Porter and Strategic Analysis of Ebay Essay Example

fact that eBay was the first one in this market, it has also a very strong consumer loyalty which is hard to acquirer for the newly companies.

Conclusion: In terms of industry competition, eBay doesn't face a lot of threats because there are the number one in the auctions online market. eBay was the first to propose this kind of service highly differentiated and ompetitors have difficulties to differentiate their service. Although eBay needs to keep in eye their consumer's needs and wants and progress with them to keep its first place in the Market. Yahoo! and Google are very strong companies which can take a part of the market share. eBay tries to personalized to each consumer with a section “about me” for example. ? Potential entrants: this analysis permit to see if eBay is threaten by new entrant in online auctions market or not.

Threats

• the switching cost are very low. There is no cost for a buyers to go on store and buy something.
• The barrier of entry is very low cost start up cost because this is e-service.
• The main barriers come from government regulation, because in certain country some products are not allowed, so auctions website has to make sure to don't violate laws.
• But the market is dominated by eBay, Amazon and Yahoo
• eBay is the first one on the auctions online market and it has the largest market share

Opportunities:

• the service of eBay is highly differentiated.
• Bay is the first auctions online website. it's hard
  

for a small company or a newly opened company to have a strong brand image also the customer loyalty is hard to gain for a new company which has to show its ability moreover, eBay has showed its ability and has a strong loyalty from its consumers.

Even if eBay doesn't sell directly product, there are the facilitators to those transactions so there liable if there is violation of the law. It's hard to enter a market where the brand recognition is that important because indeed consumer has to be sure of the website and fell that their transaction are safe. eBay did understand it and work a lot on its image of safety with Paypal so eBay stay the first choice for consumer in term of auctions online.

Conclusion: In terms of potential entrants, it's very easy to create an another online auctions business so this can be a threat.

Although, there is a low chance to become a threat for eBay because it has a strong brand image. eBay has made its proof in terms of secure transaction for instance. ? Substitutes: this analysis will permit to see if consumer can easily switch for another similar service or not

Threats:

• All e-commerce website constitute a substitute for eBay.
• Consumer may use traditional way to buy like store or e-commerce website without auctions.
• The auctions system is not a really efficient
  

service, the item goes to the highest price which can be higher than the real price of this product in the store ! here is a few website of auctions which position itself on niche market as Delcampe. com for collectors.

Opportunities: 

• There is not many substitutes to online auctions for general items, it's a highly differentiate service but there is a lot of substitute for online trade.
• Bay has a strong brand image which permits it to be the 1st choice for consumer eBay give the opportunity to sell right away new items without make an auction.

Conclusion:

In terms of substitutes, eBay got numerous substitutes but there are indirect substitutes. In one hand, the e-commerce is very expanded and nowadays people buy online all time with auctions or not. In the other hand, there is a lot alternative for eBay for people who just want to make good deals. Indeed, there are a lot of private sells or “want ad” websites or auctions website specialized.

Moreover, the fact that there is no switching cost and people are not locked in eBay, put the company in danger and very dependent of its image and its marketing campaign. The only think we can be sure about it is that is someone think about an auction website, he will think about eBay in the first place. Thanks to

its brand image, eBay stays the first one on the market. Although, eBay may diversify its activity and progress with the needs of its users with private sells or “want ad” campaign. ? Bargaining power of buyers: this analysis will permit to know if buyers are able to put eBay under pressure or not.

Threats:

eBay is not selling anything, it's just a platform which makes easier the P2P business. So it doesn't control everything. eBay is responsible for all the transaction so if one goes wrong, it's eBay's fault. On eBay, there are high-end items such as real estate, boat, cars and those kind of transaction are more risky for eBay. People who are able to buy those kind of items has a power on eBay because it's on this kind of transaction where eBay make the biggest profit. Switching cost are very low for buyers.

Opportunities: the demand is very fragmented so they can be united to negotiate.

Since eBay in one of the few auctions online website, users are quite dependent of it. there is a limitless number of buyers. Each item which appears on eBay can be seen all around the world. Even if buyers have no power on it, eBay listen to its consumer and instituted a feedback program about the service. The feedback program has permitted to exit bad buyers. eBay takes a lot of measures to increase the trust of its user by implementing an insurance policy.

Conclusion: In terms of bargaining powers of buyers, eBay doesn't face serious threat. The demand is very different, eBay may always have users.

The fact that it listen to their consumer is a real plus for it

reputation. Moreover, the work on the security of the process ad to the brand image. However, the fact that we are on an online service gives a lot of power to the buyers because they can go on others e-commerce website or use substitutes services which we described before. For the time being, the buyers trust eBay and its service and they have a strong loyalty to it. ? Bargaining power of suppliers: this analysis will permit to know if suppliers are able to put eBay under pressure or not.

Threats:

• in terms of high-end items, it's harder for a supplier to sell it on eBay because it's more risky for them. They may chose to sell it on more traditional canal.
• Suppliers are also the one who provide the servers for eBay and the software designer used on the platform. eBay cannot exist without efficient service for those.

Opportunities:

• there is a limitless number of suppliers for eBay.
• Every internet user is a potential supplier. there is many suppliers for the same segment of the market so they are not able to negotiate anything eBay because they are the one who need the service from eBay.
• For one who want to sell by the auctions, he has to go on eBay.

Conclusion: In terms of bargaining power of suppliers, we can say that eBay doesn't face a lot of threats neither. Anyone who has something to sell can be a supplier of eBay. The only shadow is the problem with high-end items, eBay has to work on this to offer to those suppliers a good and efficient and secure service with guarantees. Since eBay make

the biggest profit on those transactions so it has to focus on this. What are the biggest threats to eBay now? How can eBay cope with these?

Matrice SWOT: Strength: efficient business model the biggest marketplaces strong brand image Opportunities: eBay has the online auctions market under control few direct competitors eBay doesn't face a lot threats Weaknesses: there is many substitutes enable to control counterfeit product No synergy between eBay and its acquiries entities

Threats: There are many substitutes in e-commerce, even indirect New legislation: "Main Street Fairness Act" counterfeit may give a bad image to the brand There is three types of competitors for eBay : ? Direct competitors: Google and Yahoo !

Those two webs now propose the same service that eBay proposes ? Want-Ad and Privates sales website : vente-privee. com and craiglist. Those two examples proposes another way to buy something at a lower price or find something we can find somewhere else. ? e-commerce website: like amazon. com or priceminister. com. There are plenty of this kind of websites, more or less famous like amazon or priceminister. It's way a efficient way to buy on the internet and more secure because in this case it's amazon or priceminister who guarantee the transaction and not an unknown seller. Strategy of eBay:

Since there is a high risk of internet fraud, eBay decides to reinforce Paypal system. Yahoo ! And google contributed to this work. Also, eBay gives the opportunity to buy right away, because the risk is present on auctions transactions, but the fact that they proposes this service is a risk to lose differenciation in the intial service of the company. Since they

may have a new legislation called “ Main street Fairness act”. The government of the United States want to tax the transaction on the internet. This legislation will hurt the one who sells on eBay, mostly the small suppliers.

So eBay decided to reduce the insertion cost for small suppliers. The growth of eBay slowed down even if it has a lot of users. As eBay can't grow in intern way, it choose to acquires external companies such as half. com or craiglist. com or Skype. There is also the diversification in order to grow, indeed eBay knows that there is a big online market in China so it decided to lauch eachNet. com, a retails website. However, this website is highly competed by tabao. com which belong to Alibaba group. This group got also “ali pay” a system of payment such paypal, and it's the third most used on internet and the first one in China.