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Ebay

By | November 2011
Page 1 of 5
eBay and Online Auction Industry Analysis
eBay was founded in 1995 and has grown into a multibillion dollar corporation. The online auction industry has grown dramatically since the 1990s. Like its competitors, eBay does not produce any goods. eBay’s business model is to make money from the movement of information through the Internet. It does not produce a tangible product but provides the service of joining independent sellers and buyers together. It makes its revenue by charging sellers commissions and fees. eBay has been very successful since the day it started (Laudon 323). This paper contains an analysis of the online auction industry with a focus on eBay. Porter competitive forces model identifies five competitive forces that threaten a firm. These include: traditional competitors, new market entrants, substitute goods and services, suppliers and customers. The traditional competitors of eBay include: Amazon, Google, Yahoo!, Craigslist, Overstock and other major search engines like mamma.com, ask.com etc. These competitors are a constant threat to eBay. Entry into this industry is very easy because the internet is so widely used nowadays and it is almost basically free to start up an online auction website. Substitute goods and services include products provided by stores like Wal-mart, Target etc. These stores are also a threat to eBay because once stores like this have lower prices for goods; in my opinion, most buyers would rather buy from stores than online because of the lower prices. In the case of suppliers, eBay has a lot of suppliers because of its business processes therefore suppliers are a significant factor in the Porter’s competitive forces model. Customers have high power within the online auction industry because of their ability to easily switch to a competitor’s products or services. Also because all business transactions occur online, customers have access to all prices available instantly. Concerning the business value chain,...

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