Ebay Strategy

Short history of eBay Pierre Omidyar launched the graduation online auction in 1995 under the determine Auctionwatch under the domain seduce of www. eBay. com with the intention of creating a person-? to-? person trading connection based on a democratized, efficient foodstuff where everyone could moderate equal access done the same medium, the Internet. The initial concept was to attract neighbours and other interested in the San Francisco Bay bea residents to the site to buy and cope items of mutual interest. From there, the blood grew to succession year after year. 1996 Jeffrey Skoll became co-? president and director of eBay. 997 Margaret Whitman became CEO of eBay. 2004 eBay acquired a share in Craigslist. 2005 eBay acquired Rent. com and Shopping. com. 2006 Acquisition of Skype. 2007 eBay acquired Stubhub. com. 2008 Margaret Whitman resigned as CEO. John Donahoe was her successor. During the years 2006-? 2008, eBay undergo a drop in gross merchandise deals to -? 12 % and a reduction in figure of speech of auctions listed to -? 15%. This signalled a downswing in business for eBay, and a need to overcome the challenges which it now faced. among 2006 and 2008 eBays share of the US e-? commerce commercialise had fallen from 19% to 17% (Amazon commercialize hares, same period from 3,7% to 5,3%). In 2008, John Donahoe took over the firm. Donahoe was a man who liked change. He believed that the firms marketplace sector had reached its maturity date and a change in strategy was needed for the firm to lift forward. In other words, he believed that the emphasis should no longer be put on the market place sector of eBay but on expanding the business by providing an array of other run. Question 1 Porters fivesome forces When eBay was first set up in 1995, it was the first business in the online auction effort. Since then, the industry has grown significantly. eBays competitors includeAmazon, uBid, yahoo, and Google. Due to the increase intere st in the online auction industry, eBay is now facing competition from a numeral of assorted rivals, most importantly Amazon. 1. Bargaining force of buyers Medium Buyers have the position to negotiate a price which suits them through setting their preferred bid. in that respect is no pressure on buyers to surpass their preferred price limit. However, the number of buyers in the market is vast therefore their indicator is limited. 2. Bargaining Power of Sellers Low As a result of end little number of sellers in the market, the bargaining power is low as there are umteen alternatives which an offer buyers good set and at a low price. Unless transaction with high end items or collectibles, which may be rare, the bargaining power of suppliers is low. 3. Existing Rivalry among competitors Medium The online auction industry is oligopolistic in the sand that there are a few large companies who own a large proportion of the market shares (eBay, uBid). However eBay is facing competi tion from some(prenominal) online retailers (Amazon, Overstock). 4. Threat of reliefs High Many consumers muted prefer to riding habit conventional methods for purchasing and selling items much(prenominal) as in-? store purchases. Consumers prefer to use this ype of purchase for many reasons. Firstly for security purposes, there is no bump in large(p) currency-? in-? hand to an establishment as opposed to giving credit card details online. Also, buyers have the opportunity to check the value of the good they wish to purchase. Many retail outlets have also all-inclusive their market to an online level. 5. Threat of new entrants Medium The threat from new entrants is medium. As a result of low barriers of entry into the market, it is not difficult for businesses to be created. Businesses reclaim it difficult to generate regular customers, as they must build up a reputation of having a safe nd determine website. In this sense, eBay has a competitive advantage as it has cre ated a strong, rely environment for its customers. Rising competition in the market go forthing, in turn, piddle improvements in product quality and innovation. Also in order to generate good profits, eBay must focus on the sector of suppliers which regulates the most profits, this macrocosm the suppliers of high end items such as collectible products. EBay can nock by specialising in the market for collectible goods. Question 2 gadfly Analysis ? Political The meshing is a tax free environment. EBay is not affected by the governments laws on axes. However, eBay is affected by certain policies considering the sale of certain products in different countries. For example, the CNIL in France. Economical As a result of the economic crisis, consumer behaviour is changing. Consumers have less disposable income to turn over caused by problems associated with the economic downturn such as rising unemployment rates, lump rates etc. Sociological Consumer behaviour has changed dramat ically in novel years. Consumers want a quick and convenient way to source their products/services the lucre provides this through online retailers and auctions. The number of internet sers has amplified (insert statistics later? ). Technological The internet has revolutionised, its range of activities has expanded with time. Along with crack search engines to quickly find products/ services, internet now makes it possible to quickly make transactions between buyers and sellers (PayPal). ? ? ? The combined aspects of political, social, economic and technological will strengthen competition in the industry. In reference to economical, the economic crisis will cause companies to differentiate and work harder to find a competitive advantage over its rivals. In simile to technological, the use of e-? ommerce is becoming more and more popular it has transformed the market place. Changing demographics has meant the internet and e-? commerce has become a more bounteous force in the l ives of consumers. E-? commerce is appealing as a more attractive industry as opposed to traditional retail outlets. It is less expensive for companies to create a business online as they can reduce the cost of employing a sales workforce. Also, as technology progresses, there will be the opportunity for firms to globalize, therefore expanding their market reach into different countries, and increase their consumer base. Online businesses ill be able to target a larger number of consumers worldwide. In the current economic crisis, people need to increase their cash flow. This is an advantage for online auctions such as eBay as people can sell items that they no longer use. It creates a larger market for second-? hand items such as worn-? once clothing. Question 3 Key Success Factors Online auctions and retailers These get a line success factors apply to both online retailers and online auctions. However, in the case of the online auctions, a profound success factor would be the necessity to create a community of interests of trusted buyers and sellers. Online auctions uch as eBay emphasise the splendour of good values among their users such as honesty and trus twainrthiness. A second key success factors for online auctions is the importance of attracting and keeping sellers as without sellers supplying the items, the market would not exist. It is essential that online auctions are made attractable to sellers. This can be done by offering suppliers the option to set a minimal price for their products, further advertisements of their products e. g. eBay will display sellers products on their homepage for a minimal fee. As shown, there are specified key success factors for online auctions. Necessity to create a community Necessity to attract suppliers Expertise in technology Brand name Generate traffic to the site by attracting and keeping customers Overcome internet users nervousness about using the internet for e-? commerce Security of fee Question 4 Our strategic symbolize conveys that this is an oligopolistic market. There are two main competitors who hold strong positions in the market, those being eBay and Amazon. Both businesses have a strong reputation in the market combined with a wide alteration of auctions/product categories. EBay is a household name when it comes to online auctions. The map shows hat eBay holds the strongest position in the market. Amazon lacks in number/variety of auctions compared to eBay but it exempt managed to hold a strong position in the market through its well-? established brand name. In comparison with eBay, Yahoo holds a weak position in the market. It lacks in brand experience as an online business. Yahoo also has a limited variety of auctions paralleled with the market giants eBay and Amazon. Question 5 Swot Analysis ? ? ? ? Strengths Global brand for online auctions (Brand awareness). character reference and Quantity of products. Community spirit. Payment security (Paypal). Opportun itiesAcquisition of new business. resurrect a market in emerging countries (India, Brazil). Increase in online shopping. ? ? ? Weaknesses Model opened to fraudulent activities. System breakdowns. Increasing customer demands Threats Substitute products (stores, online shopping web sites). Success attracts competition. Interest and foreign currency flip rates. Consumers fear of fraudulence ? ? ? ? ? ? ? The SWOT analysis reveals that eBays strengths outweigh its weaknesses. eBays most promise strength is its globally known brand name. EBay has been established as a household name with its continued success in the -? commerce industry. It is still possible for eBay to expand and grow in this industry due to the increasing interest in online shopping. A notable weakness of the online commerce industry would be its systems openness to fraudulence. This has been faced by many businesses in the market including eBay. Even though eBay was subject to controversy over this problem it has s till emerged in a strong position nevertheless. Question 6 after computing the current ratio, we found that the company is able to pay its liabilities with its assets. 2005 2006 2007 occurrent Assets Current Liabilities 3990993 1266792 4970586 2518395 7122505 099579 Current ratio = current 3,15 1,97 2,30 assets /current liabilities It means that in 2007, the company can reimburse its liabilities with its assets 2 times. We noticed that the net income is diminish (-? 70%). In fact, the gross merchandise sales are fall (-? 20%) and the auction listed too (-? 14%). The working capital shows us that eBay has enough cash available for the firm day to day operations. operative capital = current assets-? current liabilities 2005 2006 2007 2724201 2452191 4022926 The average collection period in 2007 is about 22 days. That means the company wait just 22 days before receiving the