EBay: In a League by Itself

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1.What is competition like in the online auction industry? How does it compare to competition in the more general e-tailing segment? What do we learn about the nature and strength of the competitive pressures eBay faces from doing a five-forces analysis of each segment?eBay has a strong presence with 85% of commerce to commerce, and 64% of total online auction business. The most significant competitors to eBay's auction business are: Amazon Auctions (5-7% market share), Yahoo Auctions (who as of May 26, 2006 has partnered with eBay, thus giving eBay additional strength), and uBid. Bidville and ePier are two smaller competitors that have closely copied eBay's look and fee structure.

It has been forecasted that worldwide e-commerce revenues would be 6.79 trilling in 2004 and that online retail would grow at an annual rate of 19% from 2003-to-2008 to reach $229 billion, 25% ($57.5 billion) of which was expected to come from online auction sales of various country segmentation. Refer to Appendix A, Figure 1 for more details.

eBay's business segment of business-to-consumer indicated that U.S. e-commerce accounted for over 65% of all Internet transactions in 1999, but was expected to account for only 38% in 2003. The slower growth in the U.S. is likely a result of emerging countries. For example, Asia was expected to grow very rapidly following the 2001 decision to join the WTO. In 2002, Germany, the United Kingdom, France, and Italy accounted for 70% of the e-commerce in Western Europe; but, this share was expected to decline as business-to-business e-commerce in Europe was expected to triple from 2003-to-2006. Refer to Appendix A, Figure 2 for more details.

1.Competitive pressures associated with the market maneuvering and jockeying for buyer patronage that goes on among rival sellers in the industry are from:-Amazon AuctionePier-Microsoft FremontGoogle Base-uBidBidVille2.Competitive pressure associated with the threat of new entrants into the market are:-Microsoft Fremont- Overture-Google BaseAll of these entry candidates have ample resources and the potential to become formidable contenders for market leadership.

3.Competitive pressures coming from the attempts of companies in other industries to win buyers over they own substitute products are:-Online retailers (ie: Wal-Mart, Kmart, Target, Sears, JC Penny, Office Depot)-Specialty Retailers4.Competitive pressures stemming from supplier bargaining power and supplier-seller collaborations are relatively none-existing.

5.Competitive pressures stemming from buyer bargaining power and seller-buyer collaboration were non-existing based on the nature of eBay's business because they do not physically own or take ownership of the products they sell.

2.What is the competitive arena in online auctions? How does this compare to the competitive arena of general e-tailing?The competitive arena in online auctions are the following:Local / RegionalNational / International-Local Newspaper-Garage sale-Flea Market-Online retailers (ie: Kmart, JC Penny)-Specialty retailers (ie: KB Toys, Dell-Portals (ie: Google, OvertureOnline auctions differ from general e-tailing by the following reasons:-Pricing actions can vary depending on the buyer and seller; whereas, e-tailing offers a set price for the buyer where the price it not negotiable.

-e-tailers purchasers know exactly what product and quality they are expecting; whereas, online auctioneers may receive products less than 100%.

-e-tailing always ships brand new products; while auctioned products may be new or used.

-Return policies for both may be different depending on the terms and conditions or the stores or websites.

3.What forces are operating in the online auction macro-environment that have the power to alter the nature and structure of competition in the online auction industry? What does a strategic group map reveal about the position of the major players in the online auction industry?Forces that are...
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