Case Study - eBay

1> eBay offers online auction service with its business model well suited for the World Wide Web. It has a fully automated service that helps buyers and sellers trade high end articles , such as fine art ,automobiles, and jewellery and other regular items like clothing and consumer electronic goods. eBay derives its revenues by charging commission for every article auctioned through their website and also charges fees for posting the articles for sale. Ebay also gets revenues through direct advertising on its website and offer services which enable the exchange of money between the payee and the payor that generates additional transaction based fee revenue.
eBay’s growth strategies focus on expanding to newer territories and continue to innovate and enhance the variety and appeal of products on its sites.
Some of its strategic implementations have been the “Buy It Now” feature that provides sales at a fixed mark up bypassing the auctioning process, eBay motors portal that aids sale of bulky items that are expensive to ship. They also acquired
Shopping.com an online comparison site and Skype Technologies for internet telephony to accelerate trade on its website.
eBay’s business model has been very profitable and has attracted 200 million users with billions of articles listed and billions of dollars being exchanged.
Started in 1995 within a decade eBay has created a billion dollar company with operations in 32 countries and with 8000 full time employees.


2> eBay has encountered several issues while implementing its strategic focus to expand into new geographies and offering newer innovative offerings. It has not yet been able to successfully penetrate into China. The increase in its seller fees has hindered its growth rates in America and Germany.
EBay’s growing international market makes it difficult to monitor compliance and abide by a variety of laws and regulation that apply in different countries.

The bigger threat for eBay has been its limited control on the honesty and integrity of its auctions. Articles could be very highly priced more than its worth or sellers could sell fictitious articles or stolen relics.
Ebay users also have been victim to identity theft scams which have resulted in unauthorized use of user accounts triggering thousands of dollars worth fraudulent sales. Several eBay users believe that the company has not taken sufficient measures to curb online fraud.
Competitors such as Yahoo are establishing similar auction sites to capture the Asian market while Google is offering adSense which runs online advertising based on user search criteria similar to eBay’s Adcontext service.
Finally the case also suggest that with high volumes of transaction on the eBay auction site eBay may not be able to provide good customer support and perhaps compromise on its quality of customer support as they may not be able to justify the varying needs of diverse groups of customers namely online sellers and online buyers.