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Electronic commerce Essay

History of eBay
 eBay started life out as Auctionweb, founded by Pierre Omidyar
 Brainstorming amongst friends resulted in the overall idea By 1997 maintained its impressive growth but it needed additional funding
 Benchmark provided said funding, and more importantly, leadership
 Ms. Whitman was installed as CEO and Mr. Swette as COO

 First move was to issue an IPO

How does it work?

 eBay provides listings and listings support (image hosting etc)
 Buyers browse listings for interesting items and place bids
 Sellers history is provided

 Sellers pay initial fee for listing and then a cut of the final sale
 Sellers also have history to buyers history

 This in combination with low operating costs results in high profit margins.

Case Study: Question 1
 eBay is one of the only major internet-based firms to consistently make a profit from its inception. What is eBay’s business model? Why has it been so successful?
 Simple, creative, business model
Works like a flea market. No transaction handling

 User Interaction is a key part of its success
 Half the companies employees work in customer support

Case Study: Question 1
 Not just one way interaction, user feedback is highly

 Case in point, the June 1999 downtime
 User expectations of uptime were revealed

 Users expect 100% uptime which eBay at the time was unable to deliver. The management of this incident involved a rather large investment in infrastructure and technology to ensure that eBay was up as much as possible.

Case Study: Question 2
 Other major websites, like Amazon.com and Yahoo, have entered the auction marketplace with far less success than eBay. How has eBay been able to maintain its dominant position?
 eBay has maintained its dominant position for two primary reasons

Market savvy
Loyal customer base

Case Study: Question 2
 Market Savvy: eBay recognized the fact that its competition would seek to disrupt its growth and
countered with technology. Investments were made in companies such as PayPal (now an almost universally accepted payment system) and Skype Future work? Mobile app by Critical Path Software

 Loyal Customer Base: eBay has focused its efforts on satisfying its customers and becoming the dominant trusted online commerce site.

Case Study: Question 3
 Why did eBay ban the leaving of negative feedback on sellers? What has been the impact of this change?
 The motivation for eBay instituting this ban was a drop in trade volume in 2008
 This was identified as being due to a large amount of negative remarks being made by buyers and sellers
 The ban was an attempt to stop the retaliatory feedback war that was going on then.

Case Study: Question 3
 Issues with Impact: how do you secure transactions or manage fraud? New policies regarding failure to pay Buy it now option can be used to ensure payment Sellers can use reporting hubs

 Advantages:
 Increase sales
 Time saving, PayPal is fully integrated
 PayPal Seller Protection
 Saving Money

Case Study: Question 4
 eBay makes every effort to conceptualize its users as a community (as opposed to, say, ‘customers’ or ‘clients’). What is the purpose of this conceptual difference and does eBay gain something by doing it?

 Increase perceive security
 Thus encourage people to buy and sell items using eBay

 It also builds safety and trust in the company itself and not just the service

Case Study: Question 4
 User community allows for information exchange not just between users but also between users and company
 eBay’s community follows five basic values

We believe people are basically good
We believe everyone has something to contribute
We believe that an honest, open environment can bring out the best in people.
We recognize and respect everyone as a unique individual.
We encourage you to treat others the way that you want to be treated.

Case Study: Question 5
 eBay has long been a marketplace for used goods and collectibles. Today, it is increasingly a place where major businesses come to auction their wares. Why would a brand name vendor set up shop on eBay?

 100 million registered members
 Most popular shopping destination on the internet
 Localized presence in most major markets
 All of this provides a healthy customer base

Case Study: Question 5
 Trust based system can provide increased popularity if done well
 eBay’s shop reduces vendor overhead due to there being no shop

Store goods in warehouse and directly deliver upon order

 Simplifies vendors process, saving them money and time
 eBay provides easy tracking of sales to manage inventory levels

Case Study: Question 6
 Many analysts have argued that by moving to fixed- price sales eBay is risking alienating its traditional community of garage/carboot traders. How can eBay stop becoming just another site for selling?
 The auctioning based sale has built eBay
 Millions of users were attracted due to it
 Thus care must be given to make sure that this section of the userbase does not feel unappreciated
 And to make sure that business stays good for them

Case Study: Question 6
 Special treatment should be given to them so that the culture can be preserved
 Its what makes eBay distinctive

 Additional information gathering might be necessary to track usage and needs for traditional traders
 Lastly, business model and technology will be required to make sure that eBay doesn’t jut become another online shopping site

Case Study: Question 7
 Given the growth opportunities available toeBay which ones and in which order should itdevelop?
 Base everything off of risk and reward
 The higher the risk the higher the reward necessary
 Order it on investment cost and risk
 This naturally creates an order that eBay should take with regards to its growth opportunities

 Summary: stick to tried and true first

Case Study: Question 7
 Order of Growth:
 Product development strategy
 Including PayPal

 Market penetration
 Attraction of additional vendors
 Overseas Expansion
 Pure Diversification
 Extremely risky

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