2. Agenda Introduction of eBay Environmental Analysis General Industry Internal Key challenges for the future Strategic Alternatives Recommendations
3. Introduction of eBay Founded in September 3rd, 1995 by Pierre Omidyar, San Jose, California Online person-to-person trading community/Auction Initially named AuctionWeb(1997) Echo Bay Technology Group (Eco Bay Mines) First item sold was a broken laser pointer($14.83) First President hired in 1996 Jeff Skoll
4. History of eBay Revenue tops $10,000 in a month(1996) Gross Merchandise Volume: $7.2 Million Registered users 41,000 Meg Whitman joins as President & CEO(1998) Brings experience, half a million users, Revenue $4.7 Million 10 Year Reign eBay Purchased(Skype, Half.com, PayPal, Bill Me Later, 25% Stake in Craigslist Operations localized in over 30 countries, 2007 Ebay sold over $60 Billion worth of Merchandise, over 15,000 Employees, Currently 90 Million Users Worldwide
8. Introduction to eBay Browsing and bidding is free Seller charges: Insertion Fee-ranges 30 cents to $3.30 cents, depends on sellers opening bid on item Final Value: Fee is charged at the end of a sellers auction, fee ranges from 1.25% to 5% of the sellers final sale price Uncommon items sold on eBay 1999( Human Kidney), 500 Pounds of Marijuana (1999) Rights to name baby (2005), the Internet, Jetliner Ghost in a Jar, Vampire Killing Kit, Russian Test Space Shuttle, The Meaning of Life($3.26)
9. General Environment Key External Drivers Per Capita Disposable Income Percentage of Households with computers Median age of population # of broadband connections Consumer sentiment index
10. Economic Environment Recession has caused consumption in all segments to drop. Housing market collapse led to a drop in disposable income per capita (0.4%). Demand for ecommerce companies is expected to rise much quicker than brick and mortar retailers. In order to stay competitive with brick and mortars, must remain price competitive. This results in very low margins: 3.0 %
12. Socio Cultural Trends/Demographic trends Shifts in lifestyle at home and globally As internet progresses and become accessible to more people, ecommerce sites will gain more market penetration. In US: Majority of each household has at least 1 computer. Around the world, pcs and the internet are starting proliferate other parts of the world. Median age for computer use around the world dropping. Currently no financial infrastructure in developing nations.
13. Percentage of US Households with PCs Data provided by Ibis World
15. Technological Trends Better Broadband access. Faster Internet in the US. Increases the amount of online shoppers.
16. Political/Legal Trends State Legislatures want to tax purchases inside their state. You are required to pay use tax on online purchases inside your home state. Have to abide by each states different regulation rules.
19. Threat of New Entrants Because of low concentration, easy to enter market. Major players only amount to 40% of Market. Entrance into the market requires a modest capital investment. Reoccurring maintenance costs for databases and servers can be costly. Hard to build trustworthy reputation. Threat of New Entrants Is Low.
20. Buying Power of Suppliers 3 kinds of suppliers Casual Sellers Collectors Powerful Business Sellers Not very many options for sellers other than ebay. Bargaining Power of sellers is low.
21. Buying Power of Buyers Buying Power Very High Ebay is an auction site Buyers set the price that they are willing to buy at 3 Kinds of Buyers Casual Collectors Professional Buyers
22. Rivals Biggest Industry Rival is Amazon Market leader @ 15 % market saturation Ubid.com Bidz.com Buy.com Threat from Rivals is Very High.
23. Threat of Substitutes Search engine and price compare websites moving cutting into online auction business Fixed based sales on auction sites. Traditional brick and mortar retailers is the biggest threat of substitute. Threat of Substitutes is high.
24. Porter’s Five Forces in Review Threat of New Entrants Buying Power of Suppliers Buying Power of Buyers Rivals Threat of Substitutes
25. Strengths Brand power eBay is still a big name in e-business Large customer base (90 million) PayPal Quality control Competes as both and auction site and instant purchase site More customers
26. Weakness Auctions vs. instant purchases There has been a shift in online buying preferences The excitement of auction purchasing has lessened Consumers have come to prefer fixed price purchases Less of a hassle then auction buying Need more advertising Last new eBay commercial?
27. Weakness Amazon buying experience is more reputable than eBay's eBay needs to improve its buying experience in order to remain competitive with Amazon They have copied Amazon to improve Better Buying Suggestions eBay needs to innovate, not copy
28. Weakness In 2010, 54% of PowerSellers opinions of eBay have been negative Amazon ratings are 69% positive and improving eBay needs to improve the buying/selling experience to improve its brand image
29. Opportunities China Huge market- 1.2 billion people Growing number of PCs Add an optional bartering feature for sellers More accessible to some international cultures
30. Threats The Economy Consumer spending is low Many eBay items are not essential Collectables, novelty items eBays sales are suffering as a result
31. Threats Amazon eBay has made an effort to push buyers towards “Buy it now,” rather than auction sales This put them in competition with Amazon eBays market share is 5.3% Amazon has 15%
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33. Move from the Online Mall to Online Store Business Model
