Porter and Strategic Analysis of Ebay

Ebay, as a company itself, fits more in the category of an oligopoly, which is actually pretty common in any market. Other alternative websites include Yahoo!, Amazon, and Quibids, but there are only a small number of them, certainly not hundreds as in monopolistic competition. Also, eBay is interdependent on the few other auction website companies, competing with the fees they charge, as well as quality of customer support, and buyer/seller reliability. Another characteristic of eBay that coincides with it being considered an oligopoly is the fact that it has numerous entry barriers. It’s such a large company with many restrictions, and it would be hard for an up and coming substitute auction website to break into the market and compete with eBay or the other top companies in the industry. (6)

Porter’s Five Forces (1980), named after Michael E. Porter, is a critical framework to access the level of risk and degree of potential profitability of each industry in which firms are competing. Specifically, five forces are shown in Figure 1, are includes competition between rivalry, potential of new entrant, threat of substitute products, and pressure on bargaining power of suppliers and customers.

EBay has paved the wave in this industry and being in a billion dollar industry making things happen to benefit consumers in many ways.[5]

Claims that many people are now able to shop products such as e-books, songs and films using their computers while in the comfort of their offices and homes. Similarly, the Online Age has also permitted suppliers to conveniently public auction their products by basically posting advertisements on the particular sites of the on the internet marketplaces. Consequently, this has considerably totally changed and transformed the scope of distant item sales to a point where the consumers may not necessarily know each other during the promoting of products. Sites such as Amazon, Ebay, and Etsy are examples of this type of

Dembosky, A. (2012). Ebay moves beyond its dotcom roots. Available:http://www.ft.com/cms/s/0/df3723ca-1773-11e2-8cbe-00144feabdc0.html#axzz2EbzDqb5Y. Last accessed 10th Dec 2012

eBay has a choice preferred standpoint. Regularly contributed similar to the world 's greatest store, and have a bigger number of things available to be purchased than anyplace else. However its maintainability props on patch up unstable ground as omnichannel world envision, for arranging purposes, that everything is available to be purchased in each commercial center, each methods, and each channel. Partaking connected shoppers may never get to that world, yet it 's a helpful arranging presumption.

Ebay is short for Echo Bay, which was the name for his consulting firm at the time is the Online Marketplace for the world. A company that deals with sale and goods and they are passionate about their service that they provide. There are millions of buyers and seller that visit eBay every day, Businesses and individuals.

Alipay’s core service is an escrow service which solves the concerns related to settlement risk between buyer and seller. In this system, after a buyer commits himself/herself to an online transaction, his/her payment is held in an Alipay account until he receives the product ordered. After the product is received the buyer notifies Alipay and the payment is then forwarded on to the seller. As of December 2006, Alipay had 33 million registered users. (Source: “Alipay - 33 Million Registered Users,” www.imnewswatch.com, February 5, 2007) PayPal was a leading online payment company purchased by eBay in mid-2002. In June 2007, PayPal had 143 million user accounts across the world. Through PayPal, individuals and businesses could send or receive money over the Internet. PayPal supported payments in US Dollars, Canadian Dollars, Australian Dollars, Euros, Pounds Sterling, and Japanese Yen. Buyers could also pay for their online purchases on various e-commerce websites and auction sites like eBay using the balance in their PayPal account. Though this mode of transaction was quick, there were also a number of complaints from disgruntled PayPal users. Most of the complaints were related to the dispute resolution procedures of PayPal. In eBay China, transaction fees used to be charged as a percentage of the value of completed sales. This ranged from RMB 10 for a sale worth RMB 500 to RMB 115 for one worth RMB 20,000 (Source: “EBay China

eBay needs to focus on several issues to become more competitive. One issue is the fact that their competitors, like Amazon, make website purchases less difficult. On Amazon a customer can make a quick buy instead of having to bid on an item, wait for the auction to end, and then see if they won the auction. Another issue for eBay is the customer’s perception that scams are more likely on their site since purchases involve individuals and not companies. Even though eBay has the buyer protection plan to counter this idea, some customers might still shy away because they do not want to take a chance of having to go through the dispute resolution process in case it is a scam. When looking at Amazon’s return policy, they back their buyers 100%. If the buyer is not satisfied with the product or it doesn’t match the description that was on the website, Amazon will give the buyer a full refund. Looking at this from a buyer’s perspective, it makes purchasing more convenient to return a product as opposed to having to track down the buyer and trying to work out a resolution. I think that if eBay changes the protection policy and would

Each and every client of web administrations may be a "player" of eBay. Along these lines, there are an endless number of suppliers and everybody can offer something as a potential supplier for eBay. EBay plan of action gives an administration that brings the purchasers and vendors together. The suppliers don 't have much power aside from on account of the exchange of the top of the line things at the end of the day costly products: land or autos or types of gear. It is clear that both the purchasers and merchants need insurance for their things (Cheng, 2005, p. 159). eBay utilizes PayPal as a part of a request to accommodate smooth and brisk installment of things where the vendors need to get their cash rapidly. Be that as it may, it is entangled to offer costly where the suppliers have more power. Keeping in mind the end goal to encourage the offering costly things, eBay acquired Skype where to side can without much of a stretch import and trade information. The suppliers all in all don 't have much power unless they are managing the top of the line things.

The Porter`s five forces are threats of new entrants, the bargaining power of buyers ,product substitution and intensity of rival of rival among competitors .These forces measure the competitiveness of the market and also helps the company to identify strategies to use to penetrate such and gain market share.

The market eBay takes place in is primarily the Internet market. Around 1995 the Internet market was just beginning. “there will be more than 500 million users by 2003 and a rapid increase in e- commerce turnover, rising from US$500 billion worldwide in 2001 to more than US$3 trillion in 2004” (Fichter, 2003) EBay was a pioneer in Internet market until competitors such as Amazon and Wal-Mart began to sell products online as well. “Online marketing is now the fastest-growing form of marketing” (Armstrong, 2013). The difference between eBay and its

The company eBay Inc. is an American multinational Internet consumer-to-consumer corporation. Founded in 1995 by Pierre Omidyar in San Jose, California, it is now a multi-billion dollar business with operations localized in over thirty countries including China and India. It’s main enterprise is eBay.com, an online auction and shopping website that allows people and businesses to buy and sell a broad variety of goods and services internationally. Millions of collectibles, décor, appliances, computers, furnishings, equipment, domain names, vehicles, services, intangibles and other miscellaneous items are listed, bought, or sold daily on eBay. Anything can be auctioned on the site as long as it is not illegal and does not violate the eBay’s Prohibited and Restricted Items policy.

Electronic commerce (e-commerce) over the Internet is the fastest growing method for consumers to conduct business. Less than ten years old and it already has radically altered the potential to economic activities and the social environment. There are nearly 200 million Internet users worldwide currently. Of these 200 million users, roughly 40 percent reside in the United States (Styliano, A., Robbins, S. & Jackson, P., 2003). E-commerce currently affects large sectors such as communications, banking and the retail industry. E-commerce has also had an effect on the education, health and government (Wyckoff, A., & Colecchia A., 1999). It is predicted that commerce on the Internet could total tens of billions of dollars by the turn of the

The fact that eBay does have some successful competition means that its strategic capability has become less unique. There is a hint in their competitor profile that innovation and perhaps adaptability to different cultures as they innovate is not core to eBay and something which has been developed more successfully by others working within their own national culture. Indeed, eBay rules in its own territory of North America and in Europe. The search capability of eBay also means that niche players do not really make sense, whereas the consumer trust that comes from being a big player is worth everything when trading on-line, as is the notion that whatever you want it will be on eBay because of its size. Thus, the so-called network effects of eBay (the bigger the company, the more successful it will be) and its first mover advantage that has led to this level are key to its success.