Case Analysis - Ebay

Topics: Auction, EBay, Online auction business model Pages: 7 (2138 words) Published: March 28, 2012

I. Background of the Study
A pioneer and a market leader in the online auction industry, eBay has been able to grow the business significantly in the last decade amidst turbulent times for many contemporary dotcom companies. EBay’s strategy to focus on a niche market and differentiate itself through strong brand management and continuous improvement in the value-added services has enabled the company to defend the market leadership in the industry. While many new competitors have entered into the industry, eBay continued to set its sight in serving and growing. From its no-registration, no-fee, grassroots trading company called Auction Web established in 1995, eBay has grown to be in a league by itself. It provides a safe place where buyers and sellers from around the world can come together to engage in commerce. EBay is currently the top-ranked online auction company within its industry, with a sizeable share of internet users registered on its site. People spend more time on time in eBay than any other online site, making it the most popular shopping destination on the Internet. There is actually no doubt that eBay holds the power in the online auction industry. However, complacency is not acceptable. Future threats may arise which could lead to a potential loss in its substantial market share, thus a need for an analysis of the key factors of the company which should be compiled and analyzed to determine the best alternative courses of action. II. Problem

Just like any other business, eBay has its own share of problems. One of its biggest problems is system breakdowns which could result to customer dissatisfaction, ruined reputation and of course, lost sales. A company that is largely dependent on its online features should always strive to deliver consistent site stability. The timing is crucial for eBay, being inaccessible for hours at a time will have a potential damage to the loyalty of its users.

Another major problem is the possibility of customer dissatisfaction, which is a result of its few minor problems, such as the existence of fraudulent transactions and misrepresentations, shipping troubles and unreliable payment schemes. In order to continuously enjoy relative dominance in the online retail marketplace, eBay should enhance its services by giving solutions to those minor problems. Internet fraud is an unwelcome part of the online industry which be minimized if not totally eliminated. Shipping concerns, on the other hand, will always be a part of the trading industry, either online or offline, which should be addressed to prevent additional predicaments. Unreliable payment schemes which are also a part of any online exchange, especially multi-currency transactions, should also be addressed. Failing to provide satisfactory customer service could be the downfall of the company.

Lastly, though certainly not the least is the stiff competition. In practically every industry, there are other players that would want a slice of that market. There are currently too many rivals to count in this industry, and the number of potential rivals is potentially infinite. The key rivals in the industry include: Amazon auctions, BidVille, ePier, uBid, Overstock, and Yahoo Auctions. EBay should endeavor to have the largest user base to fend off this competition, so in this market, it has to try to lure those customers over from its competitors. EBay must consider its competition in each different market because, as was just mentioned, in some websites they may have the lead whereas in others they may not.

III. SWOT Analysis
A SWOT analysis allows a company to determine its strengths, weaknesses, opportunities and threats. A company’s strengths are its competencies within the company, while its weaknesses are the areas it needs to work on within the company. Both opportunities and threats are present within the industry, and both represent changes that could change the...
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