Ebay Business Model

Topics: Website, EBay, Sales Pages: 2 (648 words) Published: December 18, 2012
Firm infrastructure|
Value Added
Value Added
Human Resource Management |
Technology Development (R&D)|
Marketing| Conversion to buyers and sellers| Auction Process| Payment| Peer Review|

Using Porter’s five forces model, there’s a threat of new entrants (because of the low entry barriers and the market is full of competitors), substitute products or services (many of the items on eBay are not purely exclusive to the site and other sites use similar ways to do their business), supplier power (there is a limitless number of suppliers for eBay, and much revenue comes from suppliers’ own revenue), buyer power (each item can be listed on eBay where a limitless number of buyers use the site, and choose whether to use the site or not). EBay’s business model is that of a consumer-to-consumer (C2C) model, where customers offer goods and services to each other over the internet. EBay links buyers and sellers together on its site, for example. Its business strategy is broad market and low cost—they offer many different products over the internet through both action and buy now options, while only collecting a small commission. It has been successful in that it’s perfectly suited for the web, and it derives its revenue from transactions and information (not from holding or shipping any items). EBay is currently facing several problems. Consumers have indicated a strong preference for fixed-price retailers like Amazon, and are steering away from online auction websites which eBay is well known for. Search engines and comparison-shopping sites have also taken some of eBay’s business by making it easier for consumers to find items on other Web sites. As of now, the company is now taking steps to remedy their problem through a three-year revival plan. They are trying to provide more of an incentive for bulk sellers of fixed-price goods to put their items on their site, and they’ve adjusted their fee structure as well to better accommodate...
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