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 Pierre Omidyar launched Auction Web after successfully auctioning a broken laser pointer online. The laser pointer cost $14.83. He realized that buyers and sellers can view products and conduct transactions. He took advantage of efficiency of the internet based market. Pierre launched AuctionWeb and hired Jeff Skoll as president in June 1996. In 1997 AuctionWeb became eBay. The change to eBay boosted auctions enormously. EBay is the prime online retailing in the industry. It holds a 17 percent market share. In 1995, eBay faced an inception in 1995. Since then, it continued to experience growth of revenue and earnings. 

Meg Whitman

            In September 1998, Meg Whitman was recruited as the second president and CEO of eBay. She helped bring eBay into a major publicly traded company. Under Meg Whitman‘s leadership, eBay’s registered users grew six-fold. The company’s users globally and revenue grew simultaneously. Since 2006, the eBay growth rate started slowing down. It faces a stiff competition from Amazon, yahoo, Google and Craigist. Former CEO, Meg Whitman acquired Skype. Skype is a communications software company, and Paypal. The move to acquire Skype was expensive and did not have the expected outcome. Paypal is the primary payment source used in eBay. It boosted revenue. In 2003 and 2004, eBay continued to expand into market locations like Malaysia, HongKong, and the Phillipines. EBay executives changed seller fees and ventured into China but anticipated results failed. Revenue had fallen down by 7 percent from 2007 to the 2008 fourth quarter. By March 2008, eBay Inc. was facing a critical moment. With more pressure coming from counterfeit related lawsuits, Meg Whitman stepped down. She was succeeded by John Donahoe. 

John Donahoe

            John Donahoe was an ideal candidate because he had prior executive experience. He was the president of eBay market places since February 2005. John Donahoe had to face the current complex international and legal environment. He had to discover new competitive advantages and regain eBay’s market share and growth. The e-commerce industry faces a global economic downturn. He has already acquired Shopping.com, Gumtree, StubHub and loQuo. In 2007, he enhanced its web by acquiring online ticket websitehub.com. It started its international expansion market places like France, Germany, and Canada in 1999. By 2001, it dramatically accelerated its international expansion through marketplaces like Italy, Ireland, and Korea. It partnered with Wal-mart and Myspace.com to market Skype to make PayPal a payment option and cancelled its advertizing on Google.  A U.S District judge ruled that eBay did not bear legal responsibility for sales of counterfeit goods in its marketplace on July 15 2008. On fixed auctions, it lowered fees to compete with amazon.com. In November 2008, it laid off over 1 thousand employees. John Donahoe attempted to reinvigorate eBay growth by shifting emphasis closer to competitors. He moved auctions to fixed price listing and acquired a complementary payment method to paypal. He reduced the work force with a 10 percent. The difference between eBay and other e-commerce companies is that other companies operate like a store. On the other hand, eBay operates the online equivalent of a mall or flea market. Anyone can be an entrepreneur in eBay. It operates online auctions, classified ad sites and other sites that people can conduct commercial transactions. It also offers voice and video communications between computers and from computers to ordinary telephones. The main barriers of eBay growth are Yahoo!, Google, and mazon.com. They give eBay a strong rivalry in the e-commerce industry. 

Threats

            Amazon.com started as an online bookstore in 1994.  It partnered with companies like AOL and expanded to include other items. Soon, it included items ranging from books and CDs to clothing and electronics. Amazon.com tried to add an auction component but failed. It created the Amazon marketplace. Amazon market place allowed sellers to place items on the site, featuring them alongside identical sold by Amazon.com. It continues to add innovative value added services to attract new customers. The frustration-free packaging eliminates product containers that are difficult to open. Customers are allowed payment plans to pay with installments. Through Pinzion, Amazon.com attempts to vertically integrate as a kitchenware supplier. By 2008, Amazon.com third-quarter profit was approximately 48 percent. It reduced fourth-quarter projects and cited expectations, along with other retail sectors.

Yahoo! purchased Viaweb in 1998. Yahoo is a search engine with additional e-commerce services. The products include advertising, email, news and information, photo sharing, and internet browser toolbars and add-ons. Yahoo website users go to it for all of their needs. Advertisers are appealed because their ads are more exposed. Yahoo is in more than 20 countries. In 2007, Yahoo shopping site auction was discontinued in United States and Canada. The company runs auction web sites in Hong Kong, Singapore, and Taiwan. Microsoft identified yahoo as the ideal way to compete with Google. It involved yahoo in a takeover bid but it failed. This caused a disagreement between investors and yahoo board. Investors felt that their interests were not acted upon. Microsoft may still attempt to buy the yahoo search engine segments although the complete take over back fired.

            Google Inc is also a search engine. It was founded in 1998 and continues to improve its search engines. Google’s strongest point is the proprietary software. When searching on the internet, it understands exactly what one means and attempts to give back exactly what one wants. It has directed more than half of its resources toward improving the capabilities of its search engine. Consequently, it is the most popular in this industry. Google site is in over 116 languages and has a strong international presence. Other than search engine, it has added applications, such as email and file sharing. Google does not have an auction site. It searches items available for purchase on the internet and displays a side by side comparison between them. The sellers can set a negotiable price for their products. Google launched Google Checkout in 2006 in order to. In February 2008, it started charging for its use.

Craigslist is a private company that begun in San Francisco. I successfully entered the e-commerce industry to enable local residents to list classified ads and events. Craigslist’s strongest point is that it is free. It does not charge to list or sell on its web site. Craigslist collects revenue from fees for brokered apartment listings and job postings. To keep its overhead low, it does not operate from an office. It operates from a house and has a staff of only 25 employees. The value of Craigslist is estimated to be near $ 5 billion. In a strategy to encourage eBay growth, it has acquired a portion of Craigslist.

Opportunities

            EBay purchase established web sites that the local culture understands. Acquisitions allow eBay to expand and diversify its revenue base.

In 2000, eBay completed its first acquisition. It acquired Half.com for $ 312.8 million. Half.com enables users to sell books, CDs, games and DVDs at fixed prices. The acquisition of half.com allowed eBay to enter the fixed price marketplace. Half.com pays its sellers directly. Separately from eBay, it operates the half.com web site. It allows eBay user profiles to be shared between the web sites.

The purchase of PayPal enabled sellers of any size to receive online payments from a buyer’s credit card or check account. Thus, payment and shipment times were reduced tremendously. It was another eBay source of revenue. In 2008, PayPal revenues made up 28% of eBay’s total revenue. The revenues were $2.4 billion. EBay announced PayPal as its sole payment option in September 2008. A majority of its marketplace listings adopted PayPal.

            EBay acquired shopping.com in 2004. Shopping.com lets users to search and compare prices of products. EBay purchased Shopping.com for $620 million. The product search of Shopping.com is similar to Google’s. Acquisition of Shopping.com offered eBay a new channel for users. It offered a new medium for ad revenue. Buyers and sellers were allowed to interact.

Rent.com was acquired by eBay in 2004 also. The transaction cost $415 million. Rent.com charges owners. They link landlords with tenants online. EBay entered into online classifieds market by acquiring Rent.com. The acquisition increase eBay online exposure. It also improved its revenue streams. EBay owns over a quarter of Craigslist. Craigslist’s acquisition amount was undisclosed. An owner went against the other stockholder’s wishes. The owner sold shares to eBay. Apparently, eBay placed a couple of excessive demands on Craigslist. It wanted to block all forms of corporate transactions. Craigslist countersued eBay in 2008. It accused eBay of unlawful competition and copyright infringement. The geographical reach of eBay has increased. EBay has increased its revenue through acquisitions. EBay has moved into related businesses like online payments, and obtains technology. These moves strengthen its product differentiation.

Skype is an internet phone provider. It allows its users to make calls to many counties.  In 2005, eBay acquired Skype for $2.6 billion. Skype uses Voice Over internet Protocol. The service is free if both parties use Skype. Skype users continue to increase. EBay announced its intention to make Skype a standalone business. It planned to carry out an initial public offering in 2010.

For $310 million, eBay purchased Stubhub.com in 2007. Stubhub.com is a secondary ticket market place. Major League Baseball named Stubhub.com as its official secondary market for tickets. IT partners with American Express to get concert tickets. It partners with over 60 teams for sporting events. Stubhub.com integrates fulfillment and shipment using FedEx. It has an easy method for season ticketholders to resell tickets. EBay operates stubhub.com independently from eBay. 

            In 2008, eBay purchased Fraud Sciences Ltd for $169 million. This added to its technology portfolio. Fraud Sciences provided eBay with technology needs. EBay believes in trust and planned to improve its level of trust. Fraud Sciences has developed ways to detect fraudulent purchases. Unfortunately, it lacks development capabilities.

Through acquisitions, eBay has expanded to Asia and Europe. The purchase of Loquo enabled eBay to incorporate international corporate international classified ad web sites.

Alliances

            EBay enhances the number of items available in the marketplace through alliances with small entrepreneurs and large companies. These partners provide services eBay itself does not wish to offer. This increases their revenue. It established a certified provider program consisting of exams, references, and an annual fee. Partners provide services and products that sellers might need. With this help, eBay attracts sellers that might not otherwise use its services. It also attracts those who lack expertise in certain areas but wish to conduct a high number of transactions. Sellers can move more products than they would otherwise.

            Activia provides multiple items marketplace listing tools to sellers. Entrepreneurs use the eBay name to grow their business. In exchange, they provide eBay fee revenue.

In 2006, Yahoo and eBay aligned in a marketing alliance. To promote revenue growth for both companies, yahoo provided exclusive advertizing. Yahoo made PayPal their preferred paymrent provider. Both companies co-branded. In the same year, eBay made Google the primary advertisers on eBay’s websites outside of the United States. Google integrated Skype to further sales from Web advertising.

            In 2007, it aligned with airlines to promote PayPal. It also aligned with Wal-Mart and Myspace.com to promote PayPal as a payment option. EBay sold Skype phone equipments through the alliance with Wal-Mart. Both PayPal and Skype brand names expand through the arrangement. The revenue of eBay increased.  In 2008, eBay had an alliance with Buy.com. Buy.com links retailers with buyers. It does not pay listing fees and its volume. Buy.com has free shipping, and can take returns. The alliance with Buy.com increased the income of eBay enormously.

            Their partnership with opponents is a growth strategy. They get online exposure growth. Certified provider programs fill the gap that eBay are unable or unwilling to fill.

Internal innovations

            18 percent of eBay’s operating expenses go to product development. My eBay, feedback forum, and final value fees are the earliest innovations. My eBay allow users to track their buying and selling activities. It helps them send and receive emails, and view feedback reports. This forms trust between buyers and sellers. The website has a feedback forum. Kijiji.com is an online classified unveiled by eBay in 2005.It attracted unique visitors to eBay. It operates like Craigslist. The eBay express was also launched to provide users ability to but multiple items. 

Challenges

            Before making acquisition, alliance, and innovation decisions, eBay considers environmental factors. Unemployment rate and mortgage crisis decrease income. The unemployed seek for ways to earn a living. Fewer people can buy from eBay. Therefore, sellers on eBay increase. For instance, eBay lowered fees on fixed cost sales to compete with Amazon.com in 2008. Sellers required up to five items without paying every 30 days.

Most eBay buyers are above the age of 45. Majorities are male and most earn over $50, 000 annually. The United States ethnic composition changes. EBay expands internationally. The type of desired products from eBay changes with the type of buyers. To attract these customers, business practices and levels of service change. Lack of insight on a new location culture affects its presence. EBay attempted to establish in China in 2002 by purchasing Eachnet.com. It lost to Taobao. Its popularity in United States help it succeeds in China. In 2007, it partnered with Tom Online Inc and strengthened its local management. It had won Chinese customers’ trust.

EBay needs to respond to technology trends quickly. It lost to yahoo in Japan in 2002. Yahoo was up to date with the expected Japan technology. Skype may enable users to go behind eBay’s back. They can conduct transactions without using eBay. Retailers improve their web sites with the ability to return items and some sort of recourse if item is broken or never received. Consumers may prefer them over eBay. However, eBay has developed technology to aid limit counterfeit products. It is dedicated to thwart sale of counterfeit products on its site. The filter program detects them.

            Online sales, especially vehicles, make up the highest eBay income. It also receives income from its businesses outside of the main eBay auction marketplaces.

Conclusion

            EBay is currently the largest spot for online auction in the world. Its long time experience and expansion give them an advantage over small competitors. It has resulted to aligning alliances with major competitors like Yahoo to benefit in the relationship. These competitors take up portions of their customers on occasions. Competitors like Amazon.com cause eBay extreme external competitive pressure. Small private companies such as Craigslist pose a challenge. The company has lost many customers due to boycotts. Its trust worth continues to suffer and money spent in lawsuits because of counterfeit cases. Skype problems directly wound eBay. However, eBay continues to soar through the test of time. It has faced more challenges like counterfeit. Their expansion plans have failed sometimes. Therefore, eBay has established various strategies to deal with the challenges and improve their revenue. Up-to-date, eBay stands above completion.

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