eBay

Strategic Review Presentation

Contents
1.
2.
3.
4.
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12.

Intro to EBay
Where is eBay today
SWOT
PESTLE
PORTERS
Value chain
ILC
Strategic group analysis
TOWS matrix
Strategic Options
Recommendations
Stakeholder Analysis

Introduction

Founded in September of 1995, California U.S.A

Marketplaces have approximately 104 million active

users worldwide.

eBay.com users worldwide trade $2,080 worth of goods

on the site every second.

eBay Inc. has a global presence in 39 markets

eBay is the world's online
marketplace; a place for
buyers and sellers to come
together and buy or sell
almost anything!

eBay today

There has been a growing concern over the security issues with online shopping and other online
activities due to hacking.

Growing population having access to internet, as well as an ever-growing environment in which

companies are expected to keep pace.

Amazon are catching up in terms of online trade and policy.

eBay also owns over 40 companies

PayPal is separating from eBay to become a stand alone company.

eBay acquisitions

Pay pal

Gumtree

Bill me later

Stub hub

Up4sale.com

Kruse international

To name a few
As of September 2014, eBay has acquired over 40 companies, the most expensive of which was
the purchase of Skype for $2.6 billion most companies they own are based
in the states and a replayed to online auctions in some capacity.

Why separate with

PayPal

Help them compete on a wider market (apple pay)

Pressure from boardroom

Different core strategies required for each company

eBay hides value of PayPal

SWOT Analysis
Strengths
Brand Awareness
eBay has become a generic term
for online auctions
No Inventory
Technical Superiority
(Paypal/Skype)

Opportunities
Increase services portfolio
through acquisition
Opening more online stores in
other countries ( growing
economies in Asia and Europe)
Growing number of mobile
shoppers
Entering the retail market

Weaknesses
The model of eBay is open to a
number of fraudulent activities
System breakdowns could affect
the trading activities of eBay
(Technology Malfunctions)
Product Description Lacking

Threats
Success attracts greater
competition
Attacks by illegal practices could
happen
Some costs like credit card
charges cannot be controlled by
eBay

PEST Analysis
Political

Economical

Worldwide economic
Risks of data
downturn
security
Independently of the
Danger of illegal
general economic
products
Many users apply the
cycle
Shift of revenue
trading platform
from traditional
professionally
Tax evasion
retail trade to
Regulated shop
trading activities on
the Internet
hours, 24 hours
Increasing
advantage
importance of
international trade

Social

Technological

Worldwide
Internet
penetration
Local government
policy

Increasing product and

price transparency
New technologies
Convergence and
complicity
In patent protected
technical knowledge
and features

Porters five forces

Strategic analysis of

Ebay

Porters Five Forces - Barriers to Entry

This business is an Internet driven

service industry, where there is a
low barriers to entry.

The main barrier might that some

products are not permitted to be
sold in certain states and country.
So, the main barriers may come
from government regulation thus any
online auction should not violate
those laws.

EBay has created its brand name

among users of its services and it is
really hard to enter a market where
safety and brand recognition are this
important in the industry

Low

Porters Five Forces

Competition & Rivalry

Low

Yahoo! Auctions, Google and Overstock.com

have been the most important competitors of
eBay. They have been fighting eBay for a
piece of the market in the industry.

Moreover, one of biggest competitor of eBay is

the drop off industry, however many drop off
companies also use eBay services.
There is an immense competition because of
low entry barriers.
EBay continues to attract its customers by
providing best possible services at the lowest
cost (Porters generic strategy: cost
leadership strategy at low cost competence in
broad market).

Porters Five Forces Supplier Power

EBay business model provides a service

that brings the buyers and sellers
together. The suppliers do not have
much power except in the case of
transaction of the high-end items in
other words expensive goods: real
estate or cars or equipment.

EBay uses PayPal in order to provide

for smooth and quick payment of
items where the sellers want to get
their money quickly. But it is
complicated to sell expensive where
the suppliers have more power.

Medium

Porters Five Forces

Threat of Substitutes

Low

Placing the small items on a traditional auction is not costeffectiveapproach and there
would be a limitednumberof buyers.

This is might not be a realistic option to sellers because the Internet and eBay opens up
millions of buyer and sellers worldwide through Internet. The Internet has especially opened
up the market for specialty items such as first edition cookbooks or traditional lunchboxes
with superheroes on them.

Porters Five Forces Buyer Power

There is limitlessnumberof
buyers and that what makes eBay
powerful and profitable.

Anyone around the world can see

and buy the any item listed on
eBay which means that the
buyers dont have any real power
in influencing eBay.

However, eBay does listen to

their customers, which is why
they instituted
thecustomerfeedbackprogram.
This has helped to weed out the
bad sellers and buyers.

Low

Value Chain

Margin

marketing

Conversation
from traffic to
buyers and
sellers

Auction
process

Peer
review

Value chain Comparison

EBay

Amazon

community focus

warehousing, packaging and delivery

Variable prices, depends on the

auction

Their own checkout system

Provides B2B, B2C, C2B and C2C

transactions, auction process

Prices are fixed, retail process

Guarantees and warranties

Customer service and satisfaction

Brand Name & global awareness

Product review

Peer review

Industry Life Cycle

Where is Ebay at a Nationally, Continental and globally level?

Introduction, Growth, Maturity, Declining stages

Nationally

I would say that Ebay are in

decline nationally having
reached maximum exposure
and facing competition from
sites like, Amazon and super
markets

Continental

In terms of Europe I would suggest that that there is not much room for further
development, but also not too much competition for the size of the market.

Globally

Areas for expansion in Asia and more so in Africa would indicate to me that they are still
growing on a global scale

Strategic group Analysis

Brand Reputation & Awareness

Strong

Weak
Broad

Narrow
Number of Products Categories

TOWS-Matrix

Opportunities (O)
Acquisitions
Diversification

Threats (T)
Unscrupulous
practices- spam and
viruses to eBayers
Attracts competition
because of
supernormal profits

Strengths (S)
Majority of market
Global brand
Financial strengths

Weaknesses (W)
Dependencies on
system running at all
times

SO Strategies
Global expansion
Maintain simplicity of
interaction with
buyers and sellerusability

WO Strategies
Diversify into new
product markets
Online verification of
products

ST Strategies
Acquisition strategyglobal expansion
Re-enforce
marketing,
management and
systems as
concentrated effort

WT Strategies
Alliance to postal
services

Strategic Options for Ebay

Strategic Option
Product development

Aim for higher value markets which are less associated with eBay such as
housing and cars

In terms of housing one idea could be to allow landlords to put or individual

rooms up for rent, with a reserve price, in which eBay would take a one off
listing fee, and to build a section of the website similar to that of realtors

Advantages

Would fit well with auction based bidding system implemented on eBay

Would allow larger fees for listing on eBay

Large geographical coverage

Convenient for comparison

Wouldn't need to change website structure

Potential issues

Lack of viewing may be an issue for higher value items as people would want to see the
the product if paying large amounts

Would require clear contact details to avoid future problems

If a loan is required banks may be more sceptical or take too long

Strategic Option
Delivery infrastructure

One aspect in which eBay are considered behind competitors is that of delivery time and fees.

This is obviously a crucial aspect to there business and is important for consumers in an increasingly
impatient world.

One way around this could be to align with or create a dedicated delivery service.

Advantages

Compete with competitors such as amazon, who work with royal mail.

Better customer service in terms of product delivery time

New branch of the company could work for third parties (other companies)

Potential issues

Large cost to set up

Behind rival companies who already have a delivery infrastructure

Reputation with negative delivery reviews could hinder them

Strategic Option
Market Development

the retail market in India stands at over $350 billion and is growing at a healthy compounded
annual growth rate of 15-20%

Retail e-commerce still at nascent stage

Growing middle class, population and innovation through the internet

Regulations stop amazon from moving

Advantages

It expands your consumer exposure and makes your company and product
names recognizable in the marketplace.

New users can be found in new geographic segments, new demographic

segments, new institutional segments or new psychographic segments.

Large market to exploit, in terms of population, growing economy and online

internet users. Moreover in a time where Asia is becoming more globalized.

Potential issues

Cultural risks ( understanding the needs and wants of the customers)

Established customer loyalty to other big e-commerce companies,

e.g. taobao (China)

Can be very costly if a failure, damage the company image

Our Recommendation
Short term

Long term

Develop and improve the delivery

infrastructure
Establish consumer confidents and
improve security
deal with is the increasing
dissatisfaction from its customers
Product development

Enter into emerging economies

such as India or other Asian
countries ( market development)

SAF Test for

Recommendation
Suitability
Acceptability
Feasible

Impact on the
stakeholders
Stakeholder Group
Suppliers
Customers
Shareholders
Main competitors
New customers
Manager

Bibliography
Exploring Strategy - G. Johnson, R. Whittington, K. Scholes, D. Angwin 2014
http://www.slideshare.net/beskida/ebay-10864968
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Thank You
We intend to continue to work toward our mission of
creating the worlds leadingecommerce franchise by
investing in our core Marketplaces segment and continuing
To build our adjacent Marketplaces businesses.