Ebay Case Study

Ebay Case Study

I. History Ebay became what it is today on September 4, 1995 when founder Pierre Omidyar sold a broken laser pointer for $13. 83. He previously worked for Microsoft but left to pursue his idea of online auctions. Headquartered in San Jose, California, the company started out under the name AuctionWeb and became known as Ebay in September 1997. Meg Whitman was appointed CEO of Ebay shortly after, and she has grown the company ever since. Online auctions are available as fixed-price, buy-it-now or as regular bidding.

Transactions are completed with the assistance of Pay Pal which was acquired by Ebay in 2002. Buyers and sellers can rely on the feedback posted as to whether or not the buyer/seller is reputable and trustworthy. The convenience of online shopping has grown with millions of different items, antiques, and products being sold. Sellers can have their own stores, websites, and marketplace to sell anything they desire. Over time, Ebay has acquired international auction websites and rebranded them with the Ebay logo. The company has also purchased Skype, Rent. com, Shopping. om, CARad. com, Half. com, and purchased 25% stake in craigslist. com. Ebay did experience an overall decline in August of 2006. Despite its promotional and advertising efforts, Ebay’s revenue growth was slowing. Google had taken the lead as the major internet company. Google was perfecting its very profitable online search and advertising model, and even talked of starting an online auction site similar to Ebay. Ebay and Yahoo formed a strategic alliance in 2006 to boost their position. The talk of a merger continues as business has increased once again for Ebay in 2007.

Since the textbook was written, Meg Whitman stepped down as CEO after 15 years on March 31, 2008. The sale of Skype was complete in late 2009 as the company stated it was a “poor fit” for its business; however Ebay still owns 30% of the company. It also acquired StubHub in 2007 and Bill Me Later in 2008. Ebay continues to be a successful company with world-wide recognition. II. Internal Environment A. Strengths 1. Ebay is the world’s largest online auction site. 2. The company focuses on being the “middle man” for transactions and obtains profits from both buyers and sellers.

Ebay offers additional services and tools for users to take advantage of. 3. Diversification is a huge part of Ebay. They have branched out globally and became the leader in online auctions in foreign markets. 4. The acquisition of PayPal along with so many other online sites. PayPal enables Ebay to control the payment system for online auctioning. B. Weaknesses 1. Growing business could affect IT infrastructure and cause website problems. 2. No search engine of its own to further promote its business. 3. Fraud and scamming in the online auctions and the ability to control this.

III. External Environment A. Opportunities 1. Acquisitions provide opportunities to further profits and offer buyers and sellers more options. 2. Market development into new and emerging markets such as China and India. 3. Buying into the social networking sites such as MySpace and Facebook could prove to be very lucrative. 4. Forming an alliance with the postal service and/or shipping services could be very beneficial and offer savings to buyers and sellers. B. Threats 1. Google-the number one internet search and advertising company. 2.

Unscrupulous practices such as spam and viruses to users. 3. Auction fraud and scams that cannot be controlled in time. 4. Competition into the market because of their high profits. IV. SWOT Analysis After reviewing the strengths, weaknesses, opportunities, and threats of Ebay I find the following things to be suggested strategies: user-friendly website offering online tools, training and help; Ebay stores (B&M); online banking; alliance with postal/shipping services, security protocols, online product/item verification, and pro-active handling of fraud and scamming activities.

V. Corporate Level/Business Level Strategy Ebay has a corporate level strategy of obtaining and purchasing other businesses both online and B&M. Their investments into other online services have proven successful in the past and they continue to acquire many others. Their business level strategy proves to be top-notch with accurate billing, knowledgeable and talented staff, product innovation, brand name, and expertise in technology. VI. Structure and Control Systems The structure and control system of Ebay seems to be working well.

They have made history in the online auction business and continue to implement changes and bring forth innovative tools to help individuals on both sides of the transaction. They are far ahead in the game of mergers and understand the control they need to have in place when something is not a good fit for them, such as Skype which was sold in 2009. VII. Recommendations The first recommendation I would have for Ebay would be to form an alliance with the postal service and shipping services such as Fed Ex and UPS. The shipping of items to and from buyers worldwide is a huge part of the online auction world.

Other recommendations would be to focus on more brick and mortar stores, have online verification of products and items, offer user education, and aggressive quality control through peer review. Ebay also needs to continue to focus on finding and prohibiting fraud and scams on their websites. The ability to offer online banking could be a great opportunity to venture into. Ebay has the resources (capital) it needs to push out competition before they become a threat. That first broken laser light sold back in 1995 continues to be a mark in history as Ebay takes the world on.


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