The Success Of Ebay
eBay.Inc, together with its subsidiaries, provides online marketplaces for the sale of goods and services, online payment services, and online communication offerings to a diverse community of individuals and businesses in the United States and internationally.
The company operates in three segments: eBay Marketplace, Payments, and Communications.Â
The eBay Marketplaces segment provides infrastructure to enable online commerce in a variety of formats, including the traditional auction platform; and its other online platforms, such as Rent.com, Shopping.com and Marktplaats.nl. Its services include trust and safety programs; feedback forum; safe harbor program; eBay standard purchase protection program; customer support; tools and services; and My eBay, which permits users to receive a report of their eBay activity that includes bidding, selling, account balances, favourite categories, and recent feedback, as well as About Me, which provides users to create their own personal home page.
The Payments segment delivers a product for small businesses, online merchants, and individuals that enables them to send and receive payments online. Its services include joining the network, verification of its PayPal’s account holders, withdrawing money, and trust and safety programs.
The Communications segment enables voice over Internet protocol calls between Skype users, as well as provides connectivity to traditional fixed-line and mobile telephones. It offers its software in 23 languages.
The company also offers online apartment rental services and comparison shopping resource service, as well as provides an Internet payment platform that allows merchants to authorize, process, and manage online payments. eBay, Inc. was founded by Pierre M. Omidyar in 1995 and is headquartered in San Jose, California.Â
What is eBay’s business strategy? How successful has it been? What are the problems that eBay is currently facing?
The business strategy of eBay is to generate revenue from the fees and commissions associated with it’s charged to the site to exchange products. The revenue is generated by the people who use the eBay site. This view has been supported in the work of Laudon (2009, pp.308-309). eBay also collects revenue from direct advertising as well as from various service providers, such as PayPal that increase the ease and speed of eBay transactions ( The wikinvest, 2010).
eBay also build on its existing strengths and increase its choice of customized shopping experiences and new monetization models. Properties such as eBay Express, ProStores, eBay Stores, and Shopping.com give eBay entry into the market for new, in-season products (The eBay Inc, Annual Report, 2009).
eBay’s growth strategy focuses on expansion in geography and scope and on continuing innovation to enhance the variety and appeal of products on its sites. This view has been supported in the work of Laudon (2009, pp.308-309). eBay is now begun developing tools and services that promote e-commerce anywhere on the web. eBay is also having discussion with MySpace to allow eBay listing on MySpace pages.
The eBay company’s plan has been very successful by economies of scale of eBay due to its large supply of buyers and sellers (Kevin Dickson, 2009). Having a large number of active users as they do, they are able to protect themselves from new entrants to the industry. This retains their market share and provides them with a strong foundation for successful business.
eBay is very successful, whereby the company has been profitable and had attracted more than 233 million users by 2006 It has operations in 32 countries. In 2005, eBay users listed 1.8 billion items in auctions. This caused about $50 billion dollars exchanging hands (Catherine Holahand 2007). One of the most successful parts of the company is that it is fully automated. This significantly reduces costs to eBay, keeping net income high.
According to Danny Vogeley, 2005 states that, current problems that eBay facing now is based on analysts report that sales growth have dropped from 40 percent annually to 23 percent. New users are no longer joining the site at the same rate they used to join, and there are many of eBay’s top sellers aren’t concerned in adding voice calls to their sales models. eBay also has faced is a rising number of buyers who have been defrauded by sellers (Albert, Miriam R, 2002).
Customer service is one more problem for eBay and it is mostly due to the size of the eBay company. eBay experiences basically two types of customers, sellers and buyers. Often the need of one customer is not the same as the need of the other (The eBay Inc, 2010). The next problems that eBay is currently facing are resistance by some of its top sellers to its operation of a VoIP service Skype, a aggressive threat to the online auction marketplace in Asia by Yahoo, and maintaining the honesty and integrity of its auction service in the face of tremendous growth and expansion (Jeffrey S, 2006).
How is eBay trying to solve these problems? Are these good solutions? Are there any other solutions that eBay should consider?
In order eBay to solve these problems, they are trying to improve its site’s user experience to keep its loyal customer base happy. It is reducing the clutter of its web page design, especially the home page, which has been described as one of the most confusing and cluttered in the industry. This view has been supported in the work of Laudon (2009, pp.308-309). eBay is looking to improve product search result and give buyers more guidance in finding the product they are looking for without having to scour through hundreds or might be thousand of listing. eBay also increasingly focused on providing a traditional retail experience or small seller in order to have great income as a result (Nikole Cruise, 2009).
The solutions is eBay try to include a great expansion. Growth rates have been hindered by the increase in seller fees, however, these loses have been covered by the expansion into other countries. This view has been supported in the work of Laudon (2009, pp.308-309). Joseph. T. Sinclair (2007, pp.62) states that eBay has added extra measures of protection. For example, eBay will give extra protection to those buyers that purchase a vehicle on their sites. eBay has also entered into a number of relationships with major competitors such as Yahoo! and Google.
Other than that, eBay is banking on PayPal to become the standard payment technique for online transaction (Evan Schwartz, 2001). This has allowed its eBay’s customers to buy and sell goods and receive payments easily. This has increased the user base of eBay’s customers. To remain in touch with its customers, eBay has started a program called Voices which brings buyers and sellers together 10 times a year at corporate headquarters (Josh Catone, 2008). This program allows users to talk to management and discuss what the users like and dislike about eBay and make suggestions.
eBay has tried to build a channel of communication between customers (CharlesÂ M.Â Mayo, 2010) . It enables customers to discuss tips on how to sell and purchase items. It is also creating a component of the website where people can discuss items that people collect and trade. Using these ideas can help to decrease the number of fraudulent transactions. This view has been supported in the work of Laudon (2009, pp.308-309). eBay is now also looking to improve product search result and give buyers more guidance in finding the products they are looking for without having to scour through hundreds of listing.
The solutions that eBay has come up with to resolve various problems seem to be effective. eBay believes that the most vital task of the company is to keep customers happy (Annalee Newitz, 2007). eBay is trying to maintain the selling capabilities of the merchants on eBay as well as the confidence of its customers.
An extra solution that eBay have to consider includes helping to avoid fraudulent purchases (Tri Bros Broda, 2006). eBay could act as a mediator between the two parties. It could set rules stating that the purchaser must pay the amount of the item to eBay. Once the item has been sent to the purchaser, the payment will then be forwarded to the seller.
What people, organization, and technology factors play a role in eBay’s response to its problems?
People factors that play a role in eBay’s problems include the company employs and manage diverse kinds of people. The company employs around 15,500 employees. Whereby, the employees of the company have different background and each had different job experiences in the past. Such is done by the company because they believe that these people can give them a unbiased in organization (The eBay Inc, 1998). This makes the company flexible to different kinds of situation to this problem.
The next People factor that plays a role in eBay’s problems is the employees at eBay are extremely well taken care of, and this is an area of pride for the company (Kevin Dickson, 2009). With out a large force of human capital eBay would not be able to function. The focus on employee satisfaction and attitudes is important to achieve the success of the company.
People factors include recognizing that there are problems in the company and coming up with the solutions to the problems. People in eBay has to figure out how allocate its 8000 full time workers as eBay purchases new technologies and programs that will be used on the website and that will need support (The eBay Inc, 2010). People will have to talk to buyers and sellers to determine if the company’s new services are satisfying the demands of the users.
Organizational responsibilities factor play a role in the planning process because an organization is responsible for providing stakeholders with profit or value first and foremost. (Sarah Ganly, 2010). The benefit to the stakeholder to play a role in the decisions of the planning process because the ultimate goal of most businesses is to provide value
Organization factors in eBay include having enough employees to carry out the changes to the company. It must be made sure that the organizations business strategy is customized to satisfy new and emerging demands (The eBay Inc, 2009). The organization also needs to have enough finances to fund the purchase of the new programs and services that it may use to respond to the problems (Catherine Holahan, 2007).
Within the organization factors eBay has made many advances to aid in their growth. Three operating segments have been designed within the company to handle the commonly used marketplaces, along with the additions of payments and communications (Kevin Dickson, 2009). Marketplaces are made up through the use of eBay auction listings, fixed price listings, as well as the additions of their other online platforms, Half.com, Rent.com, Shopping.com and StubHub.
In Technology factors include offered new innovations in the technological sector and introduced new concepts with regards to eBay site (Ina Steiner, 2010). Seeing as, technology rapidly changes the company makes sure they are updated to what is happening and they can adjust to these changes. The company makes sure that the products they have are updated with regards to technology and if new technologies emerge they can compete with these products.
eBay summarized its ongoing site operations and underscored its success in scaling to process ever-growing global demand and rolling out advanced features and functions while lowering costs (The eBay Inc, 2001). The company also described its next generation software architecture, which is designed to increase productivity and trading speed as well as allow for greater flexibility in adding new businesses
Technology factors include the element and programs that will be run by eBay such as PayPal, Half.com, Shopping.com and Skype. EBay will most likely have to also increase storage space to accommodate the new programs (Kevin Dickson, 2009). EBay will have to develop the technologies and have the programs written that will power eBay’s new Ad Context program that will compete with Google’s Ad Sense program that runs contextual online ads based on keywords that are searched in the website.
Will eBay be successful in the long run? Why or why not?
Yes, eBay will be successful in the long run. eBay is the worlds largest online auction website (The Buzzle Online, 2010). eBay will stay successful as long as another e-commerce site does not start up that offers better security and seller/buyer service. Their business strategy has already proven to be extremely effective, and they are currently the dominant player in the online marketplace business. As the effort that eBay facing may limit its future growth and expansion, they should always be able to keep at least their current levels of business and resulting profit margins (The Channel Advisor, 2010).
In the ways to make eBay to successful in long run, eBay will have to design ways of attracting new buyers to the website so that transactions can continue to take place (Jack Goldstein, 2009). eBay has been investing greatly in VOIP (Voice Over Internet Protocol), but at the moment VOIP is not of necessity considered a mainstream service. This view has been supported in the work of Laudon (2009, pp.308-309). eBay needs to find ways of making this service more obtainable not just to its current users but to people in general. eBay can work with computer manufacturers and supply financial investment to have VOIP technology installed into computers.
Beside this, eBay has a large market space spanning dozens of countries. This maintains a large base for customers to sell their products easily and effectively. eBay is trying to apply more interactivity with the purchase of Skype, so that customers and sellers can communicate two-way (Catherine Holahan, 2007). eBay provides a high level of price transparency, the simplicity to which customers can find out prices in a market (Philipp Maier, 2005). eBay has recognised that it is more profitable to work with competitors such as Yahoo! and Google. The ensuing that eBay now shows has generated a source of revenue.
eBay has always done very well in focusing its company’s goals and has been fast in grabbing into opportunities.
eBay’s business model demanded that their viewers needed to be many thousands of consumers, and there should be a balance between buyers and sellers. They actively worked balance the number of buyers with the number of sellers. Envisioning success, they designed their Web site to make it easy for many simultaneous buyers to find items to buy, and for sellers to offer items for sale. They provided sellers with a safe, reliable means to collect what they were owed, while also providing the buyer with a similar safe, reliable means to ensure that what they bought was just as the seller had represented it.Â
The eBay company should try to branch out to other business opportunities. The company can try to have a personal buying and selling business wherein a company has a visible branch that buys and sells different products and services. Customers who have known the company for a long time will be the first customers of the company in this effort. eBay gives a whole new meaning to the word middle man business. It does this by providing extra ordinary tools to sellers which, lets the seller target their products to the buyers. It also provides buyers with wonderful search tools, to get to the products they are looking for. eBay has made a very powerful platform for both sellers and buyers by being seamless and invisible but at the same time facilitating Customer to Customer relationship.Order Now