Ebay Case Study E-Commerce

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  • Topic: EBay, Online auction business model, Skype
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eBay Case Study E-commerce
eBay Strategy Case Study prepared for E-business, Internet Marketing and E-commerce lecturers and students. Last update, March 2009.

Case Study: eBay thrives in the global marketplace
I recommend students researching eBay checkout the latest eBay statistics and business strategies from their SEC filings. The annual filings give a great summary of eBay business and revenue models. Alternatively filings are included in the eBay press releases which also have info on new company acquisitions.

SEC is the Securities and Exchange Commission (SEC) which is a government agency for which companies have to submit an open evaluation of their business models and marketplace conditions.

eBay also have a summary of their overall scale and range of categories they operate in on their UK company overview page

Information on the .com site shows the companies they have acquired and the countries they operate in.

Latest eBay business model news

 

March 2009 eBay 3 year model for growth

eBay Neighbourhoods

eBay has introduced Neighbourhoods where groups can discuss brands and products they have a high involvement with. Read more about eBay Neighbourhoods in this Wired Magazine article



Skype 'write-off'

Although PayPal appears a sound acquisition that fits the eBay business model, this has not proved th e case with Skype. Here theTimes reports that alhough EBay bought Skype in 2005 for $2.6 billion it recently warned shareholders that it would have to take an impairment charge of $900 million (£450 million) because it had valued the group too highly two years ago.

Case study Context
It¶s hard to believe that one of the most celebrated dot -coms has now celebrated its tenth birthday. Pierre Omidyar, a 28 year old French-born software engineer living in California coded the site while working for another company, eventually launching the site for business on Monday, 4 September, 1995 with the more direct name µAuction Web¶.

Legend reports that the site attracted no visitors its first 24 hours. The site became eBay in 1997 and site activity is rather different today; peak traffic in 2004 was 890 million page views per day and 7.7 gigabits of outbound data traffic per second .

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Today, if eBay was a country, i t would have the 9th largest population with its 35 million eBayers and would be the 59th largest economy in the world according to revenue. 2005, the 135 million customers

eBay Mission
eBay describes their purpose as to µpioneer new communities around the world built on commerce, sustained by trust, and inspired by opportunity¶

At the time of writing, eBay comprises three major businesses:

1.

The eBay Marketplace (approximately 70% of eBay net revenues in 2007). The mission for the core eBay business is to µcreate the world¶s online marketplace¶. eBay¶s SEC filing notes some of the success factors for this business for which eBay seeks to manage the functionality, safety, ease-of-use and reliability of the trading platform.

2.

PayPal (approximately 25% of net revenues in 2007). The mission is to µcreate the new global standard for online payments¶. This company was acquired in 2003?

3.

Skype Internet telephony (approximately 5% of net revenues in 2007).

This company was acquired in 2005. eBay has suffered an ³impairm ent charge´ from valuing the company too highly, but more recently it has started to provide the service for MySpace users.

Advertising and other net revenues represented just 4% of total net revenues during 2007

This case focuses on the best known, the eB ay Marketplace.

eBay Revenue model
The vast majority of eBay¶s revenue is for the listing and commission on completed sales. For Paypal purchases an additional commission fee is charged. Margin on each transaction is phenomenal since once the infrastructur e is built, incremental costs on each transactions are tiny ± all eBay is doing is transmitting...
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