ebay Notes

Topics: Barriers to entry, Brand, Online auction business model Pages: 2 (690 words) Published: December 6, 2013
Threat of Entry

This business is an Internet driven service industry, where there is a low barriers to entry. The main barrier might that some products are not permitted to be sold in certain states and country. So, the main barriers may come from government regulation thus any online auction should not violate those laws. EBay has established blocks that take care of legislation side of the law. EBay has created its brand name among users of its services and it is really hard to enter a market where safety and brand recognition are this important in the industry. It is found that the barriers to entry others are low, however it is hard to be successful in the industry where the safety and brand recognition is essential to the users of the services.

Threat of Rivalry

Yahoo! Auctions, Google and Overstock.com have been the most important competitors of eBay. They have been fighting eBay for a piece of the market in the industry. Moreover, one of biggest competitor of eBay is the drop off industry, however many drop off companies also use eBay services. There is an immense competition because of low entry barriers. EBay continues to attract its customers by providing best possible services at the lowest cost (Porter’s generic strategy: cost leadership strategy at low cost competence in broad market)(4) . They are also continuing to expand horizontally into new markets. With good brand identity and recognition comes safety and security, which is vital in this industry. There are also low exit barriers in this industry. EBay owns 35.14 % of the market as of 21st of February, 2012, which leaves room for them to grow(5). EBay needs to keep up with consumers needs and wants along with keeping an eye on its competitors in order to be successful.

Threat of Suppliers

Every single user of internet services might be a ‘player’ of eBay. So, there are a vast number of suppliers and everyone can sell something as a potential supplier for eBay. EBay business model...
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