Ebay Case Study

I. EXECUTIVE SUMMARY eBay, Inc. is the largest and most popular marketplace on the Internet, allowing members to buy and sell almost anything. Launched in 1995, about 147 million people now use eBay. An estimated 430,000 people in the United States make all or most of their living by selling on eBay. eBay’s online payment service, called PayPal, enables transactions nearly anywhere in the world. eBay proclaims “trust” between buyers and sellers as the key to the success of the marketplace. eBay is the “The world’s Online Marketplace”, which is its positioning statement, and it means many things about the company’s identity. It enables trade on local, national and international basis, with a diverse and passionate community of individuals and small businesses. eBay offers an online platform where millions of items are traded each day.

II. VIEWPOINT eBay’s goal, as CEO Meg Whitman explains it, is “to build the world’s largest online trading platform where practically can trade practically anything”

III. TIME CONTEXT eBay’s listing growth has slowed dramatically during the year 2000. eBay choose to concentrate on its current business and building strong relationships with its existing community that result in slower expansion. The effect of this is the ability to compete with fast-growing, well-funded competitors. High competition in the online auction industry was obvious and called for a quite aggressive business strategy and fast reaction to changing needs of diverse market, in order to keep up with the growth pace, and to keep the leader position in the industry. Expansion for greater share of international market and targeting large businesses could ensure greater amount and greater value of performed biddings, greater returns and competitiveness of the company. However, the cornerstone of eBay's business from the beginning till now, was building loyal and honest community through open dialogue, close relations, and trust. The current loyal community consisted mainly from old small sellers who reacted negatively to eBay's new business strategy. Due to that fact, the conflict between values, prestige and opportunities for business growth appeared to be a ‘bad headache' for the eBay's management and its founder.

IV. STATEMENT OF THE PROBLEM
Will eBay be able to maintain its social capital as it grows?

V. STATEMENT OF THE OBJECTIVES

* To be able to maintain its competitiveness on social capital and generate the $3 billion revenues and $1 billion in operating profits. * To achieved the leading position in the online auction industry, the main strategic components of its business model were to keep its current position in an e-commerce market, keep up with growing competition, and to maintain successful global growth.

VI. Areas of Consideration

VII. ASSUMPTIONS

* Feedback system critic, Sellers can also attempt to boost their own feedback by buying their own items with alias accounts, and leaving positive feedback for their main selling account.
• Small & big company carries the same weight of feedback summary.
• Ebay requires sellers to use Paypal because ebay owns it. In addition to eBay fees, sellers must pay a percentage to PayPal, as well; this is charged on the shipping charges in addition to the sale price.

* `Feedback system critic, sellers can also attempt to boost their own feedback by buying their own items with alias accounts, and leaving positive feedback for their main selling account.

VIII. Alternative Courses of Action

ACA 1:
The implementation of V3 for the increase of flexibility for the new customers, categories and countries. Advantages | Disadvantages | * expected to handle growth in transaction volumes and increased number ofregistered users over the next 5 years * Perceptible improvement in application performance. faster, more efficient page loads and responses. | * The conversion of V3 will take 18 months * The expected cost for this system is $ 40 million. |

ACA 2: Acquire existing online auction companies Advantages | Disadvantages | * New customers gained from acquired company * Inheritance of niche markets | * Cost of converting systems |

ACA 3:
The second option is to go the route of Google Advantages | Disadvantages | * Revenue from hosting * Innovation | * Lose traders to hosted site |

VIII. Analysis
Nowadays fast growing economies and especially globalization around, eBay should not stay behind and take a risk in the international market. It would gain not only new opportunities, but also new experiences in a different culture. New experiences might accelerate new ideas and technology innovations, contribute to favorable economic performance of the company (if it is a successful expansion) and lead for a progress in general. If eBay would choose not to participate in international trade and would leave an empty niche, eBay's competitors would instantly occupy that niche. Why to leave a ‘gold stream' for others, if eBay can successfully use it by itself. eBay already worked toward the strategy for international expansion, already took the first step toward China and Europe. Moreover, eBay is the best-known brand in online auctioning. Internal conditions are favorable for international business operation. U. S. Securities and Exchange Commission approved eBay's request to raise 1 billion of capital through IPO, and eBay has funds and economic power to accelerate successful business. External factors are also favorable. eBay's estimates for e-commerce growth in business-to-business and business-to-consumer auctions can be called more than good performance. Having such management and abilities to generate profits in each situation occurred, eBay can be given high qualification for business strategies development. With such knowledge there is no doubt that the company can successfully implement its past experience and achieve bright future in the international setting.

IX. Conclusion Criteria | ACA 1 | ACA 2 | ACA3 | Effectiveness | 4 | 2 | 3 | Efficiency | 5 | 4 | 2 | Ease of Implementation | 3 | 2 | 2 | Total: | 12 | 8 | 7 | * the chosen alternative course of action would be the implementation of V3 for the increase of flexibility for the new customers, categories and countries. Ebay would be able to accommodate all kinds of new things. This will allow ebay to shift information instantaneously from one database to another pending on demand. Providing an integration pack for large corporate customers who wants to hook in their own back-end inventory, supply chain management, and the accounting systems to more easily take advantage of ebay as an alternative distribution channel.

X. Plan of Action
• Expand into new product categories
-It will attract more potential users who will enable eBay to generate more sales, and will have positive effect on company's finances. The product categories should be considered not only for new users, but also keeping in mind old and loyal users' needs. Other way, it may lead to unfair competition between ambitious, well-funded rivals and old small sellers and buyers. It can lead to eBay's current community erosion and loss in older users. * Expand into international markets
-In the fast growing industry and nowadays globalization issue it would be vise for eBay not to reject its plans to expand into international market together with internet connection spread. The new and inexperienced market where there was no Internet connection before is hungry for innovations and new experiences. Moreover, developing countries, such as China, eastern Europe, and South America, are more likely to be open for innovations and foreign investments than developed countries. Especially China, where is registered fast economic growth and has a huge market would contribute significantly to increase of eBay's net income. However, the beautiful picture of enormous sales and range of products available can be darkened by legislations, differences in currency, and cultural differences, as well as counterfeit merchandise. These factors should be analyzed before initiating business in the foreign country.
As eBay currently already stepped into international market, the suggestion would be hiring local market specialists that would know all the customs.
It would not be suggested that eBay should implement aggressive strategy for international expansion till several researches would be done. Also not to strive for several international markets at once, as for each separate market should be designed proper approaches. Therefore, normal expansion using step-by-step learning about new communities could result in more effective business establishment. * Remain with current strategy and current market.
-That would solve occurred problems with current loyal community, which consist mainly of old small sellers who participated in eBay's creation. Drawing attention to unsatisfied users not only would solve disputes, but also company's face in a whole eBay's community. That could result in some increase in returns. On the other hand, if eBay would keep with small sellers and buyers and leave behind the opportunity to reach international markets, it would likely result in slow growth or no growth at all that would lead in economic losses and leader position in the market.