eBay is an American multinational e-commerce corporation founded in 1995 that operates online auction and shopping websites. It grew rapidly and became a phenomenal success, now having a net worth of billions. The first item sold on eBay was a broken laser pointer for $14. The most expensive was a luxury yacht sold for $140 million. The document analyzes eBay's strategic position using PESTEL, Porter's Five Forces, and SWOT analyses to understand the various external and internal factors influencing the company. It also compares eBay to competitor Amazon and discusses questions about eBay's current strategy.

1. CASE STUDY 
Group Members
Grace Chu
Eyo Chay Ni
Rachel Gomez
Monday, 10th Feb 2014


2. BACKGROUND
 eBay is an American Multinational Internet Corporation
 Founded in 1995 by Pierre Omidyar
 Online Auction Website
 Phenomenal Growth
 Net Worth

3. First Item Sold on eBay
 Sold for USD 14 – A laser pointer that was broken

4. Most Expensive Item Sold on eBay
 Giga-Yacht, Sold in 2005 for $140 million

5. TODAY on eBay

6. Determining eBay’s Strategic Position
 PESTEL
 PORTER 5 FORCES
 SWOT ANALYSIS

7. PESTEL ANALYSIS
 Political
 Economic
 Social
 Technological
 Legal
 Environment

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. 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. 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. 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. 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. 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. Porter’s Five Forces
Bargaining Power of
Customers
Threat of
Substitutes
Threat of New
Entrants
Bargaining Power of
Suppliers
Rivalry among
Competitors

15. Bargaining Power of Customers
 High Bargaining Power
 Other Options
 Online or Retail Stores
 Price Comparison

16. Threat of Substitutes
 Low Threat
 eBay is more convenient
 Substitutes cannot have much variety

17. Bargaining Power of Suppliers
 High
 Low fees and commission

18. Threat of New Entrants
 High
 Low Entry Costs
 Depend on individual interest

19. Rivalry Among Competitors
 High
 Shopping Outlets or Online Retailers

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. 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. 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. 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. 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. 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