user friendly for its sellers. With the chosen ACA, buying and
selling will just be one to few clicks away, hassle-free. This will eliminate the
 disadvantage of digital marketing of requiring skills and training on digitization and its
environment.

8. References

Dastin, J. & Rana, A. (2019). EBay to launch warehousing and shipping services next year.
Retrieved from: https://www.reuters.com/article/us-ebay-delivery/
ebay-to-launch-warehousing-and-shipping-services-next-year-idUSKCN1UJ273

Eshaghi, Z. & TaeiZadeh, A. (2015). A Conceptual Framework in B2C e-commerce:

Customer Expectations and Satisfaction Relation With Online Purchasing Behavior.
Retrieved from:
https://www.academia.edu/20396632/A_Conceptual_Framework_in_B2C_e-
commerce_Customer_Expectations_and_Satisfaction_Relation_With_Online_Purchasin
g_Behavior