Ebay Study

Topics: EBay, Online auction business model, Auction Pages: 9 (2915 words) Published: August 21, 2008
Question no. 1
Bargaining Power of Suppliers
The suppliers and alliances such as SquareTrade and Escrow.com should not have a strong bargaining power as eBay’s strong brand name should be able to attract substitutes should any conflicts arise from these current suppliers. Bargaining Power of Buyers

Unlike the segments listed in the case study, buyers can also be divided into basically the two types of sellers that list their products to be sold on eBay i.e. the corporate companies and the small businesses and the buyers that purchase the products from these sellers. All these buyers certainly have a strong bargaining power as they are needed to sustain the growth of eBay. Threat of new entrants

Google, even though it is not in e-tailing or online auction is a potential competitor as it is a strong trusted brand that attracts traffic and has an excellent search system. It is even said that Google is actively pursuing a profitable combination of search and e-commerce that threatens both Yahoo! and eBay (Thomas 2008). Threat of new substitutes

Although Amazon’s business model functions more as a one-stop e-shopping site, it is still capable of adopting a hybrid model that could threaten eBay’s market share. Craigslist is also another potential threat but eBay has a partial stake in this company. Rivalry among competitors

Yahoo! is certainly a big threat with its similar business model, rapid innovation and international expansion strengthen by its desire to gain more market share because of its failure to overtake Google as the preferred search engine. However, it is also commented that eBay and Yahoo! will be better off working together rather than compete (Thomas 2008).

Question no. 2
The competition in online auctions is certainly less intense than in e-tailing by just comparing the sheer number of e-tailing sites and online auction sites. Question no. 3
The rising price of fuel is also threatening the transportation industry and if the cost of courier reaches a point where it is too expensive for consumers, it will strongly affect both the online auction and e-tailing industry. Trust between sellers and buyers are one of the main factors affecting the risk of trading on the Internet. The site that is able to reduce this risk will gain more traffic. Consumers that use sites like eBay are generally looking for value for money items at the lowest possible cost. The site that is able to offer the lowest cost for both buyers and sellers will have the chance to attract the most traffic. The context of cost here can be in listing fees, selling price, delivery cost, search time to find the right item etc. Question no. 4

Based on data obtained from Hitwise US for the month of February 2008, it looks like eBay is still in a dominant position over Amazon with a market share of 1.9% over 0.32%. Data was not available for Yahoo!’s shopping site but market share recorded for www.yahoo.com is 3.87%. Of course this is in no way an accurate representation as Amazon was said to have more traffic at their site than eBay during the Christmas period in 2007 (Gawker: Vallegwag, 15 January 2008, p1). On a superficial level, we can assume that eBay still leads as an online auctioneer but then again Amazon and Yahoo! can easily adopt the online auction model as well if they managed to increase their traffic and devise more competitive pricing strategies. Question no. 5

The KSFs for both e-tailers and online auctioneers are basically the same, among them offering the right kind of products that buyers need, high traffic volume and good feedback system (Park et al 2007). The main difference between these two business models is the excitement that comes with bidding for buyers and sellers rather than a fixed price system. It is also possible to sell damaged and overstocked goods through an auction and it is a good way to test out the market value of a product as well. Question no. 6

SWOT Analysis on eBay current’s situation...
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