Case Study - Ebay 2000

Topics: EBay, Auction, Electronic commerce Pages: 6 (794 words) Published: August 22, 2010
THE PHILIPPINE WOMEN’S UNIVERSITY

Graduate School

Quezon City

STRATEGIC MANAGEMENT

EBAY IN 2002: THE CHALLENGES OF SUSTAINED GROWTH

Submitted by:

EMELITO REYMUND G. ORENCIA

SHEILLA MARIE D. APOSTOL

JOEM S. SALAZAR

MBA-EXE

Submitted to:

DR. FELIX E. ASPRER

Dean

I.OVERVIEW OF THE SITUATION

Ebay is founded in 1995 by Pierre Omidyar and is the world’s Online Marketplace. The company created a powerful platform for the sale of goods and services by a passionate community of businesses and individuals. Ebay’s site enables trade on a local, national and international basis with customized sites in markets around the world.

Ebay had experienced substantial growth and rapid evolution since it was founded in 1995 up to the year 2001. In 1996 the number of registered users are 41,000 and it went up to 341,000 in 1997 with a registered growth of 832 percent. In 1998 the registered users has increased by 640% from the previous year totaling at 2,181,000 number of users. In 1999 the growth registered at 459 percent compared to 1998 with a registered users of 10,006,000. In the year 2000 the growth registered at 225 percent from the previous year and in 2001 the growth is 189 percent compared to year 2000. Ebays gross merchandise sales in 1996 was seven million US dollars with significant increased in 2001 registered at 9.3 billion dollars with a growth of 1,328.58 percent.

In May 2001 eBay controlled 64.3% of the online auction revenue share far beyond its main competitor uBid.com, which, has emerged at that time gaining a market share of 14.7 percent. The three next largest competitors are, Egghead.com with 4.0 percent, Yahoo Auctions with 2.4 percent and Amazon Auctions with only 2.0 percent online market share. Represented less than 10 percent of the revenue share in the online auction market in mid 2001. Competitors of eBay are traditional and inefficient which resulted to three other deficiencies: 1. They tended to offer limited variety and breadth of selection as compared to the millions of items available on eBay, 2. They often had high transactions costs, and 3. They were “information inefficient” in the sense that buyers and sellers lacked a reliable and convenient means of setting prices for sales or purchases. These deficiencies have made it possible for eBay’s management to advance in the online auction competitively superior to its rivals because it 1. Facilitated buyers and sellers met, exchanged information and conducted transactions; 2. Allowed buyers and sellers to bypass traditional intermediaries and trade directly, thus lowering costs; 3. Provided global reach to greater selection and a broader base of participants; 4. Permitted trading at all hours and provided continuously updated information and 5. Fostered a sense of community among individuals with mutual interests.

II.CHALLENGES IN 2002

1. Sustain phenomenal growth

2. Extend to global auction industry

3. Broaden eBay’s offers to include more on categories, specialty sites, sellers.

4. Enhance marketing influence

III.CURRENT STRATEGY

1. Overall Low-Cost Provider Strategy

2. Broad Differentiation Strategy

3. Focused Differentiation Strategy

4. Focused Low-Cost Strategy

5. Best-Cost Provider Strategy

III.COMPETITION ANALYSIS

1. A decreasing international presence especially in major markets like China. Fierce competition from Google and Microsoft for online classifieds.

2. Disgruntled small sellers due to the change of eBay buyers from collectors seeking unique items to bargain hunters looking for values.

3. Disgruntled sellers due to a new feedback system that stands to put them at a disadvantage.

IV.SWOT ANALYSIS

Strengths

Brand recognition

Marketing

Dynamic pricing ebay express

Customer relationship management

Skype integration

Weaknesses

Low control...
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