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SWOT analysis of eBay

This is an an eBay Inc. SWOT analysis for 2013. For more information on how to do SWOT
analysis please refer to our article.
Company background
Name eBay Inc.
Industries served Internet, Online retailing
Geographic areas served Worldwide
Headquarters U.S.
Current CEO John Donahoe
Revenue $ 14.07 billion (2012)
Profit $ 2.60 billion (2012)
Employees 27,770 (2012)
Main Competitors
Amazon.com, Craigslist, Ubid, eBid Auctions, Google,
Overstock.com
eBay is an international online marketplace with a global customer base of 233 million. It is a
multibillion business operating in 37 countries. There are millions of items listed on eBay across
thousands of categories, including antiques, toys, books, computers, sports and electronics,
amongst many others.
You can find more information about the business in its official website or Wikipedias article.
SWOT
eBay SWOT analysis 2013
Strengths Weaknesses
1. Worlds largest internet marketplace
2. Business model (no strong direct
competition)
3. Economies of scale
1. High fees
2. No further growth strategy
4. Localization
5. Payment system
6. Brand reputation
3.
Opportunities Threats
1. Growing number of mobile shoppers
2. Become a retailer
3. Increase services and product portfolio
through acquisition
4. Open more online stores in other
countries
1. Online security
2. Regional low cost online retailers
3. Increasing competition from Amazon
4. Exchange rates
Strengths
1. Worlds largest internet marketplace. eBay has more than 150 million live listings and more
than 105 million active users globally in 37 countries. That makes eBay the largest marketplace
online, having a great power over other online retailers.
2. Business model. eBay only acts as a middleman between sellers and buyers, who bid and sell
items in eBays marketplace. Being a pioneer in online auctions, eBay had no competition and
currently has only few strong direct competitors. Thus, companys business model is a
competitive advantage over such giant retailers as Amazon.
3. Economies of scale. In the beginning, eBay had to invest heavily to gain IT and customer
relationship management (CRM) knowledge and skills, but since then, used its skills to serve
over 100 million users and to create the largest online marketplace with little additional costs.
4. Localization. The business operates in 37 countries. Each marketplace is using local language
and is adapted to local product offerings. No other global online marketplace is localized to such
degree.
5. Payment system. eBay uses PayPal, its own payment system, to proceed nearly all of the
payments going from eBays marketplace. From eBays perspective, such tight integration has
the benefits of more fees collected (PayPal takes transaction fees from the businesses) and
tighter control over buyers shopping experience. From buyers perspective, PayPal provides
easy to use online payment method.
6. Brand reputation. eBay is a trustworthy brand, known all over the world and is valued at $11
billion.
Weaknesses
1. High fees. eBays fees for the sellers has risen significantly over the years. The firm receives
fees on listed goods, sold goods, some adornment fees and PayPal transaction fees. The sellers
often make zero profit on their low price products sold on eBay due to its high fees.
2. No further growth strategy. eBay hasnt unveiled any plans on how the business is going to
sustain its growth. Firms top management team is unsure whether eBay should become a
retailer or to introduce new products and services and how to do that: developing its own
products or acquiring new business. As a result, there is high uncertainty over eBays future and
business direction.
Opportunities
1. Growing number of mobile shoppers. eBay has a strong payments system PayPal that is
widely accepted and used by many online retailers and online shoppers as it is convenient and
easy to use. The growing number of mobile shoppers represents a huge growth opportunity for
PayPal as its one of the few payment systems that meets the requirements for convenient
shopping and payment processing on the go.
2. Become a retailer. eBay has an access to hugest online marketplace in the world and is well
placed to take an advantage of that by becoming a retailer. The company has its IT and CRM
systems in place already and could easily stake out a market share from Amazon and other
online retailers.
3. Increase services portfolio through acquisition. The company has successfully acquired
many companies to extend its services offering and should continue adding new services through
mergers and acquisitions.
4. Open more online stores in other countries. To sustain current growth levels, eBay could
open its online marketplaces in other large and growing economies in Asia and Europe.
Threats
1. Online security. PayPal stores online shoppers personal information, such as bank account
details, which is a target for online thefts. The more online customers PayPal has, the more
attractive as a target for identity thefts it becomes.
2. Regional low cost online retailers. Regional low cost online retailers could outrival eBay on
faster and cheaper shipping, more localized product offering and better knowledge about home
market.
3. Increasing competition from Amazon. Amazons online presence has significantly increased
and now Amazons marketplace is just behind eBays.
4. Exchange rates. eBay receives a part of its income from foreign operations. The profits that are
sent back to US have to be converted into dollars and may be affected by the exchange rates,
especially when the dollar is appreciating against other currencies







Strategic Analysis on Flipkart


Strategic analysis on Flipkart

The purpose of your analysis is to assess the current competitive position of the firm and to make
recommendations on how to improve that position.
Flipkart: Flipkart is a company founded in the year 2007 by Sachin Bansal and Binny Bansal. It is an e-
commerce company that made online shopping popular in India. It offers various products on online
like books, mobile phones, digital cameras, laptops, watches etc. Initially, it has started selling books
online and later it has spread to offer many products.
1. SWOT analysis on Flipkart
2. Pestel framework.
3. About industry.
4. Competitor analysis.
5. Porters five forces model.
6. Current competitive position- generic porters framework.
7. Actions recommended to improve its position.
Strategy, mission, values of flipkart:
The mission of Flipkart is to provide their customers a memorable online shopping experience.
The Vision of Flipkart is to become Amazon of India.
Core values of Flipkart:
1. Customer Obsession
2. Ownership
3. Impact
4. Honesty
5. Selflessness
6. Communication
7. Innovation
By seeing the mission and values of the organization, we can infer that they are in sync with each other.
For example, its mission statement reads out that it wants to provide customers with online memorable
experience and one of its values is customer obsession. So, until and unless you are concerned about
your customers or obsessed with your customers, you cant provide delightful experience.


SWOT Analysis:
Strengths:
1. Strong Brand value
2. Own Logistics Arm e kart
3. Own Online payment gateway solution Payzippy
4. Own Marketplace model


Weaknesses:
1. Investor driven organization Or lack of
Independent board
2. Secretive and Political Culture.
3. Excessive focus on expanding customer base
rather than pulling profits

Opportunities:
1. Online fashion and apparel business
2. Providing logistics services to its competitors.
3. Growth in online retail sector in India

Threats:
1. From competitors like Amazon,
Snapdeal,Infibeam, Indiaplaza, Homeshop18 etc.


Reasons for Strengths:
Flipkart is a company which has entered into online E-Commerce industry very early. It has strong brand
value in India.
Flipkart has developed its own logistics arm E-Kart, which has been initially used for in-house deliveries.
Recently, it has developed its own payment gateway solution provider, where customers can save their
credit card details, Payzippy.
Flipkart has its own marketplace model where sellers need to register in this platform and buyers can
negotiate with the sellers on varied service levels and it also helps company to reduce its own inventory.
Flipkart will just deliver those products.
Reasons for Weaknesses:
Most of the money has been invested by Venture firms like Tiger global and Accel Partners. SO, most of
the decisions that are taken by founders of firm have to been approved by Investors.
Secretive and political culture is followed in this company while they are recruiting hires which is
creating problems in this company.
Flipkart is excessively focusing on expanding customer base rather than pulling profits in the process
having cash burn.

Opportunities:
Flipkart can venture into online apparel and fashion business, where the gross margins are higher.
Flipkart can offer its logistics services to its competitors in online retail sector with its logistics arm E-
kart. With online commerce sector going to boom in the coming years, online transactions are going to
increase. So, if Flipkart offers its logistics services to its competitors, it can gain money from those
transactions.
Threats:
Flipkart is facing a lot of competition from some of the online retailers like Amazon, Snapdeal,
Indiaplaza, Homeshop18 etc.

I would discuss briefly about industry in which Flipkart is operating. Flipkart is operating in online retail
industry.
Online Retail Industry: Online retail industry is 1.4-1.6 billion $. According to a recent TechnoPak
report, e-tailing has the potential to grow more than hundred-fold in the next 9 years, to reach $76
billion by 2021. This growth will be driven by the country's growing Internet-habituated consumer base,
which will comprise 180 million broadband users by 2020, and a burgeoning class of mobile Internet
users. In the next five years, Indian online retail industry will grow to 10 billion $. Some of the major
challenges for online retailers are customer loyalty, trust, and education. Most of the customers prefer
Cash on Delivery option instead of credit/debit card payment. So, this makes online retailers to lose
some of the cash as the delivery companies will keep the money for 15 days and later they pay to these
online retail companies. The major players in this industry are Flipkart, Snapdeal, Amazon, Myntra,
Jabong, Homeshop18, Indiaplaza etc.
Now, with some information about online retail industry in India, we will go for the Porters five force
framework and analyze this industry.
Porters five forces framework:
Supplier power:
In this industry, suppliers are the manufacturers of finished products like Nike, Dell, Apple etc. Online
retail companies sell various products ranging from books to computer accessories to apparels to
footwear. Since there are many suppliers for any particular category, they cant show power on online
retail companies. For example, if you take computers category, there are many suppliers like Dell, Apple,
Lenovo, and Toshiba who wants to sell their products through these online retail companies. So, they
wont be having power to control the online retail companies. Online customers can select the products
on their own and the switching costs in this case is zero. It is very difficult for manufacturers of finished
products to come into this industry because of challenges in Logistics. Online retail industry is important
to suppliers because it acts as one of the channel to sell the products. Now, with most of the customers
in India purchasing online through online retail companies, they cant afford to lose this channel. So,
they cant dictate terms with online retail companies. So, in this industry the supplier power is low.
Buyer power:
Buyers in this industry are customers who purchase products online. Since this industry is flooded with
so many players, buyers are having lot of options to choose. Switching costs are also less for customers
since they can easily switch a service from one online retail company to other one. Same products will
be displayed in several online retail websites. So, product differentiation is almost low. So, all these
factors make customers to possess more power when compared to online retail companies.
Threat of New Entrants:
Threat of new entrants is very high in this online retail industry because of following reasons:
Indian government is going to allow 51% FDI in multi-brand online retail and 100% FDI in single brand
online retail sooner or later. So, this means foreign companies can come and start their own online retail
companies.
There are very less barriers to entry like less amount of money required to start a business, less amount
of infrastructure required to start business. All you need is to tie up with suppliers of products and you
need to develop a website to display products so that customers can order products, and a tie up with
online payment gateway provider like bill desk.
Industry is also going to grow at a rapid rate. It is going to touch 76 billion $ by 2021. Industry is going to
experience an exponential growth rate. So, obviously no one wants to miss this big opportunity.
Threat of substitutes:
Substitute for this industry as of now is physical stores. Their threat is very low for this industry because
customers are going for online purchases instead of going to physical stores as it will save time, effort,
and money. With the advent and penetration of internet and smart phones, future in retail belongs to
online retail.
When we compare relative quality, relative price of product that he/she buys online with physical store,
both are almost same and in some cases, online discounts will be available which makes customers to
buy products online.
Rivalry with in Industry:
Competition is very high in this industry with so many players like Flipkart, Myntra, Jabong, Snapdeal,
Amazon, Indiaplaza, Homeshop18 etc.
Environmental Analysis:
1. Demographic trends: When it comes to online retail industry, for people to shop online, they need to
have internet. India is third largest country when it comes to internet usage after U.S and China.
Presently, above 200 million people are using internet. Out of this, 110 million people access internet
through mobiles. In India, 8-10% of online users transact online. So, it means it comes to 20 million
people. And also, with smart phones, tablets coming into picture, number of people who are going to
use internet is going to get increased. This means, increase in the online retail usage in India.
2. Socio-cultural Influences: Culturally, Indians tend to buy the products in physical stores. They want to
touch, feel the product before buying. If the risk associated with product is very high, like in purchase of
Television, Laptop, Washing Machine etc., they tend to go to physical store, then see the features and if
satisfied, will buy the products. Indians will mostly influenced by peers, friends while purchasing the
products. They will ask their friends or peers suggestions and only will buy the product. So, these factors
are negatively affecting online retail industry. But slowly, culture of buying is changing. They are going
for online purchases but this rate is less when compared to offline purchase. But with 30 day
replacement guarantee, if the product is not functioning properly, by E-commerce companies, and with
the availability of peers or friends feedback about products online, they are slowly moving from offline
to online purchases.
3. Political-Legal factors: India is a democratic country where its people elect the government through
elections for every five years. For those five years, elected government will rule the country. So, in terms
of political climate in India, it is stable. Now, with general elections going to happen this year, most of
the people in India are predicting that Bharatiya Janata Party (BJP) will come into the rule. Prime
ministerial candidate Narendra Modi of BJP is investor friendly. Previously, when he was the Chief
Minister of Gujarat, he has implemented several policies and made Gujarat, one of the state in India, a
vibrant state. Indian business has in the past applauded Modi as an investor-friendly chief minister who
has led Gujarat to double-digit economic growth.
India is also pushing for Foreign Direct Investment in Online Retail Industry.

Technological Factors: With the advancement of technology at a rapid pace, online retail industry is
going to benefit a lot. Several technological devices like smart phones, laptops, tablets etc. are going to
help this online retail Industry because with the penetration of these devices, Indian consumers are
going to purchase their products online. Even Smart phone market is growing at a very rapid rate in
India. People in India are going to smart phones as these phones provide various features when
compared to traditional phone models. Other technology which is going to help this industry is big data
and Predictive Analytics. Since companies can gather the data about their customers when they are
doing business with them, they can use these data to personalize the services by using predictive
analytics

5. Macroeconomic factors: Indias current GDP is 1.842 trillion $ and tenth largest economy in terms of
GDP.
Growth Outlook: Economy poised for gradual recovery in 2014-15. Reserve Bank of India, an apex bank
of India is expecting A GDP of 5.6% in the year 2014-15. Even investor confidence is going to boost after
general elections because investors are confident about BJP prime ministerial candidate Narendra Modi.
Also, India is going to become third largest economy after China and U.S. So, on an economic front, this
is going to help online retail industry.
Actions recommended for Flipkart:
Flipkart has not been into fashion and apparels business in online retail. Since the margins are very high
in this space, Flipkart can cash this opportunity by venturing into this space. Currently, only Myntra and
Jabong are leading players in this space. Flipkart can venture into this space either by starting on its own
or by merging with one of these firms.
Since online retail is going to boom in the coming years, it is necessary for this industry to have logistics
support. So, since Flipkart is already having its own logistics arm E-kart, it can provide this logistics
service to its competitors in online retail industry.
In this type of industry, price matters a lot to customers. If same product is offered by two e-tailers at
two different prices, customers will go for the lowest price. So, Flipkart should try to offer the products
at lower prices. This can be done by optimizing its logistics services. Since logistics cost plays an
important role in determining the price of the product. Filpkart should try to optimize its supply chain in
such a manner that its supply chain costs should be very less and try to offer products at lower price
compared to its competitors.
Big data and predictive analytics are going to play a big role in the future. There are many tools like R,
SQL available to mine the data and to find out the patterns. So, Flipkart can use data about its customers
like what are they buying, what are their buying patterns and can target them by using predictive
analytics. For example, Amazon uses customers purchase history and suggests products according to it.
Flipkart can also employ relationship marketing into it. Instead of mainly focusing on customer
acquisition, it should also focus on customer retention. Because loyal customers are more profitable
when compared to new customers.

Reference Sources:
http://articles.economictimes.indiatimes.com/2014-02-13/news/47305247_1_logistics-arm-payzippy-
sachin-bansal
http://forbesindia.com/article/boardroom/can-flipkart-deliver/33240/0
http://www.business-standard.com/article/companies/flipkart-changes-business-model-launches-
flipkart-marketplace-113040600051_1.html
http://businesstoday.intoday.in/story/flipkart-strategy-to-tackle-competition-from-amazon-
india/1/202612.html
http://www.huntshire.com/Company/Values/102/flipkart
http://www.moneycontrol.com/smementor/mentorade/infotech/e-retail-industry-will-be-worth-10-
billion5-yrs-time-995352.html
http://economictimes.indiatimes.com/tech/internet/fdi-in-online-retail-rift-arises-as-mncs-seek-100-fdi-
domestic-cos-insist-on-partial-opening-up/articleshow/28569069.cms
http://www.iamai.in/PRelease_detail.aspx?nid=3222&NMonth=11&NYear=2013
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