EbayCaseStudy
Analyzing Managerial Decisions: eBay.com
Donna Cushing
Oklahoma Wesleyan University
Managerial Economics
BUSI 5223
Jerry Rau
July 10, 2015
Analyzing Managerial Decisions: eBay.com
How does eBay create value? eBay creates value by providing an online setting for buyers and sellers to meet. It enables both the buyer and the seller to have access to each other that they might not have otherwise had. The value created for the buyer, is that he/she can view items online across state lines, or across the country for that matter. This shopping is instantaneous, versus the time involved with having to travel to view items for purchase. The expense of time and travel is decreased significantly, thus creating value for the buyer. For the seller, their audience is increased tenfold, therefore increasing the likelihood of selling their items. The seller can create a “store” on eBay versus having a brick and mortar store. The cost of the online store is miniscule in comparison to an actual place of business. Additional value is created for the buyer and seller due to the availability of PayPal. Through the use of Paypal, items are insured and payments or refunds are able to be completed quickly and painlessly. This arraignment helps to make sellers to be more confident in their transactions because they don’t have to worry about bounce checks or illegal payments.
What potential contracting problems exist on eBay? There can be numerous contract problems for online buyers and sellers. For the buyer, the product they purchase may not be as advertised, or meet their expectations. The seller may not send the purchased item in a timely fashion, or may not send it at all. For the seller, the buyer may not pay for an item, which in effect has removed the item from being viewed by other buyers. This results in a possible loss of a sell, and the costs of time and fees to relist said item. Possible problems for the buyer and seller are the issues related to
Donna Cushing
Oklahoma Wesleyan University
Managerial Economics
BUSI 5223
Jerry Rau
July 10, 2015
Analyzing Managerial Decisions: eBay.com
How does eBay create value? eBay creates value by providing an online setting for buyers and sellers to meet. It enables both the buyer and the seller to have access to each other that they might not have otherwise had. The value created for the buyer, is that he/she can view items online across state lines, or across the country for that matter. This shopping is instantaneous, versus the time involved with having to travel to view items for purchase. The expense of time and travel is decreased significantly, thus creating value for the buyer. For the seller, their audience is increased tenfold, therefore increasing the likelihood of selling their items. The seller can create a “store” on eBay versus having a brick and mortar store. The cost of the online store is miniscule in comparison to an actual place of business. Additional value is created for the buyer and seller due to the availability of PayPal. Through the use of Paypal, items are insured and payments or refunds are able to be completed quickly and painlessly. This arraignment helps to make sellers to be more confident in their transactions because they don’t have to worry about bounce checks or illegal payments.
What potential contracting problems exist on eBay? There can be numerous contract problems for online buyers and sellers. For the buyer, the product they purchase may not be as advertised, or meet their expectations. The seller may not send the purchased item in a timely fashion, or may not send it at all. For the seller, the buyer may not pay for an item, which in effect has removed the item from being viewed by other buyers. This results in a possible loss of a sell, and the costs of time and fees to relist said item. Possible problems for the buyer and seller are the issues related to
References: Dahlman, C. (1979, April). The Problem of Externality. Journal of Law and Economics, 22(1), 148-162.