EBay Inc. Research Paper
Table of Contents
TOC o “1-3” h z u HYPERLINK l “_Toc350790993” Executive Summary PAGEREF _Toc350790993 h 2
HYPERLINK l “_Toc350790994” Situation Analysis PAGEREF _Toc350790994 h 3
HYPERLINK l “_Toc350790995” Company Performance PAGEREF _Toc350790995 h 3
HYPERLINK l “_Toc350790996” Industry Perspective PAGEREF _Toc350790996 h 4
HYPERLINK l “_Toc350790997” External Factors PAGEREF _Toc350790997 h 5
HYPERLINK l “_Toc350790998” Stakeholder Analysis PAGEREF _Toc350790998 h 6
HYPERLINK l “_Toc350790999” Problem Statement PAGEREF _Toc350790999 h 7
HYPERLINK l “_Toc350791000” The Benefit Analysis PAGEREF _Toc350791000 h 15
HYPERLINK l “_Toc350791001” Measures and Expectations PAGEREF _Toc350791001 h 16
HYPERLINK l “_Toc350791002” References PAGEREF _Toc350791002 h 18
EBay Inc. is a multinational internet consumer-to-consumer corporation in America, which has its headquarters in San Jose, California. It was founded in 1995 and meant to act as a marketplace for selling its goods and services.
EBay has been able to build the online trading community, where any person can sell to other people using the World Wide Web, i.e. the Internet. The process is such that sellers and buyers are brought together in such a way a seller is allowed to highlight his or her items, and a buyer then bids the things he or she is interested in. The eBay users are allowed to browse and see the items in the market in an automated way. The arrangement of items is performed by a topic. Each auction has a category to deal with (Bjornsson, 2001).
It has both a customer-to-customer and streamlined trading, which they conduct through various forms like garage sales, flea markets, collectible shows and others with the web interface. This makes it easy for buyers to make sellers be able to list items of sale very fast after they have registered.
The process of browsing as well as bidding on the auctions is being done for free. However, there are three types of charges applied to sellers. One is a non-refundable amount charged once an item has been listed in eBay. This is called as an REPLACEion fee. It ranges between thirty cents to $3.30 and depends on opening a bid of the seller on the said item. The second one is the fee, which is charged due to the option of additional listing. This is done to promote an item by either bold listing or highlighting. The third fee is called a final value, which is charged towards the end of the seller’s auction. The fee ranges from 1.25-5% of the amount the item has been sold.
If the bid is less than what the seller has stated as the minimum price, eBay takes an initiative to notify the seller through e-mail. The buyer and the seller sort out together independently, that is away from eBay. The contract of binding in the auction is merely between two people, i.e. the seller and the winning bidder only (Bjornsson, 2001).
In the year 2012, the company increased its revenue to $3.4 billion by 15% as compared to the last year. The company had reported of its net income of the third quarter of $597 on a GAAP basis and the net income of $718 million of a non GAAP. This GAAP as well as the non GAAP incomes were above twenty two and fourteen percent respectively. The segment margin in businesses expanded every year. The eBay Inc.’s CEO and President has confirmed that they had a third quarter in their company. He confessed that the company’s mobile payments and commerce had been a game changer in their company. They had a global reach and a very strong portfolio. This makes them demonstrate their potential in helping their customers to be able shopping anywhere at any given time. They also enable retailers to compete in the rapidly evolving commercial environment (Businesswire, 2013).
PayPal also had a strong performance in the third quarter. The quarter ended with 117.4 million registered and active accounts. This was an increase for 14% as compared to that of 2011. The revenue has improved for 23% and the Total Payment Value has been increasing with 20% every year to about $35.2 billion. The PayPal has gone on to innovate in the global scale. It tries to expand the addressable market offline.
The market places also delivered a strong quarter which has increased the user growth. The gross merchandise volume minus vehicles has added 11% per year. In 2012, they increased to about $16 billion. The revenue also increased for 9% yearly which was as a result of the strong growth in Asian Pacific and the United States. The user growth has continued to increase to about 10% since the year 2007 with those coming from the mobiles being more than 800,000 users. This has boosted the growth of the sold items up to 19%. The eBay downloads have gone up to 100 million worldwide. This is an increasing point on engagement and differentiation.
The GSI revenue has increased to $226 million with 16% of increase in GeC merchandise sales. The sales in the same store have grown yearly by 19%. This shows strong sales in e-commerce from retail clients. The GSI has really won its clients and brought the services and innovative technology of eBay solutions to all sizes of merchants (Businesswire, 2013).
The future of eBay in performance and consolidated subsidiaries based on the expectations of the company, assumptions and forecasts involves some uncertainties and risks. These ones include some statements of financial results expected for the year 2012 and the fourth quarter, the future payment growth, GSI businesses and marketplaces, mobile commerce and payments.
Other perspectives include the changes in the product offering, regulatory, competitive and credit card risks which are specific to Bill Me Later and PayPal and especially PayPal. It has continued to grow geographically and also introduce its products. The company also has the ability to develop and upgrade its infrastructure, systems and capabilities of customer services such as GSI’s vs. 11 initiatives that should be offered at the reasonable cost. The company will also maintain the stability of the site and the performance on the sites. It continues to add the new features and products in a timely fashion.
EBay is now an online middleman used by both sellers and buyers in the manner that some mortar companies and traditional bricks cannot be able to touch. However, the use of web comes with such challenges like the issues of trust between sellers and buyers. The company has really tried to deal with trust issues because users still continue to make use of their services (Bjornsson, 2001).
EBay is still very operational especially now. However, it is still being in the stages of building up and has some business models working very well. Management has demonstrated that it really responds well; it also works hard in expanding its business and does not jeopardize the main business. Even if the stocks of eBay are overvalued, the fundamentals of business are solid. The company’s only risk is the case if it does not accelerate in its growth as estimated.
The factors that could lead to some differences in the actual results of the company and the predicted outcomes are some changes in business and well as economic and political conditions. Any European as well as the economic downturn or any crisis and conditions affecting the growth of e-commerce may also have some effects.
Other factors include the fluctuations in exchange rates of the foreign currency, the ability of the company to profitably manage, integrate, and grow businesses being acquired recently or those that may be received later or in future. The company is required to react successfully to the mobile commerce and mobile payments that is very important. The company should also be able to deal with the increasingly competitive environment of e-commerce, the competition from other means of selling and also the sellers from trading sites different from their own. The company should also manage the large increasing enterprise with a wide range of varying maturity degrees, businesses in different geographical areas, effects of business initiatives and management changes, the management of tax, litigation and regulatory risks, among many others.
This involves prioritizing and identifying key stakeholders as major so minor ones, assessing their needs and combining the knowledge in shaping the organization’s strategic direction. The stakeholders are different in their positions, beliefs, power and convictions. We must consider all these factors collectively and independently to be able to look at the implementation and development of an effective market strategy targeted. Some of the major stakeholders are the SNRDA, SBA, DASN, Congress, GAO, GSA and NSSC. Minor stakeholders are: DCMA, the US Treasury, EBIO, NSCS, DRMO, Media and constituents. However, by looking at each potential of every stakeholder to cooperate or threaten the program, the OMC administration can identify them as mixed, supportive, non-supportive or even marginal (Clark & Turker, 2003). The table below shows the Stakeholders’ Threat Matrix.
Stakeholders’ Potential for the Cooperation with the System High Stakeholders’ Threat System Low Stakeholders’ Threat System
High Collaborate with mixed Blessing Stakeholders ASNRDA Federal gov. community ARO Involve supportive stakeholder: DCMA, SBA, Ebio, and GAO
Low DDefense against Non supportive Stakeholders: GSA, and Media
Congress Monitor Margin of the Stakeholders: End users, Citizens or the constituents
Stakeholders’ Threat Matrix (Clark & Turker, 2003).
The management and strategic analysis is a process that is interactive and facilitates positioning of the organization to be able to major on a competitive advantage in the changing environment. The position and power of stakeholders is the one that determines whether converting, matching, avoiding or minimizing a strategy should be used to meet the objectives of marketing.
De Wintern and eBay Australia worked together with the aim of developing a framework on issues management. They have started with undertaking a stakeholder analysis as they prepared for the framework of EBay Company. They have found out that eBay has a strong team of very influential stakeholders. The analysis of the group of stakeholders has highlighted the best ways of addressing the concerns for a project’s final action. They have agreed to have a workshop involving senior management so as to be familiar with the processes that are new to make a good use of them in future. The eBay and another company Pay Pal have mitigated a reputational impact and installed quite a sophisticated tool for management to prevent the crises with having better issue management (De Wintern, 2012).
EBay is a consumer-to-consumer corporation in America which has its headquarters in San Jose, California. It was founded in 1995 and meant to act as a marketplace for selling goods and offering services. The company is well-known and among the leading sites in the Internet. It features a website which has the offerings of “buy now” and auctions.
Initially, eBay used to sell the recycled and broken electronics. However, today, it has the rules and guidelines what goods to sell or offer. The list consists of the things not sold for a long time. The restrictions are such things like used clothes, pesticides and drugs, electronics, stocks as well as other securities. Copies and fakes of merchandise branded are also not accepted. The company also has some policies towards the counterfeit sites (Forbes.com, 2012). While eBay fails to allow the competing merchandise, the Amazon Company which is five times bigger than eBay encourages the competition of prices. It offers merchandise from the competing vendors.
There are three main problems or challenges facing eBay now. These are the following ones:- Selling through the mobile devices; – Legal challenges to the PayPal;
– Prospects to collect the sales tax.
A new challenge is selling through mobile devices. The method allows customers to do their shopping at any time through the apps both on devices and mobiles.
eBay is not new to lawsuit. The recent ones require eBay to be able to defend the company against the allegations that it is exercising monopoly in online payments via PayPal. It has been an owner of PayPal since the October 2002. PayPal is a worldwide e-commerce business that allows money transfers and payments to be done through Internet. Most of its consumers have been very happy due to PayPal because. Once they make the payments, the shipment is being made very fast unlike when they pay through a money order or with checks.
Online retailers like the Amazon have dropped the opposition being long withstanding on collecting the national tax sales. This is opposite to eBay. The merchandise that has been shipped to the districts and states of Columbia has the tax sales and will pay taxes regardless of retailers being physically present or not. Earlier if a retailer only has a warehouse or a store it was a must that he or she would need an online seller for collecting the necessary sales’ taxes. Due to this, the Amazon currently collects the sales’ taxes in Kentucky, New York, Kansas, North Dakota, Washington and Texas. However, such companies as eBay oppose the collection of sales’ taxes because it hurts small merchants. They support an opinion that retailers the businesses of which have less than five million dollars can be exempted from paying, thus, they can be competitive (Forbes.com, 2012). Some of the causes of eBay’s problems that sellers are facing with are being discussed below (Hsiao, 2013).
1. Problem with buyers;-EBay customers will not buy any goods without inspecting them. Yet these goods in eBay are new, of the top quality, recent, vintage, parted out, and complete. This means that these customers do not know what they expect from eBay goods. The buyers could also leave a negative feedback that can make the business rating reduce.
2. Locking out as a result of chargeback and feedback; the measures put in place may not be able to curb all the charges back and feedbacks. It is not because sellers are embarrassing, inconvenient or even that they affect the cash flow. It is due to the fact that they can lead to the effective inability to continue with their daily business activities. EBay Company is well-known in locking and suspending accounts which have a poor feedback or large charge backs.
3. Non-transparent sanctions of eBay; EBay has a way of making certain sellers to effectively suffer or disappear by moving the auctions to the very end of results’ search. This prevents them from being visible in the category pages for search results or common items, increasing the fees, stopping fee discounts, reducing the customer service access to sellers having an access before, and others. Sellers get shocked when they find themselves in these situations.
4. Low shipper performance; eBay relies on such shipping carriers as UPS, DHL, USPS, FedEx and many others to satisfy its buyers. However, shippers make the third party of business. Therefore, their performance is often beyond the control of sellers and buyers. Problems such as traffic delays, weather, natural disasters, absentee deliverers and strikes cannot be controlled by eBay.
5. Problems of fulfillment; those sellers using fulfillment services, partners or even drop shippers must work with uncertainty in transactions. Their performance is very much connected to its performance of drop shipping or a fulfillment partner.
6. Counterfeit goods;-some of buyers have the problems in trusting that sellers have nothing to do with the counterfeit goods. They sell not until the buyers return the goods. In business, sellers always want to get the goods cheaply and sell to gain profits. The sellers are not always experts in trying to authenticate goods. When the suppliers deliver goods and give their word that they are genuine, the sellers will trust their word.
7. Illegal activities; sellers in eBay sell a variety of mindboggling goods obtained from mind boggling suppliers and sell to mind boggling customers. While working with all the parameters involved, it is difficult for the one to identify what is accepted and what is not in any locale where a customer wants to do the purchase. We also have said that there is no seller who can be an expert in the regulations all over the world.
8. Making a poor choice of business; eBay sellers make a lot of losses as a result of doing a bad choice in selecting business. Most of sellers are not aware of the demand and supply in the market. They also do not know how to apply the time for their selling.
9. Identification of thieves using spoofs and phishing; there are many email messages that seem to come from eBay. They attract buyers and sellers into logging in. It takes them to the page similar to eBay’s. This leads to the fraud selling when, for example, the seller gets to sign in that page and the third party impersonating eBay gets the password.
10. Depression and unhappiness; customers do not always get satisfied with the services proposed to them. It is very difficult for a seller to control all the parties involved in eBay such as shipping, PayPal payments and suppliers. The results are not up to the buyers but to the organizations involved. EBay’s seller is not at the mercy of carriers, suppliers and others (Hsiao, 2013).
The Fishbone Diagram
The following fishbone diagram shows the problems that eBay faces.
-47625285750Low shipper performance
Low shipper performance
1228725285750Non transparent sanctions
Non transparent sanctions
-577215193675Selling via mobile devices, legal challenges to Pay Pal, prospects to collect the sales t.ax.
Selling via mobile devices, legal challenges to Pay Pal, prospects to collect the sales t.ax.
54387750Low eBay sales
Low eBay sales
1009650328295Thieves’ identification using spoofs and phishes
Thieves’ identification using spoofs and phishes
-104775328295Depression and unhappiness
Depression and unhappiness
2286000252095Making a poor choice of business
Making a poor choice of business
4305300252095Problems of fulfillment
Problems of fulfillment
The challenge of selling through mobile devices has been tackled for making it possible for customers to do their shopping any time through the apps both on tablet devices and mobiles.
EBay Company is required to be able to defend the company against the allegations made to them. The company is exercising monopoly in the online mode of payments made through PayPal that it has owned since October 2002. PayPal is a worldwide e-commerce business that allows money transfers and payments to be done through Internet. Many consumers in eBay have shown great joy in using PayPal because the shipment is made very fast once they have done the payments. This is unlike when they pay through a money order or with a check.
The solutions to the problems facing the sellers are being addressed below. To avoid the problem of buyers, eBay sellers need to take a great care in using item descriptions and photos that will give clear information on conditions and the way of handling requests of refunds. They should be able to invest in their feedbacks and protect, win the battle protection of buyers whenever this is necessary, block the problem of buyers from getting into their backyard and be able to cope with the chargeback. The sellers should not wait to register again when they are suspended. This is because they can be locked out at any time. It is, therefore, important for sellers to place eBay policy in front. It states that, “The customer is always right,” even if a buyer is the one who is wrong. Concerning some non-transparent sanctions, the motto which states that, “Let the seller beware” is in front. The sellers need to ensure that eBay’s alternatives are in place where they have their selling partnerships. Thus, they can pick the slack up when eBay gets fickle to them.
Packing goods to be shipped with the great care and using the necessary packing materials, having the shipping insurance and using a better shipment method offering the package tracking may reduce the shipper damage and effects of relationships between a customer and a seller. It is important for the seller to weigh risks that are associated with eBay model of business before making any decision which partner or service provider to use while delivering its products to customers. The seller should consider the best practices of drop shippers eBay model business chooses. This is because there are a lot of uncertainties in the performance of these drop shippers. The fulltime services such as the ENL Global and Ship Wire are known to perform very well.
The issue of counterfeit goods is a major problem that needs to be addressed. If a customer complains that the goods are not quite good, the seller should act very fast and make them whole so that the customer does not become negative on eBay’s business dealings. This also makes the seller secure his future business dealings via eBay. There are illegal activities the seller may prevent. It is, however, important that the seller registers the business by obtaining a license, paying the necessary taxes and trying as much as possible to stay away from the media piracy and borderline fraud (Hsiao, 2013). Thought bending these rules, it is very tempting. It may lead to the one losing business, hence, losing the income accrued to it. The businessmen in eBay also need to choose their businesses correctly for them to be able to acquire their income they are comfortable with. The sellers need to familiarize themselves with the demand and supply in the market. Therefore, they can be able to time for their sales. This will reduce the cost of eBay promotions and events where the sellers compete against each other in the market.
The sellers should also be aware of fraudsters that are likely to use their eBay logs in accounts in order to make a fraudulent selling. This may lead to a lot of bad feedbacks from customers directed the blame this seller. Fraudsters may use their passwords to access even the e-commerce sites bank accounts and empty them. The buyers and sellers in eBay Company should understand all there is about spoofs and phishes even before taking any action to click on the links in their email messages looking similar to those from eBay. There are some methods which could be used to get rid of unhappiness risks which may be inside a business person there. The policies may be brought about by eBay Company. They do not seem to favor the sellers to make an individual seller feel like it is unfair, leading to depression or to sellers being unhappy. However, the sellers should understand that there are certain things that are beyond their power and, therefore, they can do nothing. The best thing to do is to keep quiet and be happy so that one can be able to continue with business (Hsiao, 2013).
The basic types of the competitive advantage are the differentiation and cost leadership. Competition on cost is negative for eBay. Competitors will provide goods and services at low costs because their competitors already have done the same. EBay must, therefore, try to be different so that they can maintain the leadership of the business. Differentiation is defined as an act of designing some meaningful differences to differentiate the offerings from the company with those of competitors’ (Kotler & Keller, 2006). EBay, therefore, should be able to come up with a service or a product that is unique from whatever there is in the entire industry. It is difficult to differentiate services. It can be easier for the services to differentiate themselves in a different offer, image or deliver developed. EBay can have a way of differentiating the company from others by putting the focus on a brand image, providing some delivery services with a better technology and having some innovative features. This will make eBay continue to be a leader in the market, and the company would accrue to high profits. They could also use branding and symbols to differentiate the company’s image. A brand name which is recognizable is necessary for the continuity of eBay’s success. This company was the first in customer-to-customer auction industry. Hence, they have a competitive advantage that enables them to differentiate themselves from other companies competing with them. If they focus on the company’s brand image, they will automatically obtain the brand preference, recognition and loyalty. The customers will then be able to recognize eBay by its name and identify what it really stands for and the services it provides. The perception of consumers is a result of the strategy of branding by eBay. It is required to focus on ensuring the brand as being recognizable.
Another way the company can differentiate itself is by the services offered to consumers. Businesses in the Internet require much more than the storefront for it to be successful. The main things that prevent consumers from purchasing online is the confidence in whether they will obtain the goods that they have bought or not. As well they are anxious with the data privacy and protection of their private information. The company should aim at providing some features that are innovative so as to be different from other competitors. The main concern the consumers have is safety and trust. EBay has been able to have the safety and trust initiatives like the program of a verified user, some feedback forums and insurance for the items bought (Brandley, 2001). They have also been able to put in place antifraud rules and have some innovative programs that are consumer friendly. These are aimed at protecting its customers from fraud, misuse and deception.
Another way in the service improvement is to have a delivery process which is superior. This would make the company win a lot of customers for being able to deliver the consistently quality services as compared to other companies. If the company has exceeded the expectations of customers, the consumers may tend to go for this provider once more for its services proposed (Kotler & Keller, 2006).One of the strengths of eBay is that they offer a variety of products and, therefore, have achieved the superior services. They have created a community online where buyers and sellers can socialize and talk about the certain issues in the world of market.
Costs and benefits can be classified as tangible (Sales, leases, wages and operational costs) and intangible (The employee morale and the customer dissatisfaction). The table below shows the total value of tangible and intangible costs and benefits in eBay.
Cost Cost 1 3,500,000 Cost 2 230,000 Cost 3 3,300 Total costs 3,733,300 Benefits Benefit 1 2,450,000 Improved public image
Benefit 2 1,950,000 Improved public image
Total benefits 4,400,000 Benefits-costs = 666,700
This is a chart that compares criteria and options which are designed to assist in the identification of optimal solutions (Business dictionary, 2013). If for instance a business would think of introducing various new products, the managers should identify and also weigh many considerations like the project sales, the criteria, costs and legal difficulties among others. The decision matrix is used when there are several options and the company must narrow down to one, when decisions is to be made on several criteria bases, and when options have been reduced to a number that is manageable. The table below shows option scores of a decision matrix.
Ethics Cost/ Benefits Stakeholder 1 Stakeholder 2 Total
Weight 1 1 4 8 14
Option 1 7 3 4 2 16
Option 2 3 4 7 1 15
Option 3 4 8 9 2 23
Option 4 1 3 3 7 14
Measures and Expectations
The company should, therefore, continue with the search of new ideas so that they can be able to increase the way of reaching their customers. The company should go on with an idea of offering a wide range of products, having the better market places, expanding the world, continuing fostering the sense of online community and others. This will make them have an advantage over other competitors such as the Amazon. They should always consider their customers before deciding to increase the prices. They should also put a bigger emphasis on the quality of their products and differentiation strategies. Through all these unique services, eBay Inc. will be able to appeal even to some independent entrepreneurs, large corporations, individual buyers and sellers (Help me.com, 2013).
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