Ebay Case Study Analysis

Running head: CASE STUDY ANALYSIS

Case Study Analysis

eBay: In a League of Its Own

EBay is the leader of the online auction industry, and was unchallenged for quite some time. The eBay company became the leader in the online auction industry by not only allowing everyday consumers to purchase and sell items, but it also allowed big companies to clear up their stock to bargain shoppers. EBay has become a serious competitor in the traditional e-tail environment with the less competitive “buy it now” option and the acquisition of PayPal, their secure online payment system.

The problem that eBay faces currently is creating a business plan to maintain their position as the leader in the online auction industry while establishing a place as a retailer of choice in the fixed price e-tail market and continuing to exceed profit levels.

Maintaining their place has become a recent challenge because eBay is currently facing stiff competition in the online auction market. Some of the competition that eBay is up against are sites such as Yahoo Auctions, Overstock.com, Craigslist, Google and the recent re-surge of Amazon.com. EBay is now facing competition because other sites are now building their sites around some of the cons of the eBay giant. For example, eBay is not a free site. Sellers are charged monthly fees, which in turn can drive up the cost of the items being sold. Sites such as Craigslist are completely free, increasing its popularity everyday based upon the fact that there are no fees to utilize the site, the site is more local selling merchandise to consumers who are near the item, so shipping costs are minimal. This also allows the consumer the option to pick up items much faster. Amazon.com has seen a recent surge in users due to its non auction format that is appealing to many consumers. Amazon.com also has increased their popularity by allowing used items to be sold and independent sellers to have business on their site.

Recently eBay has introduced some changes that they feel will be solutions to their stunted growth rates and place them further away from the competition. In order to continue their growth, eBay is focused on increasing the number of users to their site. More users bring in more revenue. EBay plans on changing the fee arrangement and also taking away the ability for sellers to leave negative feedback. With these changes eBay hopes to increase their number of users back to the site and decrease the amount of fraud. The decrease in the cost to list an item and the increase in the fees when an item sells makes it more attractive to users list an item for sale on their site. EBay will now make more revenue once the item is sold, not making users pay more upfront costs.

Some other possible changes that eBay could make in order to dominate the industry is to make more acquisitions that work for their business. EBay purchased half.com and is a nice addition to their business model. Half expands on the buy it now option, while also tying in their auction format. EBay also needs to try to make the purchase of Skype work for their business. EBay needs to somehow link that technology into their business model. Possibly allowing users to talk to each other in person or auction in person using that tool could be a way to link the two and offer something new and exciting to users. EBay could also expand its business beyond the online auction industry by connecting with other big merchants to sell their goods on their site instead of their own personal websites. For example, eBay could partner with a retail giant such as Target or a Barnes and Noble. A merger such as this could allow consumers to use the buy it now option or to auction off sale items to get the best price. With the popularity of Craigslist,