I. eBay’s Vision
II. eBay’s Business Model
III. Industry Analysis
Background
Porter’s five forces
SWOT analysis
IV. eBay Financials
V. Summary and Recommendations
I. eBay’s 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 eBay’s explosive growth, making it the world's online marketplace for the sale of goods and services by a diverse community of individuals and businesses.
II. eBay’s Business Model
Since 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 eBay’s 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 interfac...
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...ompetition. eBay has proven itself successful as the first to market-it should use its experience to be the first to market in places like India or Poland.
Exhibit 1. SWOT analysis of eBay
Strengths
• Brand image
• Ability to sell unique products/product diversity
• Sheer volume of transactions
• Community and feedback forum
• Safety features
• Keen acumen in managing the value chain
• Senior management
• Strong financials-revenue growth, profit margin, stock price, etc.
• First to market Weaknesses
• Inability to sell at high volumes
• Slower response to infrastructure overload
• Fraud cases/nonpayment to sellers
Opportunities
• Value chain partners/alliances/acquisitions
• Developing nations going online
• Their wider view of market penetration
• Fixed price transaction Threats
• Technology threats such as viruses, power outages, system overload
• Loss of market share in online auction industry
• Revenue/market share loss due to fixed price auctions
• High profile fraud cases/security breaches
• Political unrest, currency volatility in developing markets
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