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Ebay Market Share

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Ebay Market Share
How to dominate the online auction market
Jeffrey Phillips • Brian Somok • Xiaoke Zheng
Executive Summary

Background eBay Inc history:
September 1995: funded as a sole proprietorship.
May 1996: incorporated in California.
April 1998: reincorporated in Delaware.
September 1998: completion of initial public offering
October 2002: acquired PayPal

Product
Online Auction: Every day, 24 hours a day, 7 days a week, 365 days a year, millions of people from all over the world go shopping at online auctions. This is not an exaggeration - eBay, with a 76% share of the auction site market, reports 42.7 million users and a growth factor of 100% per Year

Porter’s Five Forces Analysis

Rivalry

Rivalry is very intense. Yahoo had to give up Japan and Australia online auction sites in 2003 because of low margin in this market even if Yahoo made great investment in these two sites beforehand.

Number of firms
Online auction firms: www.eBay.com, www.overstock.com, www.ubid.com, www.yahoo.com, www.amazon.com, www.CQout.com, www.bidville.com, etc. The large number of firms in this market reflects the intense competition among those sites. Margin profit is decreased to a relatively low level. eBay could still survive because of its scale of economy and good reputation. However, eBay’s growth in 2004 was much smaller than in 2003. Shareholders put much pressure on eBay, and eBay had to readjust its pricing on varied services on the short run in order to satisfy people’s short term expectation. However, he is risking his long term revenue and reputation.

Fixed costs
Essentially, fixed costs on online auction market are rather low: purchasing programming technology patents, web, administration, credit, accounting, staff, and daily operations.

Product differentiation
Differentiation depends on how the transaction is performed. There is not too much difference among different online auction companies in web processing efficiency and shipping efficiency,


References: . October 23, 2000. . May 29, 2003. . August 25, 2005. . December 22, 2004. . Februrary 17, 2005. . February 14, 2005
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