Five Force of Ebay

Topics: Sales, Barriers to entry, Competition Pages: 2 (532 words) Published: April 28, 2008
Five force about Ebay

The risk of entry by potential competitors is relatively high due to low barriers to entry. New competitors can launch new sites at a nominal cost using commercially available software. This low barrier to entry will cause competition to intensify in the future. Also due to the broad range of products sold at eBay there is many more opportunities for new competitors to enter in more specific market segments.

The degree of rivalry among established companies within eBay抯 industry is very high. This high degree of rivalry is very common in discount retail industry due to the high concentration on being the price leader. EBay抯 competition is very broad and varies with each of its different products. eBay competes closely with many well know broad-based companies such as traditional department and general merchandise stores, as well as a large variety of online retailers. Due to this complex competitive industry, eBay must concentrate on many competitive factors such as: ability to attract buyers, volume of transactions and selection of goods, customer service, system reliability, brand recognition, and many others to keep their edge.

The bargaining power of buyers is low because the seller sets the prices of the products and because a majority of the sales are in an auction platform. This gives eBay and the buyer less control of the products prices, but in most cases the large amount of sellers per product keeps the prices low and competitive. The buyers benefit from the competition of the sellers, convenience of a trade environment, and not on the power of price bargaining.

The bargaining power of suppliers is relatively high because eBay must keep its fees and commissions low in order to attract and keep loyal sellers. Sellers are the suppliers of the products and are able to pick from different auction companies and select one offering the lowest fees and commissions. The ability for the suppliers to select the company...
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