CASE STUDY: EBAY

ITEC 610

Scott CnockeartBenjamin Muthoka

Chris LangeMurdock McCormick

What is eBay?

eBay is the largest online marketplace where local, national, and international participants can make sales and purchases. Buyers and sellers are able to use auction-style listings, or make immediate sales using the “Buy it now,” Fixed Price,” and eBay store listings.

eBay Background 1995 - Pierre Omidyar, In his home,

created eBay and it was originally called EchoBay.com. Because the domain name was already registered, Echo was shortened to “e”, and eBay was born.

March 1998 - Meg Whitman, the name we all know, joined eBay.

September 1998 – eBay goes public October 2002 – eBay acquires PayPal

(Mullen, 2008)

First item sold on eBay was…. a laser pointer….

$14X

BROKEN

(MSN, 2009)

eBay Revenue History

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

0100020003000400050006000700080009000

Annual Revenue

in Millions

Web Auction Competitors

eBay is still a market leader in the online auction market commanding a respectable 17% online market share.

(BusinessWeek, Issue 4136 )(O’Brien and Marakas, 372)

Competitive Advantage

Superior customer service through the use of different technologies to provide online support. E.g. chat rooms, discussion boards and automatic email response technology.

Leveraging PayPal by increasing services such as the recently added iPhone application that has attracted thousands of Net shopping sites.

Improved communication between buyers and sellers through Skype, which at its acquisition had a 54 million customer base.

A commanding international market share especially in Europe with Germany generating a staggering $7 billion in annual sales second only to the U.S.

( O’Brien and Marakas, 2009)

eBay vs. Amazon

eBay Shortfalls A decreasing international presence especially in majors

markets like China. Fierce competition from Google and Microsoft for online

classifieds. Declining sales which has seen Amazon gain 5 million

more visitors while eBay lost 8 million in the same time period.

Claims of a non user-friendly website by online buyers. E.g. better search results from Google.

A time consuming and exhaustive vetting process that delays introduction of innovative technology into the market.

Disgruntled sellers due to a new feedback system that stands to put them at a disadvantage.

(BusinessWeek, Issue 4136 )(O’Brien and Marakas, 372)

Current Business Practices

(eBay Inc., n.d.)

eBay has positioned itself to be the worlds largest online marketplace. The company has a presence in 39 markets,

the US included Almost 1 billion users worldwide eBay has forever changed the idea of internet

commerce

Current Practices Consumer benefits of eBay

Provides an open trading forum for buyers and sellers to conduct business Some sellers provide links to online stores Provides an excellent opportunity for

entrepreneurs to start a small business The market controls the value of products being

sold Contains an extensive search database

Virtually anything can be located via search engine Advanced features allows more search detail

(eBay Inc., n.d.)

Current Practices, cont.

Consumer benefits of eBay, cont. User friendly interface

Items of interest can be browsed using different views

Sellers provide details of selected items Items can be selected to watch

Personal online account creation Contains recently purchased/won products View items previously checked to watch Access personal eBay mail from sellers

Experience the excitement of the process Painless payment process via eBay owned PayPal

(eBay Inc., n.d.)

Accompanying Services

Paypal online payment service Built on our current financial system of banks

and credit cards Secure method to send and receive online

payments effectively Payment solutions global leader Accepted by millions of merchants worldwide Currently utilized on and off eBay

(eBay Inc., n.d.)

Accompanying Services cont.

Rent.com, apartment listing guide Online Classifieds

Information on apt. availability and rates, roommates, virtual tours, moving services

Online Classifieds People meet, share ideas, and trade locally Available in hundreds of cites and regions

globally Gumtree.com, Kijiji, LoQUo.com, Intoko, Netherlands; Marktplaats.nl, German auto ads;

mobile.de

(eBay Inc., n.d.)

Business Challenges Users find eBay online auctions cumbersome Competitors are breaking into online

classifieds markets, providing free services searchable by location: Google Base Microsoft’s Windows Live Expo

eBay lost China’s market due to TaoBao; a company that allowed for more of a consumer to consumer approach to eCommerce

(O’Brien & Marakas, 372)(Xiaojuan & Davison, 145-148)

Potential Solutions 1) eBay could continue to make

acquisitions1 eBay currently has a 25% stake in Craigslist eBay has acquired online classifieds sites:

Kijiji Gumtree LoQUo

eBay completed acquisition of Skype in 2005 in an attempt to link buyers and sellers quickly and easily

2) eBay could continue to go global2 eBay has already expanded globally to over 22 countries

1: (O’Brien & Marakas, 372-373)2: (Komiak, Komiak, Imhof, 187-204)

(O’Brien & Marakas, 372-373)

Potential Solutions (continued)

3) Incorporate PayPal into Craigslist

4) Incorporate more on-site advertising and make eBay item postings free

Analysis of SolutionsProposed Solutions

Impact on Business

Model

User Satisfactio

n

User Cost Totals

1) Acquisitions 9 5 6 202) Global Expansion

10 9 7 26

3) Incorporate PayPal into Craigslist

5 10 9 24

4) Use advertising to make postings free

9 10 10 29

Based on a scale from 1-10; 10 being best

Recommendation For eBay to truly compete with the new

products developed by Microsoft and Google, they need to take a proactive approach and allow users to post products for little or no money

These costs can be recouped through the use of site advertising

References eBay inc. (n.d.). The eBay Company. Retrieved August 1, 2009, from http://pages.ebay.com:

http://pages.ebay.com/aboutebay/thecompany/companyoverview.html

eBay inc. (n.d.). How eBay works. Retrieved August 1, 2009, from http://pages.ebay.com: http://pages.ebay.com/help/account/questions/about-ebay.html

Komiak, P., Komiak, S. Y. X., & Imhof, M. (2008). Conducting International Business at eBay: The Determinants of Success of e-Stores. Electronic Markets, 18, 187-204. Retrieved July 31, 2009 from Business Source Complete database.

Maltby, E. (October 17, 2008). R etrieved August 01, 2009 from http://money.cnn.com/2008/10/17/smallbusiness/ebay_twilight.smb/index.htm

McMillan, D. (2009, J une 0 6 ). Can eBay Get Its Tech Savvy Back? BusinessWeek, 413 6, 48-49.

MSN. (2009, n.d.). eBay Inc. Retrieved August 2, 2009, from http://moneycentral.msn.com: http://moneycentral.msn.com/detail/stock_quote?Symbol=ebay&getquote=Get+Quote

Mullen, A. (2008, n.d.). Learn how eBay began as a small business in someone's living room and grew into one of the top earning Websites on the Internet. Retrieved August 1, 2009, from www.happynews.com: http://www.happynews.com/living/online/history-ebay.htm

O’Brien, J. A. & Marakas, G. M. (2009). Management Information Systems. New York, NY: McGraw-Hill Irwin.

Xiaojuan Ou, C. & Davison, R. M. (2009). Why eBay Lost to TaoBao in China: The Global Advantage. Communications of the ACM: 52, 145-148. Retrieved on June 15, 2009 from Computers and Applied Sciences Complete database.