e.bay competitive strategy and matrix analysis

1. eBAY
S/LT ADEEL PN
MR. SHAFEEUDDIN
1

2. SCHEME OF PRESENTATION
 History
 Introduction
 Company profile
 Business model
 Acquisition of PAY PAL
 Competitors
 Financial analysis
 SWOT analysis
 5 force analysis
 Recommendations
2

3. HISTORY
• 1995 – founder Pierre Omidyar, graduate from
Tufts University, encouraged by his wife’s
hobby.
• Skoll, Omidyar’s partner joined him as first
president.
• 1996 – incorporated in San Jose, CA
• Sept. 1998 – eBay first IPO. $18 per stock.
• 97, Meg Whitman, joins as CEO. HBS
3

4. INTRODUCTION
An online auction platform that facilitates
transaction between buyers and sellers of
goods and services
4

5. COMPANY PROFILE – Mission & market
MISSION
MARKET
5
eBay's mission is to help practically anyone
eBay's mission is to help practically anyone
trade practically anything on earth.
trade practically anything on earth.
eBay enables trade on a local, national and
eBay enables trade on a local, national and
international basis. It features a variety of
international basis. It features a variety of
international sites, specialty sites, categories
international sites, specialty sites, categories
and services
and services

6. BUSINESS MODEL
Seller uploads the picture and description of the
item to be sold.
Sale ends at predetermined time.
High bidder and seller contact each other and
make arrangements of shipment.
Buyer sends funds to seller {money order, check,
PayPal}, seller sends goods.
Buyer and seller then grade each other through
feedback forums.
6

7. Business Model – reason for eBay’s success
Largest Online Trading Forum
Largest Online Trading Forum
Compelling Trading Environment
Compelling Trading Environment
Trust and Safety Programs
Trust and Safety Programs
Cost-Effective, Convenient Trading
Cost-Effective, Convenient Trading
Strong Community Affinity
Strong Community Affinity
Intuitive User Experience
Intuitive User Experience
7

8. Business Model
Seller
Seller
• Non refundable Insertion Fee
• Additional listing options to
promote
• Final Value Fee
8
Buyer
Buyer
• Browsing and
bidding
Is free of charge

9. ACQUISITION OF PAYPAL
PayPal uses existing electronic infrastructure of
bank accounts and credit cards to allow “small”
monetary exchanges online.
Its convenient for small businesses and
individuals, because they can collect online
payments without difficult set-up.
eBay acquired PayPal in 2002 and has integrated
it throughout its website as a payment option for
auctions.
9

10. MAJOR SERVICES AND FEATURES
Authentication Services
Get a second opinion on your item by using outside
expertise.
Verified Rights Owner (VeRO) Program
Make sure that items do not violate intellectual property
rights as there may be liability involved.
Dispute Resolution
An independent service that provides a neutral place to
work out disputes online efficiently and effectively.
10

11. MAJOR SERVICES AND FEATURES
• eBay Professional Services
Professional Services on eBay serves the fast growing
and fragmented small business marketplace by
providing a destination on eBay to find professionals
• eBay Local Trading
eBay has local sites in 60 markets in the U.S. These
localized eBay sites allow users to easily find items
located near them and browse through items of local
interest
11

12. MAJOR SERVICES AND FEATURES
eBay Premier
eBay Premier is a specialty site on eBay, which
showcases fine art, antiques, fine wines and rare
collectibles from leading auction houses and
dealers from around the world
eBay Live Auctions
Live Auctions provides live, real-time online
bidding on items being sold on the sales floor of
the world's leading auction houses
12

13. COMPETITORS
eBay’s broad-based competitors include the vast majority of
traditional dept and general merchandise as well as emerging
online retailers
Amazon
Yahoo
!
Buy.com
Autobytel.com
MSN
WalMart
Home Depot
Macy’s
Sam’s Club
13
AOL
Dell

14. eBAY VERSUS YAHOO FOR SELLERS(1/2)
eBay
Maximum
Duration
10 Days
Yahoo
14 Days
eBay auctions end at the time
the auction was created
Yahoo allows you to set the
ending time within a one-hour
based on the starting or reserve range. any fees for listing auction
not charge
Fee price of an item each time an item
items to the buyer or seller
is listed
up to five percent of the final
to the buyer or seller when an
Commiss
closing price
item
ions
fee for reserve auctions
is sold
Endin
g
Time
Chances of
More likely
Buy & Sell
Less likely
a
When aa page for the item gets created page for the item is created
immediately,but it can take several
immediately. The item is also added to
new Item
Is posted
hours before the item gets added tolist of items and is searchable
the
the list of items and is searchable
immediately.
14

15. eBAY VERSUS YAHOO FOR
BUYERS
eBay
Items
Charging
for
posting
Unusual
Thing
Search
Brows
items
Insuran
ce
Over 6 times more items
Yes
More likely to find
Titles or titles &
description
Can limit within a category
By title or by picture
(if designated as part of the
gallery )
Yahoo
A lot fewer items
No
Not have as wide or deep of a selection
Titles or titles &
description
Can limit within a category
By title or by picture
Automatic insurance for
Not offer insurance
sales
Space Not provide space for pictures:
Provides free space for auction item
for You must place your picture files
Pictures, so more items have pictures
picture On some other site
For you to see
s
15

16. eBAY VS. COMPETITION- FACTS
 eBay had great first mover advantage and brand
name establishment in the U.S.
 Google could also be a potential competitor but
management does not see it as threat.
 In the International markets though, Yahoo moved in
first and EBay is suffering from that still.( Japan and
other south Asian markets.
 Amazon and yahoo stole most of the market share
during three ebay crashes during 99.
 EBay does have its supremacy in the U.S. with yahoo,
Amazon and Google following leaders.
16

17. THREATS OR ISSUES
• Bargaining power of suppliers.
• Substitutes product or services such as b2b,
b2c service providers.
• Increasing competition from Amazon and
yahoo.
• No barrier to entry in the industry.
• Buyer-seller frauds
• Technology failure or/and change
17

18. eBAY’S REVENUE
2500
Revenue ($mil.)
2000
1500
1000
500
0
1997
18
2010

19. FINANCIAL ANALYSIS - REVENUE & NET
INCOME
Revenue(1000$)
Revenue(1000$)
500000
Net Income(1000$)
Net Income(1000$)
431424
400000
300000
224724
200000
100000
86129
0
1998
19
1999
2000
60000
50000
40000
30000
20000
10000
0
48294
7273
9567
1998
1999
2000

20. PROFIT OPPORTUNITY IN PROCESS
New profit
opportunity
Delivery
profit
E-money
Profit
Trading
Profit
Delivery
Payment
Trading
Listing
89% of TR
Profit
Selling
Searching
Profit
9% of TR
Advertising
2% of Total
Requirement
Profit
Revenues(2000
)
20
Listing

21. REASON FOR SUCCESS
Mature and diverse board of directors
7 outsiders, 1 insider, 1 related insider
Strong management team lead by
Meg Whitman. Senior staff consists of experienced
managers from companies such as PepsiCo and Disney
with an average of 20 yrs. of business experience and a
strong vision for the company.
Brand name development
eBay has carefully developed a brand name based on
ease and trust. They have created the defector online
trading platform.
21

22. SWOT MATRIX
22

23. 23

24. 24

25. COMPETITIVE PROFILE MATRIX (CPM)
OF eBAY
25

26. COMPETITIVE PROFILE MATRIX (CPM)
:OF eBAY
26

27. EXTERNAL FACTOR EVALUATION
MATRIX )EFE) OF Ebay :
27

28. 28

29. SPACE MATRIX
29

30. :SPACE MATRIX
30

31. BCG MATRIX
31

32. FORCE ANALYSIS 5
(B2B, B2C, C2B,off-line…)
Threat of substitute
Threat of substitute
Products or services
Products or services
Bargaining power
Bargaining power
Rivalry among
Rivalry among
of Suppliers
of Suppliers
Existing Competition
Existing Competition
(GM, HP…)
(Yahoo, Amazon
…)
Barriers to entry
32
Buyers
(GE..)

33. RECOMMENDATION
To Be the World Leader in e-Market Place
To Be the World Leader in e-Market Place
S
E
R
V
I
C
E
G
L
O
B
A
L
…
B
U
S
I
N
E
S
S
M
O
D
E
L
S
Y
S
T
E
M
eBay : 22.0M users, 265M
items
33

34. RECOMMENDATION
Services
Services
Depending on the category of product
Depending on the category of product
Back Ground Increasing of Community power
Back Ground
Increasing of Community power
Trust issues between buyers & sellers
Trust issues between buyers & sellers
Strategy
Strategy
Broaden the eBay Trading Platform
Broaden the eBay Trading Platform
Foster eBay Community Affinity
Foster eBay Community Affinity
Enhance Features and Functionality
Enhance Features and Functionality
Target key product categories for special users
Target key product categories for special users
Develop new community tools
Things Develop new community tools
Things Enhance the community for women and old peoples
 Enhance the community for women and old peoples
To
To  Add new features and services to help trade with greater ease
 Add new features and services to help trade with greater ease
Do
Do  Expand Value-Adds Services ( community purchase)
 Expand Value-Adds Services ( community purchase)
Increase the Trust and Safety Programs
Increase the Trust and Safety Programs
34

35. RECOMMENDATION
Globalization
Globalization
Growth rate Decreases
Growth rate Decreases
Back Ground
Back Ground To utilize the advantages of internet in globalization
 To utilize the advantages of internet in globalization
Homogeneity global market
Homogeneity global market
Strategy
Strategy  Different strategies to enter new international markets
 Different strategies to enter new international markets
Things
Things
To
To
Do
Do
35
Enforce Marketing in foreign countries
Enforce Marketing in foreign countries
Provide unified site and URL in each country
Provide unified site and URL in each country
Introduce country-specific services
Introduce country-specific services
Choose from building solely, acquiring a company or
Choose from building solely, acquiring a company or
partnering with strong local companies
partnering with strong local companies

36. RECOMMENDATION
Business Model & Strategic alliance
Business Model & Strategic alliance
Limit of P2P market size
Limit of P2P market size
Back GroundGreat potential market of B2C and B2B
Back Ground Great potential market of B2C and B2B
A new, rapidly evolving and intensely competitive area
A new, rapidly evolving and intensely competitive area
Strategy
Strategy
Things
Things
To
To
Do
Do
36
Expand Business Model from P2P to B2C and B2B
Expand Business Model from P2P to B2C and B2B
Good relationship with partner
Good relationship with partner
 Have a partnership with bank, c-card,e-money, mobile
Have a partnership with bank, c-card,e-money, mobile
communication company, Google etc
communication company, Google etc
 Expand gradually Business model from P2P to B2C
Expand gradually Business model from P2P to B2C
 Develop the eBay's private brand product.
Develop the eBay's private brand product.

37. RECOMMENDATION
System Infrastructure
System Infrastructure
15 System downs between Aug 2008 and Nov 2009
15 System downs between Aug 2008 and Nov 2009
Back Ground The threat of Hacking ( Deny of services )
Back Ground
The threat of Hacking ( Deny of services )
The cost of system failure is so big
The cost of system failure is so big
Strategy
Strategy
Adapt to changing technologies and industry standard
Adapt to changing technologies and industry standard
Achieve to stability, availability and efficiency
Achieve to stability, availability and efficiency
 Build backup system for important system such as CPU
Build backup system for important system such as CPU
Disk,D/B, Network System, Power, Communication Line
Things Disk,D/B, Network System, Power, Communication Line
Things Downsize the computer system from Mainframe-level Sun
 Downsize the computer system from Mainframe-level Sun
To
To
to Linux (( ex: Google has 4,000 Linux server)
to Linux ex: Google has 4,000 Linux server)
Do
Do  Acquire specialist for System, DB, Network,Program and etc
 Acquire specialist for System, DB, Network,Program and etc
Invest more money on System Infrastructure
Invest more money on System Infrastructure
37

38. 38