eBay-The

Customer
Marketplace

Group 2
Nikhil Yadav (PGP31158)
Prakhar Agarwal (PGP31162)
Mihir Joshi (PGP31154)
Roshan Ranjan (PGP31169)
Abhinandan Das (PGP31124)
Kumar Saurabh (PGP31151)

Agenda

eBay-A brief History

Online Auction Process
Consumer Market
Present growth
Comparative analysis
Issues and Solutions

History

Pierre Omidyar
In 1995 Founded Auction Web with the idea of
Providing an Internet site where person-to-person trading could take
place
Buyers and sellers rushed to the site, and by 1997 Auction Web became eBay.

1996
15,000 auctions daily
2 million hits per week
Main category is collectibles

1998
Expansion
Benchmark Capital came on board

Meg Whitman made president and CEO

eBay-Timeline
1995:

eBay was launched

by Pierre Omidyar

1997:

benchmark capital
purchased 22% stake in eBay
for $5 mn

1999:

eBay acquired
Butterfield & Butterfield, Kruse
International, Billpoint, and
alando

2001:

eBay traded $ 9
billion worth of goods, which is
equivalent to 20% of the all e
commerce.

1996:

Hosted auctions of
15,000 daily and 2mn hits per
week

1998:

eBay went public and

sold 3.5 mn shares and raised
$ 6.3mn

2000:

76.5 % increase in
operating profit and net
income increased by four
times.

Online Auction Process

Involved listing an item for

sale with a closing date and
time.
The seller

Provided a description of
the item
Most provided pictures

Could specify

a minimum opening
bid
A bid increment
A reserve price
Not disclosed to
the bidders

The transaction between seller

and high bidder
Executed with out eBays
involvement

Types of Auctions

Auction-style listings

Allow the seller to offer one or more items

for sale for a specified number of days. The
seller can establish a reserve price.

Fixed price format

Allows the seller to offer one or more items

for sale at a Buy It Now price. Buyers who
agree to pay that price win the auction
immediately without submitting a bid.

Fixed price format with best offer

Allows the seller to accept best offers. If a

buyer submits a best offer, the seller either
rejects or accepts the best offer. If the best
offer is not satisfactory, a seller may submit
a counter offer to the buyer.

Consumer Market

Evolution of eBay:
Consumer auction market for small segment of population to sell
collectibles
37 million users listing 12 million items daily with own laws,
feedback system, enforcement, payment processing unit
Voices- full day focus group sessions to obtain feedback from
users

Policing at eBay

eBay relied on its community to help police its

site
the community is also self-policing, and
users frequently form neighborhood watch
groups to help guard against misuse or
violations of the sites etiquette.

Present Growth
1.00E+07
1.00E+05
Number (in thousands)

1.00E+03
1.00E+01
1996

1998
Years

Registered Users

Listed Items

Sales

2000

Comparative Analysis

eBay Fees
Listing Fee

Item

$0.30- $3.30

Depending on minimum value of

item

$40

Cars

$25

Motorcycles

$50

Real estate timeshare (3-10 days)

$75

Real estate timeshare (30 days)

Selling Price

Success Fee

$0- $25

5.25% of closing value

$25-$1000

5.35% up to $25 and 2.75%

after that

$1000Remaining
closing value

Incremental 1.75% after

$1000

Cars

$40

Motorcycles

$25

eBay Fees
Optional Listing fee Additional Features
$0.15

Additional photo after 1 free photo

$0.75

Supersize 1 photo

$0.25

Adding image to preview

$0.05

Buy-it-now Capability

$19.95 each

Adding image to gallery and Feature plus highlighting

$5.00

Purple highlighting in group listing

$2.00

Bold font size in group listing

Issues

Will eBay be able to sustain the growth

Will diversification of business help or destroy the existing unique

flea-market feel

Quality of suggestions that were flowing in

Recent increase in transaction and services fee

SWOT Analysis
Strengths

Weaknesses

The company is a giant

marketplace used by more
than 100 million people to
buy and sell all manner of
things to each other.
The company exploits the
benefits
of
Customer
Relationship Management
(CRM).
Business-to-Consumer
(B2C), then mixed with
Consumer-to-Consumer
(C2C).

Fraud includes counterfeit

goods being marketed to
unsuspecting
(and
suspecting!) buyers.
It should be pointed out that
fraud and theft are problems
with individuals, not eBay.
The weakness is that
unscrupulous
individuals
can exploit the C2C business
model.

Opportunities

Threats

Acquisitions provide new

business
strategy
opportunities. eBay has
been buying up firms including
payment
system PayPal.
Aspirating
consumers
are growing segments in
many
developing
nations.

International competitors
competing in their domestic
markets may have the
cultural experience that
could
give
them
a
competitive advantage.
Yahoo! Dominates the
Japan market

Internal Factors Evaluation

Strengths

Weight

Rating

Weighted Score

eBay Global Brand for

.20

0.80

.20

0.60

Generic Brand

.30

0.90

Weaknesses

Fraudulent activities

.10

0.40

System Breakdown in

.20

0.40

1.00

3.10

auction
Customer Relation
Management

trading activities
TOTAL

External Factors Evaluation

Opportunities

Weight

Rating

Weighted Score

Acquisitions

.20

.80

Market Development

.15

.45

Market Penetration

.20

.80

Threats

Success attracts

.15

.45

Illegal practices

.15

.60

Credit card charges

.15

.45

TOTAL

1.00

3.55

competition

Recommendations
Reinforcing the Marketing department: eBay must reinforce the
marketing department to improve image in through advertising and by
global branding to make eBay a generic brand for consumers

Technological development and Security :eBay must put up

securities to ensure no fraudulent activities may happened through
authentication and verifications

Maintain global growth initiative :By making

Acquisitions (develop new markets), new products
and adopt into different cultures.

What did eBay actually do?

Acquired GSI Commerce (a retail ecommerce service provider) in 2001
Main focus was GEC Services which accounted for 75% of GSI
revenues, while divesting from other business areas
Strategic expansion from flea market to marketplace with large
merchants on eBay
Needs of sole proprietors and small businesses ($48B) still to be
addressed by eBay and PayPal
Needs of large merchants to be addressed by GSI
Opportunity of growth for PayPal in the large merchant segment

Thank
You