Case Analysis – Ebay Essay Example

of course, lost sales. A company that is largely dependent on its online features should always strive to deliver consistent site stability. The timing is crucial for eBay, being inaccessible for hours at a time will have a potential damage to the loyalty of its users.

Another major problem is the possibility of customer dissatisfaction, which is a result of its few minor problems, such as the existence of fraudulent transactions and misrepresentations, shipping troubles and unreliable payment schemes. In order to continuously enjoy relative dominance in the online retail marketplace, eBay should enhance its services by giving solutions to those minor problems.

Internet fraud is an unwelcome part of the online industry which be minimized if not totally eliminated. Shipping concerns, on the other hand, will always be a part of the trading industry, either online or offline, which should be addressed to prevent additional predicaments. Unreliable payment schemes which are also a part of any online exchange, especially multi-currency transactions, should also be addressed. Failing to provide satisfactory customer service could be the downfall of the company.

Lastly, though certainly not the least is the stiff competition. In practically every industry, there are other players that would want a slice of that market. There are currently too many rivals to count in this industry, and the number of potential rivals is potentially infinite. The key rivals in the industry include: Amazon auctions, BidVille, ePier, uBid, Overstock, and Yahoo Auctions. EBay should endeavor to have the largest user base to fend off this competition, so in this market, it has to try to lure those customers over from its competitors. EBay

must consider its competition in each different market because, as was just mentioned, in some websites they may have the lead whereas in others they may not.

III. SWOT Analysis A SWOT analysis allows a company to determine its strengths, weaknesses, opportunities and threats. A company’s strengths are its competencies within the company, while its weaknesses are the areas it needs to work on within the company. Both opportunities and threats are present within the industry, and both represent changes that could change the positioning of a company. Using this analysis, companies can focus on their good part of the business and focus more on the bad part to make it good. Also, a company can see what factors are external or internal which helps the business in a long run to be more efficient.

EBay, just like any other company, has its own share of the good and the bad as enumerated below.

Strengths a. Being the pioneer and the largest online auction website, eBay enjoys the first mover advantage. EBay have initiated the use of technology to innovate the on-line retailing function. The company has a strong business model and employs effective strategies in order to enjoy market dominance. b. Its diverse trading platform is capable to attract vast audiences with different needs. Offering the broadest product variety is one the biggest strength of eBay. Though there are other organizations that offer a large amount of products, eBay outshines them all with an incomparable amount of differentiated products. It is like a giant marketplace used by millions of people all over the world to buy and sell all things anyone

can possibly think of. c. The company can make the most of the benefits of CRM or Customer Relationship Management by building a formidable community of buyers and sellers. This provides eBay a loyal customer base. d. EBay has become a generic term for online auctions; it is more or less synonymous to online auctions, which promotes strong brand recognition. Its brand identity provides a sustained competitive advantage to the company which is the key to attracting customers.

Weaknesses a. The business model of eBay is open to a number of fraudulent activities. There are numerous auctions which could either be fake or illegal. Its inability to control the contents of the auction facilitates a large sale of copyrighted and not for resale items. This may affect the credibility of the company. b. Problems in customer service which may negate customer confidence in eBay. One if which is the lack of standardized method of payments which can lead to buyer-seller disputes. Despite its acquisition of PayPal, sellers can still enforce their preferred method of payment. Scammers may choose a payment method that offers no buyer protection. Shipping, on the other hand, can also be considered a weakness of eBay. The cost increase brought about by the additional shipping costs may lead to buyers fleeing away to other retail stores for a better deal.

c. The EBay model forms a reliance on technology which can result in alienating some demographic groups. Developing nations may not appreciate the online trading platform that is offered by eBay since they have limited access to technology and may encounter some problems in pursuing their transactions. d. System breakdowns

could also affect the trading activities of eBay. If the system is unreliable, customers may eventually seek better websites.

Opportunities a. The company has a broad strategic alliance portfolio. Its acquisition of PayPal to support its online auction helped facilitate its payment methods. Another strategic acquisition is the Skype Technologies whose VOIP technology which now integrated in eBay website. This helps bring the buyer and the seller closer together since they can now talk directly using Skype voice chat. b. The development in international markets has a big potential for eBay. Though the current practice for the EBay model places focus on the domestic market, globalization creates a big potential for wider customer base. c. The rising internet usage or demand world wide is also a big opportunity. Even developing countries are becoming more familiar with the internet technology, thus provide an opportunity to convert previous skeptics into loyal eBay users. d. Coupled with the current domestic market EBay dominates online auction services. There is the opportunity to move into specialist markets although this may require a partner in the form of an established auction house.

Threats a. The company’s first mover advantage may fade, which will likely result to a decrease in its dominance in the market. b. Low consumer confidence in on-line systems can lead to a decrease in participation which is brought about by increasing media coverage of identity fraud and transactional fraud online. c. Given the global nature of the business the impact to changing exchange rates will affect the business directly. d. The diversity of culture among different countries may pose a threat on eBay’s attempt to globalization.