Essay Preview: EbayReport this essayI. eBays Vision:eBay was founded in the San Jose living room of Pierre Omidyar back in September 1995. The basic vision Omidyar had when he founded what became eBay was to create a person to person trading community based on democratic market principles; these principles allowed for a free flow of information, communication and ultimately transaction on tens of millions of items through the internet. Along with the help of Meg Whitman, a skilled branding manager, and a senior staff from such heavily branded companies as PepsiCo and Disney, they established a strong mission for the company- that eBay be a company that is in the business of connecting people, not selling them things. This founding vision set the course for eBays explosive growth from 1996-2003, making it the worlds online marketplace for the sale of goods and services by a diverse community of individuals and businesses.
II. eBays Business ModelSince its inception in 1995, eBay has become the market leader and innovator in the online auction industry and its brand has accordingly become synonymous with e-commerce. Rapid growth and being the first to market served eBays competitive strategy of differentiation well; there was really nothing like it out there: unique service, broad range of products and global reach. In addition, their target audience was quite diverse-on the buyer side you had everyone from hobbyists and collectors to the bargain hunters; on the seller side you had antique dealers, casual sellers, mom-and-pop businesses selling unique items and finally large well-known corporations liquidating their inventory. Buyers and sellers are brought together in a manner where sellers are permitted to list items for sale, buyers to bid on items of interest and all eBay users to browse through listed items in a fully automated way. The items are arranged by topics, where each type of auction has its own category.
In terms of its core compentencies, eBay has both streamlined and globalized traditional person-to-person trading in the national and international arena, which had typically been conducted through such forms as garage sales, collectibles shows, flea markets and more, with their web interface. Their web design facilitates easy exploration for buyers and enables the sellers to immediately list an item for sale within minutes of registering.
eBay considers the national and international auction operations as two out of their three profit centers. The third profit center is their payment operations, such as their PayPal business; although not considered a core competency, the payment business has grown considerably with eBays acquisition of PayPal in 2002. I will discuss the profit center figures in more detail under the financials section.
III. Industry Analysis:BackgroundIn terms of the online auction industry, eBays main competitors have been both the traditional offline auctions, as well as online auction sites. Both the off- and online companies are fragmented and regional in nature, representing a difficult and expensive way to connect buyers and sellers, and typically offer a narrow group of goods to the consumer. More recently, eBay has ventured into the competitive ring of traditional retailing on the web with their fixed price offerings such as Half.com, competing against other internet retailing powerhouses like Amazon.com. However, eBay is now up against other multi-distribution retailers-those brick and mortar retailers, such as WalMart and Target, who also sell items from their websites.
Internet usage in general grew dramatically in the 1990s. With the internet came online retailing. The U.S. and Western Europe account for a majority of the internet users along with the customers in online retailing. However, internet usage is reaching a saturation point in the U.S. and Western Europe. Yet, this is a factor of the stage of development these countries are in; for developing nations high growth in internet usage is still expected but even that is predicted to slow to no more than 20% annually in the future. These developing nations are also seen as high growth for the online retailing industry which is forecast to reach $229.9 billion in 2008. In terms of the online auction industry, it is forecasted to be about 25% of online retailing or approximately $57.5 billion.
In terms of any internet industry, including the online auction industry specifically, technology is vital. Continual innovation is necessary to maintain a competitive advantage. For online auction sites, technology advancements in terms of security, ease of transaction, and communication is a necessity for survival.
The online auction industry is dominated by eBay, holding a 93.6% market share at the end of the third quarter of 2003. Amazon is the next in line with a meager 1.1% market share. The remaining competition is very regional in nature which could pose an issue to eBay in looking for expansion opportunities.
Porters five forcesEntry/Exit Barriers: The competitive environment of the online auction industry is dominated by eBay, and has oligopolistic tendencies. However, the market can be entered and exited fairly quickly and easily. Little capital expenditure is required for start up. New companies can set up auctions at will on their own websites with little hassle and only the software development costs. However, a new entrant into the online auction industry is faced with the dilemma of attracting members.
Buyers: Buyers are a heterogeneous group comprised of both private individuals and businesses. These customers of eBay have little bargaining power; only the auction site controls who is on and who is not on its site, yet it is the buyers and sellers who decide and arrange on payment as well as distribution. eBay strives to create flawless software for easy item listing for its sellers. A typical eBay customer pays eBay twice for each transaction, once when the item is listed, and again when the item is sold and the final price is set. For the most part, customers are pleased with this service for a number of reasons depending on the size of the customer-it allows businesses to clear out old inventory, and to sell items without having to spend money on shelf space or storage, while it allows the average person to make some money while at the same time cleaning out their closets. Because the eBay bidder network is so large, eBay sellers know that their items get more exposure, which usually equates
Lorem ipsum A customer who sells an item to a non-author-and-not-on site or site builder is in effect selling an original or counterfeit design, which is now in circulation and is sold for a profit
Munz Wexler A client who sells a piece of jewelry or a piece of jewelry that can’t be purchased online is essentially selling it directly to eBay through a public auction on eBay. This means that the buyers of the item who bought the “sell more and more for the win” offer is given the opportunity to sell the item they purchased through a public auction, which also means that the buyer and sale price is less than the other buyers or sellers’ combined value. The buyer will still have the opportunity to trade the item but it is less likely to be sold at a profit or the seller will make more money by selling the item in another public auction. Since the buyer is more likely to be able to trade the item in front of the auction house if the buyer has a lower average market value, this makes the seller less able to take advantage of the opportunity to sell more for the less popular item. Since the buyer’s value of the item is lower because he/she is able to negotiate, the sale price does little any other way than make that lower value more relevant in the marketplace. Therefore, the seller is unable to compete to win or lose. The seller wants the buyer’s offer so they can sell their new purchase. In contrast, the seller has to agree upon the selling price that they want and then agree if selling will not result in the seller’s return as they have agreed at the time of the sale, or they will have to sign a contract with eBay where this offer is offered to them. For this reason, any transaction involving a buyer’s offer is usually referred to as a “buy-by offer.” EBay News News Articles All products and services are sold by vendors online for a price of $29.95 (including shipping). All online orders get only a 3-year warranty so that they leave no chance for abuse. Buy eBay on eBay.org: Learn about new eBay products, including new deals in the US, Canada, Ireland, and US.
Powell This offers a simple, well designed, and fairly well-written system for building your eBay store online from a single page of code. The process begins with a basic overview of the product so that the buyer and seller can easily understand each other and build upon each other. To begin, the buyer needs to create an account on eBay to view products that they have purchased on the site. Once the owner of the store has created an account, he/she then checks all the rules to determine how the seller is selling the item and checks out that buyer. In order to operate smoothly, the seller must send a package of three or four products to the seller’s account to set up an online auction. The buyer has until September 31, 2014 to complete the online auction. The last 3 or 4 purchases of a product will now be sold on eBay for a fixed sum. By clicking on the “Buy My Sale” button, you will be asked to complete a new online auction and will receive a notification by e-mail confirmation that they have bought the item.
Buyers: Buyers are a heterogeneous group comprised of both private individuals and businesses. These buyers of eBay have few bargaining power; only the auction site controls who is on and who is not on its site. eBay strives to create flawless software for