CASE STUDY 

Group Members
Grace Chu
Eyo Chay Ni
Rachel Gomez
Monday, 10th Feb 2014


BACKGROUND
 eBay is an American Multinational Internet Corporation
 Founded in 1995 by Pierre Omidyar

 Online Auction ...
First Item Sold on eBay
 Sold for USD 14 – A laser pointer that was broken
Most Expensive Item Sold on eBay
 Giga-Yacht, Sold in 2005 for $140 million
TODAY on eBay
Determining eBay’s Strategic Position
 PESTEL
 PORTER 5 FORCES
 SWOT ANALYSIS
PESTEL ANALYSIS
 Political
 Economic
 Social
 Technological
 Legal

 Environment
Political
 Globalization



able to break into a new market which previously closed
challenges from foreign competitors...
Economic
 Exchange rate




conduct significant business outside United States but profitability is
reported in US doll...
Social
 Lifestyle and attitude vary from country to country


they have to set different target, product or consumer cat...
Technological


Growth of internet




lower the barriers of entry
more competitors
growth of internet user will incre...
Legal
 Strategy developed which have to comply with different legal

obligations domestically and internationally



...
Environment
 Global warming and pollution awareness increase

globally



more online shopping
have to be more ‘green’ ...
Porter’s Five Forces

Bargaining Power of
Customers

Threat of
Substitutes

Threat of New
Entrants

Bargaining Power of
Su...
Bargaining Power of Customers
 High Bargaining Power
 Other Options
 Online or Retail Stores
 Price Comparison
Threat of Substitutes
 Low Threat
 eBay is more convenient
 Substitutes cannot have much variety
Bargaining Power of Suppliers
 High
 Low fees and commission
Threat of New Entrants
 High
 Low Entry Costs
 Depend on individual interest
Rivalry Among Competitors
 High
 Shopping Outlets or Online Retailers
Differences between eBay & Amazon

Auction Site

More Towards Fix Price

More Interaction between
Buyers and Sellers

Less...
Revenue of eBay vs Amazon
$80.00
Revenue (million)

$70.00
$60.00
$50.00
$40.00

eBay

$30.00

Amazon

$20.00
$10.00
$2009...
Net Income of eBay and Amazon
Net Income in K

3500000
3000000
2500000
2000000
1500000

1000000
500000
0
-500000

2009

20...
SWOT ANALYSIS
1)
2)
3)
4)
5)

STRENGTHS
Global Reach
Recognizable Brand Name
Wide Variety of Products
No Inventory Holding...
QUESTIONS
 Analyze the marketing environment and the forces shaping

eBay’s business over the years.
 How has the change...
REFERENCES
 http://en.wikipedia.org/wiki/EBay
 http://www.marketwatch.com/investing/stock/ebay/financials
 http://www.m...
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eBay

  1. 1. CASE STUDY  Group Members Grace Chu Eyo Chay Ni Rachel Gomez Monday, 10th Feb 2014 
  2. 2. BACKGROUND  eBay is an American Multinational Internet Corporation  Founded in 1995 by Pierre Omidyar  Online Auction Website  Phenomenal Growth  Net Worth
  3. 3. First Item Sold on eBay  Sold for USD 14 – A laser pointer that was broken
  4. 4. Most Expensive Item Sold on eBay  Giga-Yacht, Sold in 2005 for $140 million
  5. 5. TODAY on eBay
  6. 6. Determining eBay’s Strategic Position  PESTEL  PORTER 5 FORCES  SWOT ANALYSIS
  7. 7. PESTEL ANALYSIS  Political  Economic  Social  Technological  Legal  Environment
  8. 8. Political  Globalization   able to break into a new market which previously closed challenges from foreign competitors  High government investment on ICT infrastructure  faster, better and more reliable internet access user  Marketplace Fairness Act     US state sales tax Increase the price of a product or service people would probably stop buying internet retail sales could decrease by up to 24% (Austan Goolsbee, 2000)  Government Intervention  China’s internet regulators have made it difficult for foreigners to participate fully, giving local Chinese e-retailers an advantage from the offset (Dean, The Wall Street Journal, 2006)
  9. 9. Economic  Exchange rate   conduct significant business outside United States but profitability is reported in US dollar Global economic condition   weak economic condition would limit the growth of revenue change in consumer purchase pattern
  10. 10. Social  Lifestyle and attitude vary from country to country  they have to set different target, product or consumer categories * eBay failed to break into China market, the hottest market as they did not localize their services  Increase in online social networking  people are rely on internet   can get everything easily from online shopping an opportunity to increase market share
  11. 11. Technological  Growth of internet    lower the barriers of entry more competitors growth of internet user will increase public online consumption  Rapid development of high-speed network service  eg: broadband  broadband internet connection were used by 42% of household, up from 32% in 2012  Third party online payment system    PayPal provide a safe, easy and secure way to make and receive payment online reduce the risks of transaction
  12. 12. Legal  Strategy developed which have to comply with different legal obligations domestically and internationally         The European Sales of Goods Act Data protection act in UK Federal Trade Commission in USA EU Electronic Commerce Directive The Electronic Signatures Law Increase the use of e-commerce of both consumers and business ensure a certain level of security in online shopping costs for online business
  13. 13. Environment  Global warming and pollution awareness increase globally   more online shopping have to be more ‘green’ to attract consumer eg: eco-packaging, work environment
  14. 14. Porter’s Five Forces Bargaining Power of Customers Threat of Substitutes Threat of New Entrants Bargaining Power of Suppliers Rivalry among Competitors
  15. 15. Bargaining Power of Customers  High Bargaining Power  Other Options  Online or Retail Stores  Price Comparison
  16. 16. Threat of Substitutes  Low Threat  eBay is more convenient  Substitutes cannot have much variety
  17. 17. Bargaining Power of Suppliers  High  Low fees and commission
  18. 18. Threat of New Entrants  High  Low Entry Costs  Depend on individual interest
  19. 19. Rivalry Among Competitors  High  Shopping Outlets or Online Retailers
  20. 20. Differences between eBay & Amazon Auction Site More Towards Fix Price More Interaction between Buyers and Sellers Less Interaction between Buyers and Sellers Pay-Pal Facilitates all its payments Middleman Middleman and also a retailer
  21. 21. Revenue of eBay vs Amazon $80.00 Revenue (million) $70.00 $60.00 $50.00 $40.00 eBay $30.00 Amazon $20.00 $10.00 $2009 2010 2011 2012 2013
  22. 22. Net Income of eBay and Amazon Net Income in K 3500000 3000000 2500000 2000000 1500000 1000000 500000 0 -500000 2009 2010 2011 Ebay Amazon 2012 2013
  23. 23. SWOT ANALYSIS 1) 2) 3) 4) 5) STRENGTHS Global Reach Recognizable Brand Name Wide Variety of Products No Inventory Holding No sales personnel OPPORTUNITIES 1) Critical Foreign Market Not Penetrated 2) (CLOP  internet based purchase) 3) Growth Through Acquisition WEAKNESSES 1) Technology malfunction 2) Product Description Lacking THREATS 1) 2) 3) 4) Fraud Increased Competition Old and New Technology Small entry barrier to industry
  24. 24. QUESTIONS  Analyze the marketing environment and the forces shaping eBay’s business over the years.  How has the change in the nature of eBay sellers affected the creation of value for buyers?  Do you agree or disagree with Donahoe that eBay’s current strategy doesn’t mean that certain sellers will lose?  Is eBay doing the right thing by sticking its current strategy? What changes, if any, would you recommend to Donahoe?
  25. 25. REFERENCES  http://en.wikipedia.org/wiki/EBay  http://www.marketwatch.com/investing/stock/ebay/financials  http://www.marketwatch.com/investing/stock/amzn/financials  http://dspace.iimk.ac.in/bitstream/2259/510/1/543-549.pdf
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