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Further, eBay's gross merchandise volume - the amount of goods passing through eBay's various marketplace platforms -shrunk by 22% in the last quarter (Buley, 2009).
The company had misjudged the potential compatibility between Skype and the Marketplace business (Burrows, 2009). EBay sellers were uninterested in phone chats with customers (Barret, 2009). Although the company has announced that it will spin off Skype via an IPO, next year, the economic environment may make this difficult.
eBay sellers are angry over fee increases that favor fixed-price sales. Those users also are incensed generally over eBay's decision to place less emphasis on auctions. (Burrows, 2009). Further, sellers have been upset with what they believe are poorly conceived ratings policies that unfairly revoke their ability to conduct business on eBay (Klein, 2008).
eBay does a very poor job of controlling fake and illegal auctions. This negatively impacts customer satisfaction with the service and invites lawsuits with vendors such as the recent court battle with L'Oreal.
eBay's recent poor performance may be more than just a sign of the economy; online auctions may be losing their appeal. The company is trying to diversify into fixed-priced electronic commerce, but appears to be throwing the baby out with the bath water. Further, the company is plagued by constant fraud. Customer anger and frustration with the company's transition and its inability to police its sites are posing significant danger to the company's brand. Finally, eBay may be stuck with Skype, like it or not.
Recommendation # 1: Improve Execution of the One-Stop Shopping Strategy
The one-stop shopping strategy appears to be a good move on eBay's behalf. It provides diversification should online auctions continue to lose their appeal and it offers a way for eBay to differentiate its site by providing more ways to purchase products than other online retailers. And, targeting the secondary market should be a better option than going after a primary market dominated by Amazon.com.
However, the execution of the strategy needs improvement. Most notably, eBay needs to protect its auction business while adding fixed-pricing. It needs to stop using fees to favor fixed-price sales and it needs to do more to support small customers who are the back-bone of its auction service rather than trying to get rid of them through poorly conceived ratings policies. Although the site will provide one-stop shopping, it must accommodate the various requirements of all the types of suppliers who participate. Therefore, eBay should segment its various sellers and develop pricing and policies that suit each individual segment. Further, eBay might consider developing different sections of its Web site for auctions and for fixed-pricing. This is because eBay is so heavily branded as an auction company. The addition of a separate section would permit branding for fixed-pricing.
Recommendation # 2: Do More to Remove Fake and Illegal Auctions
Fake and illegal auctions ought to be a top priority for eBay. They negatively impact customer satisfaction and can destroy eBay's coveted brand name which is one of the company's major assets. One can't help but wonder if fraud is the root cause of the decline in auction popularity. In addition, illegal auctions can result in costly litigation, and even when won, are an unwanted distraction and a source of negative publicity.
To combat fraud, eBay should take a number of steps. First, it needs to invest more in data mining technologies that detect fraud at the content level. Second, the company should pursue prosecution with a vengeance; account suspension is not enough and there should be a zero tolerance policy. eBay should publicize these efforts so that its sites becomes known as the worst place on the Internet to commit fraud. Third, the company needs a stricter certification process for sellers. Fourth, eBay needs to immediately respond to all customer complaints concerning fraud.
2008 Annual Report. http://investor.ebay.com/annuals.cfm
About eBay. http://news.ebay.com/about.cfm
Barret, V. (2009, April 21). EBay is finding its (old way). Forbes. http://www.forbes.com/2009/04/20/ebay-john-donahoe-technology-internet-ebay.html
Burrows, P. (2009, March 12). EBay outlines three-year revival plan. BusinessWeek. http://www.businessweek.com/technology/content/mar2009/tc20090311_318128.htm
Buley, T. (2009, April 21). EBay: Back to basics. Forbes. http://www.forbes.com/2009/04/21/ebay-earnings-internet-technology-internet-ebay.html
Ihlwan, M. (2009, April 16). With Korea deal, eBay tries again in Asia. BusinessWeek. http://www.businessweek.com/globalbiz/content/apr2009/gb20090416_364057.htm
Klein, K.E. (2008, October 21). The growing frustration of eBay sellers. BusinessWeek. http://www.businessweek.com/smallbiz/content/oct2008/sb20081021_503608.htm
Reisinger, D. (2009, February 12). Webware radar: Google Checkout stalls as Bill Me Later Soars. cnet news. http://news.cnet.com/8301-17939_109-10162701-2.html?tag=mncol[continue]
Future Strategies of eBay eBay was founded in 1995 by Pierre Omidyar as "AuctionWeb," part of a larger personal site that included, among other things, Omidyar's tribute to the Ebola virus (Wikipedia, 2004). The site belonged to Echo Bay Technology Group, Omidyar's consulting firm. He had tried to register the domain name "EchoBay.com" but found it already taken, so he shortened it to his second choice, "eBay.com." eBay is headquartered in
EBay is an online auction website, and pioneered this business model. eBay runs its website, in multiple countries, and acts as an intermediary for buyers and sellers. The company earns its revenue by charging for listings and taking a profit on transactions. eBay has 128 million active users around the world. It also owns PayPal, which is a leading online payment site. eBay was founded in 1995 and has remained
EBay: A Case Study Analysis Letter to the CEO Dear CEO: The face of ecommerce has been changed by the creation of a global online marketplace. eBay has provided consumers an opportunity to not simply survive, but to thrive. eBay has established a forum for buyers and sellers to untie in and form a community. The online marketplace has established a safe and secure online marketplace where traders can exchange goods and services
The services provided by eBay include eBay Express, eBay Blogs, and eBay Mobile. eBay Express is a website launched in 2006 with the intention of becoming an online shopping site for users with United States Addresses. In 2006 eBay Blogs was also launched, and it includes Discussion Boards, Groups, Answer Center, Chat Rooms, and Reviews & Guides. Another service provided by the company is eBay Mobile that provides SMS alerts,
However, it must be careful not to expand too far into venues that undercut its business model of relatively low operating costs. It also must remain vigilant against fraud -- the worse the state of economy, the more likely fraud will occur, as people try to make money any way they can. eBay's use of the 'Bill me later' program which was designed to help consumers who had difficulty finding
EBay, Inc. Company Overview Founded on Labor Day weekend in 1995, eBay now operates the world's largest online trading community. The first sale by founder and computer programmer Pierre Omidyar was a broken laser pointer that was slated for the trash can; he sold it for $14.83. As of December 2010, 94.5 million users were active globally buying and selling practically anything. That user list compares to 90.1 million the previous year
New methods like the peer-to-peer bump technology and mobile payment systems in offline stores are aimed at the future. EBay has been developing applications for popular devices like the iPad and the iPhone along with specific sections dedicated to clothing, electronics etc. which indicate a positive step towards the future (Donahoe, 2010). Since EBay has its revenues coming mostly from North America and Europe (48% and 41% share respectively),
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