Marketing

eBay in 2002: The Challenges of Sustained Growth

By Group 1

4849198 Mr. Wuttichai

4849073 Ms. Piyanee

4849078 Ms. Salita 4849195 Ms. Rachna

Presented to

A. James P. Fitzpatrick

MGMG509: Strategic Management

College of Management, Mahidol University

Company Background

eBay is The World's Online Marketplace® with a global customer base of 181 million. Founded in 1995, eBay has created a powerful marketplace for the sale of goods and services by a passionate community of individuals and small businesses. eBay now has a global presence in 33 markets, including the United States.

On any given day, there are millions of items listed on eBay across thousands of diverse categories, including antiques, toys, books, computers, sports, photography and electronics, amongst many others.

As an early Internet enthusiast, Pierre knew that people needed a central location to buy and sell all kinds of items on a level playing field and to meet other users with similar interests. He started eBay to fulfil this need. At the time, Pierre's fiancée (now wife) was an avid Pez™ (sweet dispenser) collector. She was having trouble finding people to trade with, and Pierre thought eBay might be the answer to her problems.

SWOT Analysis

Strengths

* Dominant player in the online auction industry largely uncontested

* Strong management team

* Belonging the sense of community as a key competency which generate a strong CRM

Weaknesses

* Difficult to expand its website internationally due to lacking of local culture expertise

* Difficult to cope with illegal practice occurred between the use (seller and buyer)

* Prospect uncontrollable system breakdown

Opportunity

* Potential Market in international in developing countries

Since these countries have a hugh amount of population and growth in economy. People tend to spend more time for leisure including getting through auction website.

* Existing market Potential Market still has a opportunity for customer expansion

Since these countries have a hugh amount of population and grow in economy. People tend to spend more time for leisure including getting through auction website.

Threat

* Competitors may occupy the cultural expertise in some countries as a competitive advantage.

For example, Yahoo website which is a US-based internet company has dominated the Japan market.

* Difficult to cope with illegal practice implemented by outside.

As mention in weakness, this occurs by someone who pretend to be Ebay officer and send the fake e-mail to others to register the personal information then they

* Prospect uncontrollable system breakdown

Financial Position

* Increase in revenues

Company revenue has increased at a compound rate of 2,236% from last five year (from 1996 to 20001).

* Decrease in net income

Net income has increased at a compound rate of 2,610% at the same period.

* Liquid status

Current ratio of eBay is high (about 4.91 as of year 2001), which mean that eBay is in liquid status. It indicates the high extent to which current liabilities are covered by eBay's assets expected to be converted to cash in the near future.

* Under leverage status

Debt ratio of eBay is low (about 0.15 as of year 2001), which mean that Azalea is in under leverage status.

* Average profitability

Profit margin ratio of eBay is average (about 12% as of year 2001), which mean that eBay has an average profit margin.

* DSO is average

A Day sale outstanding of eBay is average. (about 49.57 days as of year 2001)

Marketing Situation

* Leading global brand for online auction

* Customer-oriented business (Collect data and implement CRM)

* Highlight the value of community concept as for sustainable or long-term growth

* Account for B2B, B2C compatible with C2C functions

Management Critique

Partnership Interaction

eBay try to foster a sense of relationship, trust and growth opportunity among eBay users and business alliance by creating partner interaction.

1. Business to business interaction : e.g. eBay-IBM, AutoTrader.com, AOL, Warner Brothers

2. Personal to personal interaction : e.g. Buyer and Seller

3. Business to personal interaction : e.g. eBay, Buyer and Seller

By this interaction, eBay could understand how the customers and business partner perceive eBay's preference, as well as being use the comment as reference for future development.

Community affinity valued

eBay's core value is to create a community that person easily either communicate or trade to other people. eBay lets the community feedback (e.g.