eBay

eBayStrategic Review Presentation

Intro to EBay Where is eBay todaySWOTPESTLEPORTERSValue chainILCStrategic group analysisTOWS matrix Strategic OptionsRecommendationsStakeholder AnalysisContents

2

Introduction Founded in September of 1995, California U.S.AMarketplaces have approximately 104 million active users worldwide. eBay.com users worldwide trade $2,080 worth of goods on the site every second.eBay Inc. has a global presence in 39 markets

eBay is the world's online marketplace; a place for buyers and sellers to come together and buy or sell almost anything!

The most expensive thing sold on eBay to date has been a $4.9 million private business jet, therefore you can see the scope of possibilities for ebay as anything can be sold its just up to the customers to negotiate the price we provide the opportunity. 3

eBay todayThere has been a growing concern over the security issues with online shopping and other online activities due to hacking.

Growing population having access to internet, as well as an ever-growing environment in which companies are expected to keep pace.

Amazon are catching up in terms of online trade and policy.

eBay also owns over 40 companies

PayPal is separating from eBay to become a stand alone company.

eBay acquisitions Pay pal Gumtree Bill me later Stub hub Up4sale.comKruse international To name a few As of September 2014, eBay has acquired over 40 companies, the most expensive of which was the purchase of Skype for $2.6 billion most companies they own are based in the states and a replayed to online auctions in some capacity.

Why separate with PayPalHelp them compete on a wider market (apple pay)

Pressure from boardroom

Different core strategies required for each company

eBay hides value of PayPal

SWOT AnalysisStrengthsBrand AwarenesseBay has become a generic term for online auctionsNo InventoryTechnical Superiority (Paypal/Skype)WeaknessesThe model of eBay is open to a number of fraudulent activitiesSystem breakdowns could affect the trading activities of eBay (Technology Malfunctions)Product Description LackingOpportunities Increase services portfolio through acquisitionOpening more online stores in other countries ( growing economies in Asia and Europe)Growing number of mobile shoppersEntering the retail marketThreatsSuccess attracts greater competitionAttacks by illegal practices could happenSome costs like credit card charges cannot be controlled by eBay

7

PEST Analysis PoliticalWorldwide economic downturnIndependently of the general economic cycleShift of revenue from traditional retail trade to trading activities on the InternetIncreasing importance of international tradeRisks of data security Danger of illegal productsMany users apply the trading platform professionally Tax evasionRegulated shop hours, 24 hours advantage

Technological SocialEconomicalIncreasing product and price transparencyNew technologiesConvergence and complicityIn patent protected technical knowledge and features

Worldwide Internet penetrationLocal government policy

8

Porters five forces

Strategic analysis of Ebay

Porters Five Forces - Barriers to EntryThis business is an Internet driven service industry, where there is a low barriers to entry. The main barrier might that some products are not permitted to be sold in certain states and country. So, the main barriers may come from government regulation thus any online auction should not violate those laws.

EBay has created its brand name among users of its services and it is really hard to enter a market where safety and brand recognition are this important in the industry

Low

Porters Five Forces Competition & Rivalry

Yahoo! Auctions, Google and Overstock.com have been the most important competitors of eBay. They have been fighting eBay for a piece of the market in the industry. Moreover, one of biggest competitor of eBay is the drop off industry, however many drop off companies also use eBay services.

There is an immense competition because of low entry barriers. EBay continues to attract its customers by providing best possible services at the lowest cost (Porters generic strategy: cost leadership strategy at low cost competence in broad market).

Low

Porters Five Forces Supplier PowerEBay business model provides a service that brings the buyers and sellers together. The suppliers do not have much power except in the case of transaction of the high-end items in other words expensive goods: real estate or cars or equipment.

EBay uses PayPal in order to provide for smooth and quick payment of items where the sellers want to get their money quickly. But it is complicated to sell expensive where the suppliers have more power.

Medium

Porters Five Forces Threat of Substitutes

Placing the small items on a traditional auction is not costeffectiveapproach and there would be a limitednumberof buyers.

This is might not be a realistic option to sellers because the Internet and eBay opens up millions of buyer and sellers worldwide through Internet. The Internet has especially opened up the market for specialty items such as first edition cookbooks or traditional lunchboxes with superheroes on them.

Low

13

Porters Five Forces Buyer PowerThere is limitlessnumberof buyers and that what makes eBay powerful and profitable. Anyone around the world can see and buy the any item listed on eBay which means that the buyers dont have any real power in influencing eBay. However, eBay does listen to their customers, which is why they instituted thecustomerfeedbackprogram. This has helped to weed out the bad sellers and buyers.

Low

Value Chain

marketingConversation from traffic to buyers and sellersAuction processPeer reviewMargin

15

EBay Amazon community focuswarehousing, packaging and deliveryVariable prices, depends on the auctionTheir own checkout systemProvides B2B, B2C, C2B and C2C transactions, auction processPrices are fixed, retail process Guarantees and warranties Customer service and satisfactionBrand Name & global awarenessProduct reviewPeer review

Value chain Comparison

Industry Life CycleWhere is Ebay at a Nationally, Continental and globally level?

Introduction, Growth, Maturity, Declining stages

Introduction Stage: The initial stage in which a new product is introduced. A focused strategy is normally used at this stage to stress the uniqueness of the new product or service to a small group of customers. These customers are typically referred to in the marketing literature as the "innovators" and "early adopters."a large amount of capitol is needed at this stage for R&D and other launch costsGrowth Stage: The growth stage also requires a significant amount of capital, to launch a newly focused marketing campaign as well as funds for continued investmentin property, plant, and equipment to facilitate the growth required by the market demands. Maturity Stage: As the industry approaches maturity, the industry life cycle curve becomes noticeably flatter, indicating slowing growth. Firms at this stage may have excess cash to pay dividends to shareholders. But in mature industries, there are usually fewer firms, and those that survive will be larger and more dominant.Decline: Declines are almost inevitable in an industry. Ifproduction innovationhas not kept pace with other competing products and/or service, or if new innovations or technological changes have caused the industry to become obsolete, sales suffer and the life cycle experiences a decline.17

Nationally I would say that Ebay are in decline nationally having reached maximum exposure and facing competition from sites like, Amazon and super markets

Continental In terms of Europe I would suggest that that there is not much room for further development, but also not too much competition for the size of the market.

Globally Areas for expansion in Asia and more so in Africa would indicate to me that they are still growing on a global scale

20

Strategic group AnalysisStrong

Narrow WeakBroadNumber of Products CategoriesBrand Reputation & Awareness

From the strategic group map you can see ebays position in comparison to its comeptitiors, in this case we are comparing the brand reputation and awareness againast the number of product categories, from this ebay as you would expect is a globally recognized brand with many users around the world at the moment, its up there with both amazon and Walmart, in terms of product categories it is very high as you would also expect as we are aloud to sellor buy virtually anything on ebay, for instance the business private jet, which you wouldnt see much other online actions companies have n place. 21

TOWS-Matrix

SO StrategiesGlobal expansionMaintain simplicity of interaction with buyers and seller-usabilityWO StrategiesDiversify into new product marketsOnline verification of productsST StrategiesAcquisition strategy-global expansionRe-enforce marketing, management and systems as concentrated effortWT StrategiesAlliance to postal services

Strengths (S)Majority of marketGlobal brandFinancial strengthsWeaknesses (W)Dependencies on system running at all timesOpportunities (O)AcquisitionsDiversification

Threats (T)Unscrupulous practices- spam and viruses to eBayers Attracts competition because of supernormal profits

22

Strategic Options for Ebay

Strategic Option Product developmentAim for higher value markets which are less associated with eBay such as housing and cars

In terms of housing one idea could be to allow landlords to put or individual rooms up for rent, with a reserve price, in which eBay would take a one off listing fee, and to build a section of the website similar to that of realtors

Advantages Would fit well with auction based bidding system implemented on eBay

Would allow larger fees for listing on eBay Large geographical coverage

Convenient for comparison

Wouldn't need to change website structure

Potential issues Lack of viewing may be an issue for higher value items as people would want to see the the product if paying large amounts

Would require clear contact details to avoid future problems

If a loan is required banks may be more sceptical or take too long

Strategic Option Delivery infrastructure One aspect in which eBay are considered behind competitors is that of delivery time and fees.

This is obviously a crucial aspect to there business and is important for consumers in an increasingly impatient world.

One way around this could be to align with or create a dedicated delivery service.

Advantages Compete with competitors such as amazon, who work with royal mail.

Better customer service in terms of product delivery time

New branch of the company could work for third parties (other companies)

Potential issues Large cost to set up

Behind rival companies who already have a delivery infrastructure

Reputation with negative delivery reviews could hinder them

Strategic Option Market Developmentthe retail market in India stands at over $350 billion and is growing at a healthy compounded annual growth rate of 15-20%

Retail e-commerce still at nascent stage

Growing middle class, population and innovation through the internet

Regulations stop amazon from moving

Expected by 2016 there will be around 56 million active users online shoppers Indian regulations do not allow foreign online retailers to have a fully-owned Indian arm that sells merchandise directly in the region. This is why Amazon cannot sell the merchandise that it owns, this comes right into ebays strenghs According to the world internet usage and population statistics in 2006, North America was shown to be about 70% penetrated in terms of internet usage, whereas the worlds biggest market, Asia, with more than half of the worlds population, was only 11% penetrated. In addition, Asia was witnessing a tremendous growth in internet usage due to rising affluence and globalization. Bolstered by these statistics, Asia is definitely an area of vast potential for eBay to exploit.

30

Advantages It expands your consumer exposure and makes your company and product names recognizable in the marketplace.

New users can be found in new geographic segments, new demographic segments, new institutional segments or new psychographic segments.

Large market to exploit, in terms of population, growing economy and online internet users. Moreover in a time where Asia is becoming more globalized.

31

Potential issues Cultural risks ( understanding the needs and wants of the customers)

Established customer loyalty to other big e-commerce companies, e.g. taobao (China)

Can be very costly if a failure, damage the company image

Our RecommendationShort term Long termDevelop and improve the delivery infrastructureEstablish consumer confidents and improve security deal with is the increasing dissatisfaction from its customersProduct development

Enter into emerging economies such as India or other Asian countries ( market development)

We would recommend that in the short term they devlop there delivery infrastructure, as the customer satisfaction levels have decreased a lot since there rise in the early 200s , furthermore dealing with the security problems now and early prevents any future detrimental outcomes and increases consumer confidence. In the long term expanding to india can be a very benefitall move, as it provides many advantages for the company and there is a lot of room for expansion. 33

SAF Test for Recommendation

SuitabilityAcceptability Feasible

It is highly suitable for eBay to make a short term and a long term goal as there is a constant rise in competition in the online industry, creating a high established and reliable company today could help develop the company for the future. Is is more acceptable too regrow ebays roots in creating a level platform again in which will increase and sustain customer loyaltyIn terms of feasibility it is highly practical to move into india in the future and establish presence over there. It is very possible that if the cultureal issues and the public expectations are met there are high opportunitys for ebay to expands and grow in therei global industry life cycle. 34

Impact on the stakeholders Stakeholder GroupSuppliers

Customers

Shareholders

Main competitors

New customers

Manager

Bibliography Exploring Strategy - G. Johnson, R. Whittington, K. Scholes, D. Angwin 2014 http://www.slideshare.net/beskida/ebay-10864968 https://prezi.com/jdrx10am2e1b/pestle-analysis-on-ebaycouk/ http://www.strategicmanagementinsight.com/swot-analyses/ebay-swot-analysis.htmlhttp://ptgmedia.pearsoncmg.com/imprint_downloads/ftpress/bookreg/9780131873667/Ch14.pdf http://www.slideshare.net/lars.schmidl/strategic-evaluation-of-ebay http://www.grin.com/en/e-book/21549/strategic-analysis-of-ebay http://www.academia.edu/6436004/Ebay_strategic_evaluation-_white_paperhttp://www.ukessays.com/essays/information-technology/ebay-value-chain-model-information-technology-information-technology-essay.phphttp://www.slideshare.net/lars.schmidl/strategic-evaluation-of-ebayhttp://www.thehindu.com/business/Industry/indian-ecommerce-market-is-nowhere-near-maturity-ebay-india-md/article5929148.ecehttp://www.businessinsider.com/ebay-amazon-and-googles-pla-shopping-ads-2014-1?IR=T http://www.itnews.com.au/News/302922,ebay-rebuilds-indian-outsourcing-relationship.aspx http://www.forbes.com/sites/greatspeculations/2014/11/24/ebay-through-the-lens-of-porters-five-forces/http://www.wtn.net/2004/bio460.htmlhttps://theebaydiaries.wordpress.com/2014/10/05/ebay-and-paypal-will-be-parting-ways/

36

Thank You

We intend to continue to work toward our mission ofcreating the worlds leadingecommerce franchise byinvesting in our core Marketplaces segment and continuing To build our adjacent Marketplaces businesses.

37