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INTRODUCTION
eBay is one of the largest online marketplaces for the sale of goods and services by a diverse community of individuals and businesses. The eBay community includes millions of registered members from around the world who contribute to making it the most popular shopping destination on the Internet. A number of people come to the eBay marketplace to buy and sell items across multiple categories, including antiques and art, books, cars and other vehicles, clothing and accessories, coins, collectibles, crafts, dolls and bears, electronics, memorabilia, real estate and a variety of other items. Also, eBay offers a wide variety of features and services that enable members to buy and sell on the site quickly and conveniently. eBay is dedicated to its community of members, and has a number services which enhance the trading experience. In order to get a better understanding of eBay’s founding, the following briefly describes its start up history.
Since its inception 7 years ago, eBay has come a long way. ... On September 1, 1995, Auction Web, which later became known as eBay, was launched from Omidyar’s apartment. At the time, eBay consisted of a filing cabinet, an old school desk, a laptop computer, and a web site that Omidyar posted on the server of his Internet provider for which he paid $30 per month. Being the first online auction house gave eBay a competitive edge. ... It would be Skoll’s role to make eBay’s strategic intent of providing person-to-person auctions on the Internet into a business. ...
Moving forward from this introduction and brief description of eBay’s start up history, this discussion goes into an in depth analysis of eBay.
VISION
Values and Beliefs
eBay harnesses five basic values for its community, and they go as follows. EBay believes that people are basically good, believes that everyone has something to contribute, believes that an honest, open environment can bring out the best in people, recognizes and respects everyone as a unique individual, and lastly, encourages members to treat others the way that he or she would want to be treated.
Purpose
eBay’s purpose is to build upon its position as the world’s leading community commerce model and the most compelling commerce platform on the Internet
Tangible Image (Mission)
To Provide a global trading platform where practically anyone can trade practically anything. ...
SYMPTOMS
eBay is continuously moving in a positive direction. ... Users of online auctions are very price sensitive and may start doing business with eBays competitors in order to save money, if eBay decides to increase its fees. ... eBay has taken measures to try to overcome much of this, such as the Nonpaying Binder Policy, and the Verify User Program to create a trustworthy and loyal community of users, but further measures still need to be taken
In addition to fraud and price issues, there are also the matters of poor customer service with responding to e-mails and outage and maintenance downtimes. eBay lacks the personnel needed to respond to e-mails within a reasonable amount of time. Also, with the increasing amount of users, eBay has experienced system slowdowns, outages and downtimes. Because of poor customer service and outages, eBay is not considered to be at the level of its closest competitors in regards to service, and has lost millions of dollars in revenues in regards to outages. Further, eBay has issues competing in countries or territories in which it did not gain a first mover advantage. A prime example would be Japan, where eBay closed down operations because it wasn’t able to achieve success. However, competitors are successful in territories that eBay had a first mover advantage in. So what’s eBay doing wrong? ... The success of the eBay community is fundamentally based on openness, honesty, integrity and trust. Internal practices and policies reflect eBay’s strong commitment to its stockholders, community and employees. eBay is committed to exercising the highest level of ethical standards in everything the firm does.
The Board of Directors for eBay believes that most of the board should consist of directors that are independent of the company. ...
Currently the members of the board consist of Pierre Omidyar, founder and Chairman of the Board of eBay since its inception; Dawn Lepore, the Vice Chairman of Technology, Operations, and Administration of the Charles Schwab Corporation; Philippe Bourguignon, the Managing Director of The World Economic Forum and former CEO of Euro Disney; Thomas J. ...
eBay’s board of directors has developed and adopted a clear code of ethics. ... eBay has developed a culture that not only benefits customers, but employees as well. ... eBay hires and contracts management of high competencies, it has a motivated work force, and it is the leader in the industry. eBay focuses on user experience, establishing a relaxed, efficient, fun, trustworthy, and safe culture for both customers and employees. eBay has taken responsibility to help build the eBay community as well as provide a friendly online trading environment. ... This organization has also contributed to communities with fundraisers and the creation of the eBay Foundation.
In October of 2000 eBay launched an independent online auction site with fund-raising promotions. ... In addition to running independent nonprofit auction sites, eBay has also coordinated online auctions with other organizations such as, Sears, Reebok, and The Oprah Winfrey Magazine to raise money for their favorite organizations as well. Further, the firm created the eBay Foundation. ... It supports involvement of eBay employees in the community. ...
CORPORATE STRATEGY
eBay has established a first mover advantage thereby setting the standard for the industry. This has enabled the organization to acquire a vast majority of buyers and sellers, which has resulted in eBay effectively defending itself against competitors. ... For nearly a decade, eBay has been implementing what could not be effectively done off-line. ... Despite the fact that eBay is the worlds leader in auctioning on the Internet, eBay has identified its growth potential and has explicit strategy elements to follow. They include such areas as strengthening the eBay brand, improving online site functioning, enhancing community relations, increasing the trading platform, and intensifying the user base. eBay also has a set of contingency strategies in place if needed to enter into new markets. ... For instance, eBay has entered into cross-promotional agreements with several companies such as Benchmark Capital, America Online, The Acme Idea Company, Butterfield & Butterfield (B&B), and Half. ...
Related Diversification/Srategic Alliances
The eBay strategic alliance with Benchmark Capital is indicative of a nonequity strategic alliance. ... The agreement gave eBay access to Benchmarks resources such as, its marketing, network of staff, consultants, and bankers. This nonequity strategic alliance allowed eBay to acquire internal information, learn new business techniques, and pool resources in which it utilizes as an important source of a competitive advantage, all which helped eBay maintain market leadership. ... This strategic alliance involved the development of an expanded P2P commerce plus community structure, which gave eBay access to AOLs 10 million users. This also meant that eBay had access to AOLs network and admittance to its domestic and international AOL brands such as, Aol. ... Working with AOL enabled eBay to efficiently provide product/service differentiation and receive cost savings for the eBay organization (economies of scope), by transferring the core competencies to the second business, in this case eBay. ... eBay merely incorporates it into its existing business strategy. This strategic alliance and others has enabled eBay to maintain an industry technology standard, maintain market stability, share research and development expenses, and outsource and learn new business techniques.
eBay has captured cross business strategic fits with closely related organizations. ... This outsourcing commitment between eBay and Acme, has enabled both organizations to acquire additional resources, capabilities, and form new competitive advantages. Utilizing this partnership, eBay has created value that it could not have developed by acting independently.
Further, eBay sought related diversification with the acquistion of Butterfield & Butterfield (B&B). ... eBay utilized this acquisition effectively and efficiently, which enabled eBay to grow substantially. This strategic acquisition resulted in a competitive advantage that helped eBay successfully maneuver into a high-priced items category and substantially increased eBays marketplace globally. This enabled eBay to significantly overcome trade barriers. The strategic alliance with Kruse International, has enabled eBay to enter into other high-priced categories such as automobiles.
eBay utilized its expertise to build synergistic strategic alliances with other organizations such as, Auto Trader. ...
eBay went even further and acquired Half. ... com had already established categories in which eBay had not yet entered into, such as video games at fixed prices, books, and CDs. ... This related diversification enabled eBay to build on an already well established market segment and augment additional offers as well. For example, eBay launched its Business Exchange site which helped facilitate small businesses to trade with each other in business related segments such as office furniture, printer equipment, power tools, and industrial apparatuses. ... There are a number of other acquisitions and alliances that eBay has partaken in, and it must continue to do so to try to expand its trading platform, and its value added services to sustain a competitive advantage. ... One very important activity for eBay is its ability to act as a middleman in an online marketplace to connect sellers and buyers, which is the sole purpose of its founding. ... This operational advantage in the marketplace creates great value for eBay. eBay also continues to institute additional pre-trade and post-trade services to create more value for the customers.
eBay’s support activities come largely from the firm’s infrastructure such as management, planning, finance and legal support. ... With the agreement of Bechmark Capital, eBay had access to a network of potential CEO’s, marketing gurus, consultants and bankers, which it needed for the recruitment of talented management. The continuance of innovative technological developments with eBay’s web site and services added even further to support. ... The following discusses eBay’s criteria for sustainable competitive advantage with a couple of examples.
First of all, an example of an intangible resource with value is eBay’s reputational resources. By being the first mover in the online marketplace, eBay has created an empowering reputation with its customers. ... Because of this, eBay has the largest community of buyers and sellers next to any other online auction site. ... So, at first eBay held a sustainable competitive advantage and received above average returns, but now eBay is just receiving average returns due to the continuing entrance of competitors.
Next to certain competitors such as flea markets or other venues such as brick-and-mortar retailers, eBay has the capability of a more cost effective and convenient way of bringing sellers and buyers together in an exciting trading environment, and in a less time consuming manner. eBay also has a selection of millions of items compared to traditional auction houses who tended to have limited variety and breadth of selection which gives eBay the capability of continuing to attract more members. ... Having the capability of being able to do just the opposite, creates value and success for eBay. ... Some competitors are having great success, but eBay maintains the strong capability of being able to attract more and more members due to its name recognition, and item selection in the online auction market. ebay’s capability continues to be valuable, however, it isn’t too rare anymore, it isn’t too costly to imitate, and being nonsubsititutable becomes a yes/no. ...
SWOT ANALYSIS
Before management of eBay can devise an effective strategy for gaining a competitive edge, they need to carefully analyze the organization’s competitive situation. ... The following discussion first identifies strengths and weaknesses of eBay by assessing internal characteristics, and then moves on to detecting opportunities and threats which involves evaluating relevant environmental factors.
Strengths
Being the world’s first online marketplace, an entirely new concept in commerce is by far, eBay’s greatest strength. ... Unlike other commerce trading forums, eBay has aggregated a critical mass of buyers, and items listed for sale, which in turn has resulted in an extremely vibrant and robust trading environment. eBay sellers enjoy generally high sell-through or conversion rates and buyers enjoy an extensive selection of broadly priced goods and services. The auction- pricing format found on eBay creates a sense of urgency among buyers to bid for goods because of the uncertain future availability of unique items on the website.
Approximate Word count = 10228
Approximate Pages = 40.9
(250 words per page double spaced)
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