The eBay Case Analysis

name. origins. mf/index. html The eBay Case Analysis Abstract This case project is a complete analysis of the eBay company, its one of the American global e-commerce company situated in San Jose and California states. It deals with facilitating purchaser-to-purchaser and enterprise-to-consumer sales via its website. Market growth rate This corporation was founded in September 3rd, 1995 as an auction firm, in California State, United States. Computer programmer Pierre Omidyar later established it as part of his more sizeable individual site. The first item that was sold in the company was a broken laser pointer which its value was $14. Omidyar created this website because he wanted to create an environment where the internet could put all people from different walks of life at the same level (khan and Sharma, 200).

The initial site that was designed was not only just a personal site. After they realized that people had turned to the use of Billpoint as a mode of paying system, they introduced PayPal which become so competitive thus it overpowered use of Billpoint services. It soon became evident that most customers preferred the use of PayPal compared to Billpoint this led to eBay company deciding in 2002 to buy PayPal to be used on their website for almost $1. 5 million. Currently, the company has more than 94 million users globally, in 2010 there were goods worthy 62million dollars that were sold on the eBay website. eBay built an online individual-to-individual trading community on the internet through the use of the global web (Mcnamara, 40). Because access to the online trade channel (i.

e. Internet) is universal, and the physical assets required to setup an auctioning site are all commercially available, barriers to entry in the auctioning industry are minimal. What comes stronger into play is the network externalities effect, as was mentioned before. Being in a market with huge network externalities makes it extremely difficult for a competitor to get a large share of the userbase, since most users tend to gravitate towards the service which already offers the most users since it will presumable have the greatest number of offerings (Bala and Sharma, 2669). • Believe that honest, open environs can bring out the best in people. These values are vital and apply at every subordinate of the eBay company. The company is committed to delivering the best to its customers across the world.

Objectives of the company The company has set some objectives which are vital for the survival of eBay company. The established objectives, along with the vision and mission of the company, enables employees to work towards achieving set goals. Both sections will respond nearly in a similar manner when looking at Porter's five forces. Therefore, to analyze eBay Company using Porters Five Forces, we will have considered the company as a whole but not investigating the company as separate segments. Potential entry of new competitors is the first vital porters five force that we will analyze. The listing of new potential competitors for eBay Company is very high. The barriers that can prevent entry of new competitors in the market especially technological know-how are low.

Consumer's existences in our company are so vital to our survival. This is true because without then our business segments can hardly exist. It is the customer's preference for either to choose products from our company or choose products from other companies. For this company, it's challenging to determine whether suppliers exercise high or low negotiating power for our business. Our feeling is that suppliers to our firm possess high bargaining power. As we try to broaden our businesses invention offerings, there will emerge other competing companies' hence intense rivalry. Considering our compensation services, "our users may choose to pay through a variety of alternative means, including credit and debit cards, automated clearing house and bank wires, other online payment services, offline payment methods such as cash, check or money order and using mobile phones.

" The competition faced by eBay Company is immense if we explore all other options present in the market field (David, 2017).   The three main competitors of eBay Company are, Google, Amazon, and Overstock. To analyze their performance, we would look at their total scores. The only negative factor affecting the eBay company is with human resources and the loyalty of the customer. In the recent years, eBay users have been switching between the brands. 0 eBay industrial change In the history of auction web, eBay Company has been one of the most leading companies in the world. It was established by computer wizard Pierre Omidyar on 3rd September 1995, in the California United States. From that time, it has emerged to be one of the leading world's dot-coms.

This provided a secure, more comfortable and quick method of online payment, hence reducing cases of loses which had been witnessed before. In 2005, eBay Company bought Skype, which is an internet communication channel, who their goal is to provide quick and unlimited communication between users. This made it easier for traders to have close contact hence making a transaction of items more affordable. eBay Company has then witnessed rapid changes its operation thus making it become a leading auction firm in the world. By the year 2008, its registered operators rose up to appropriately 406 million, and this was a definite change from the previous year whereby the company had attained more 276 million online users. This was an excellent example of how social media played a critical role in the growth and improvement of enterprises.

Internet accessibility provided affordable and quick channels of accessibility; this was fundamental for the growth of eBay Company. eBay created a platform where all users in possession of internet connection using either, mobile phone, laptop or computer to access its website and conduct the different transaction. Buyers and sellers were able to negotiate and compare prices of various items more accessible, without being forced to move around in search of means of communication. Channels of communication were available at any place near to the users. The different approach was to change the activities of the company which aimed at increasing the number of transactions made by the individual client. Through these strategies, eBay was able to increase the number of subsidiaries thus leading to the formation of a partnership with other organization.

These firms include; PayPal, it was established in 1998 then eBay bought it in 2002. The primary purpose of acquiring PayPal was to create safe channels of payment through creating accounts and use of credit cards which prevented cases of deception which were in increase thus affecting the growth of this company. In the current market, PayPal has been able to achieve more than 70 million users across the world. In the year 2008 skype company recorded an increase in revenue up to $ 143, this represented a 46% increase from previous years. StubHub Company was acquired in January 2007 at a price of 310 million dollars. It created a platform for traders to sell and buy permits for sports, performances and other related activities at a reduced amount which was friendly to most of the users.

In 2006 StubHub witnessed more than 400 dollars from sales of tickets for various events. Another vital strategy used by eBay to increase its market was a decision to buy Rent. This was aimed at facilitating time taken while doing transactions, which enabled buyers to identify their needs more efficiently. It also reduced fees for American buyers to be able to pay a fixed price; this was aimed at increasing the number of customers and compete with other companies which posed a threat in the growth of eBay Company. This ensured that the company achieved great market across the world. The growth of eBay Company has been a result of a continuous effort to integrate digital media with the internet. This lured more customers to join eBay thus increasing its revenue generation.

The brand has employees at around 12600 workers, and more than half of the employees work in the United States of America. The SWOT analysis will enable you to understand better the critical opportunities, threats, weaknesses, and strengths that can hinder the e-commerce trademark. In the fourth quarter of 2016, eBay witnessed a change of 3% of the net revenue In comparison to 2015 income in the same period. In the year 2015, the net revenue was $2322 million and $2395 million in the year 2016. Hence, a rise of$73 million was witnessed during the fourth quarter. com, and stubhud. com. The eBay company has structured in a manner that these e-commerce companies fall under one management led by the president of eBay marketplace. Devin Wenig was announced to be the president of the marketplace on 6th September 2011 and is entitled to report to the CEO John Donahoe.

The CEO maintained that, “Devin’s deep global operating and leadership experience combined with his record of delivering innovation and understanding of the global technology platforms and market communities makes him unique to lead our eBay marketplaces businesses” The other business segment is PayPal which is headed by Scott Thompson who is mandated to make PayPal leader in the global payment. In this case of eBay Inc. , these internal factors are strengths that enable growth and expansion in the e-commerce industry. The company can use these strengths to increase profitability and maintain a robust business. The following are eBay’s main strengths: 1- Brand Image: For an extended period, eBay has managed to introduce a powerful brand image, and it has been the know Amazon competitor.

In the e-commerce industry, brand image is a vital strength and the level of sales, as well as profits, result from a trust of the site as well as customers decision. The active market share among buyers has grown by 5 million in 2016 as well as 2 million 2016 fourth quarters. 4- Digital Growth: fast technological advancement is also a powerful strength for eBay Company. The firm makes use of both technologies and even services provided by others in maintaining the high brand image. eBay has made intuitive user crossing points, both seller and buyer tools as well as transactional processing, database and also network applications that enhance reliability and security on eBay sites for their users. The technological advancement at eBay simplified storage as well as processing of large data sums.

5- Cost-effectiveness based on economies of scale: Cost-effectiveness based on economies of scale is a strength that supports the fulfillment of eBay’s corporate vision and mission statements. This internal factor contributes to the company’s prominence as one of the biggest players offering online marketplace, classifieds, and ticket exchange services over the Internet. Cost-effectiveness also enhances eBay’s operations management, which shapes the operations of StubHub, Kijiji, and other subsidiaries. 6- Region-specificity of operations: Region-specific operations lead to flexibility and competitiveness in responding to challenges in regional online retail/auction markets. This strength is based on eBay’s organizational structure, which involves geographical divisions that broadly group regional markets. After the business transactions are over all the parties are happy and confortable with each other this ensures that customers are retained by the firm.

11- Payment services: eBay Company has acquired PayPal as a means to pay for all transactions hence ensuring security to both buyers and sellers. For instance the PayPal device can ask for refund in case something happens or is realized after payment. 12- Human resource aspects: eBay recruitment systems and procedures are open to all members of the public. The company ensures that job descriptions are clearly defined to ensure that skills, knowledge and attitude of qualified candidates are publicly declared to ensure proper selection process based on qualification and experience. Amazons ability to faster growth in both local and global online commerce brands is hardening the situation of his competitor eBay. Amazon mainly is a threatening contender creating the condition difficult from corner to corner on e-commerce spectrum hard-hitting for all key players in the market.

2- Lack of long-term agreement: With the critical personnel eBay has been made weak as compared to his competitors at the globe. This is because for human resource to be productive, Work experience and organizational familiarity play the critical role. That being so, crucial administrators should be kept for long in the company for his prosperity. For example, strong centralized units support organizational cohesiveness and consistency. However, the same internal strategic factor limits management flexibility to geographic and business-type variations in the international market. 9- Weaker position against competition: Despite all the technological innovation, competition has kept growing tough for eBay. Amazon has been seeing faster growth and other local and international ecommerce brands are also making the situation tough for Ebay.

Amazon particularly is a tough contender making the situation difficult across the ecommerce spectrum tough for all the other players. This has caused uncertainty on eBay’s future directions. Opportunities This aspect of the SWOT analysis model identifies the external strategic factors that facilitate or support business growth and improvement. In this case, eBay Inc. has growth opportunities based on external factors in the e-commerce industry. The company’s management must develop appropriate strategies that suit these opportunities. Currently, the company’s marketplace, classifieds, and ticket exchange revenues are generated mainly in the United States and some European markets. This external strategic factor can increase revenues and spread risk among more varied e-commerce markets. Such expansion should capitalize on rising online purchase rates and technological trends, such as the ones determined in the PESTEL/PESTLE analysis of eBay Inc.

The Company has made very significant purchases like PayPal as well as Stub Hub. The firm should also take advantage of the Chinese business model to expand its market share. 7- Investment in marketing: The brand must take a stronger approach to marketing. This will help it find faster growth and new opportunities in the emerging markets. Investing in marketing can also help it penetrate its existing markets deeper and tackling the competitive pressure. 8- Diversification and acquisitions: The brand has made some important acquisitions like PayPal and StubHub. The brand can find further growth through diversification and acquisitions. : 1- Competition: Rivalry is one of the principal hazards facing eBay. In the exemption of online as well as mobile sources, the firm also is exposed to stiff rivalry from the offline source.

Flipkart, Alibaba, Amazon are among the principal competitors of this company. Still, there are other giant brands like Walmart and Costco that have intensified the competition in the e-commerce. This free entry into the e-commerce market by other firms has posted the more significant threat to eBay Company. Operating contrary to these regulations whether inside or outside the US may result attracts numerous criminal fines. The growing complications of the regulatory structure have led to the upsurge in compliance costs. 3- Currency fluctuations: Majority of eBay's income comes from international markets. The downturn has passed, and a majority of the world's financial prudence is back on track. However, a currency variation as well as stricter dollar results to low income or losses.

The result was stagnant growth and a punishing stock crash. eBay got boring, stocking the same stuff everyone else had, with a shopping experience leached of the personality that infused the site in its early days. 8- High bargaining buyer’s power: From the analysis of the porter’s five forces, it is very clear that in this business, buyers have say on the prices on this site. Therefore the company is restricted on the fees to be charged on transacting on these sites. 9-increased seller bargaining power: As per the competitive edge of this company, sellers usually determines the prices to be charged on the items availed for sale on eBay sites. The three are the leverage ratio, liquidity ratio as well as the profitability ratio.

Constructed on the revenue statement, auctions revenue in last year growth about 30%, at the identical period, eBay amplified only 2%, these statistics indicate that mutually Amazon, as well as eBay, has constant to rise in total income in 2009, from figures, we can identify commonly that Amazon, as well as eBay successful, made money in the last financial year. I use present ratio to relate two businesses liquidity; it demonstrates eBay, as well as Amazon, are 2. 5 also 1. 5, from this up-to-date ratio; both of them are capable of paying off their obligations. 63% and 8. 61% respectively. Separately, Amazon made net revenue more successfully than eBay, from the above data. On ROE, eBay is 18. 69% while Amazon is 22. More significant, customers do not require paying any additional fee for bargain hunting from Amazon.

For Amazon, they make a direct sale on the internet while eBay is an online public sale system, the different existing between the shopping methods may tend to be the reason why eBay takes a high-income margin. "Cash flow of eBay: the statement illustrated that operations (2908. 1M) could generate enough cash to fund the company's investing activities (1149. 4M), the difference was financed in borrowed money under credit agreement (100M) and other cash financing activities (945.  Another profitability ratio, return on equity, shows how much profit we are generating from the money that our shareholders have invested.  At eBay, our most recent return on equity indicates that we have not been as profitable with our shareholder’s money as Amazon has.  Our last ratio shows our return on equity is 10.

8% while Amazon's was at 13. Looking at past ratios, our return on equity is not much lower than what it has been previous years, while Amazon’s return on equity has been falling significantly over the past few years. In the year ending December 31st, 2008 our net income was $1,779,474.  At the end of 2009, our net income had gone up to$2,389,097, and at the end of 2010, our net income had dropped down to $1,800,961.  Each of these years our net revenue had increased from the previous years though.  The fact that our net income in 2009 was significantly higher than the other two years can be contributed to the higher earnings before interest and taxes that our income statement shows that year. " In conclusion, Financial ratios provide meaningful data for the corporation.

16 showing that eBay has financed relatively little debt which is an advantage to the firm meaning it has higher chances of generating income. The activity ratio of eBay Company compared to that of Amazon indicates that Amazon is making more returns from their investments than eBay. The last ratio to analyze is the profit ratio. eBay has maintained an impressive profit margin since 2006. This show how good the company is doing since the return on asset is yielding revenue. This shows that the change was amounting to one million. Therefore, the net income for this period stretched to $601 as of $600. "From $ 2232 million in 2015, the net income fell to $2156 million in 2016". Based on the strategic analysis, recommendations for eBay Company are: 1- Lowering product and service fees to customers: to entice our clients to purchase more of your products and services than our competitors, your products and services should be priced at a lower price.

The listing and selling fee imposed to products should be made relatively affordable to our competitors' prices. This payment method has the best risk detectives to curb instances of fraud. PayPal is promoted through adding PayPal symbols at our checkpoints and sites that mainly use our payment feature. Apart from PayPal, eBay should focus on innovating alternative means of making payments which are in line with the current technology. 3- Advertising the bargaining capability of our website: the company has got the powerful global presence. More revenue for this Company is generated from the worldwide presence. To improve on this ability of our sites and continue reminding your clients, the thorough advertisement could help the company on that. Through proper implementation of advertisement plan drawn, increased tariffs for our sites will be realized.

By effectively advertising our product features and our services will help to lure more clients from competitors who offer similar products and services. This strategy will increase the eBay's expenses that we currently invest through advertising, but if the number of clients in our sites increases and income due to the increased number of clients at our site outweighs the expense we incurred during expanding our advertisements, then this strategy will enable the company to penetrate more in the marketplace. If we generate additional traffic to our website, then the developed relationship with our customers may last long that what we incurred during the advertisement. 10- Differentiations: Strive to build customer loyalty through differentiating their products from those of their competitors.

Whatever things a business does to increase value for buyer’s forms bases for differentiation. 11- Encourage joint ventures: eBay should continue in finding other business organization on online market to partner with it to ensure reduced risks, ensure pooling of resources and competencies to be more competitive than their rivals. 12- Global strategic alliances: eBay should encourage mergers in drawing of strategies simply because of its global presence. This will ensure that the products and services are uniform from one nation to another. Also, eBay ought to lead to the emphasis on how to derestrict their board of directors. The other zone to maneuver on is human resource done through starting long-term hiring pacts with the essential personnel in administration.