ebay presentation final
DESCRIPTION
TRANSCRIPT
Group #3
October 4th 2010
AGENDA
Introduction of eBay Environmental Analysis
General Industry Internal
Key challenges for the future Strategic Alternatives Recommendations
INTRODUCTION OF EBAY Founded in September 3rd, 1995 by Pierre Omidyar,
San Jose, California
Online person-to-person trading community/Auction
Initially named AuctionWeb(1997)
Echo Bay Technology Group (Eco Bay Mines)
First item sold was a broken laser pointer($14.83)
First President hired in 1996 Jeff Skoll
HISTORY OF EBAY
Revenue tops $10,000 in a month(1996) Gross Merchandise Volume: $7.2 Million Registered users 41,000
Meg Whitman joins as President & CEO(1998) Brings experience, half a million users, Revenue
$4.7 Million 10 Year Reign eBay Purchased(Skype, Half.com,
PayPal, Bill Me Later, 25% Stake in Craigslist
Operations localized in over 30 countries, 2007 Ebay sold over $60 Billion worth of Merchandise, over 15,000 Employees, Currently 90 Million Users Worldwide
EBAY HISTORY (REVENUE)
EBAY TRAFFIC AND REVENUE
EBAY REVENUE GROWTH
INTRODUCTION TO EBAY
Browsing and bidding is free Seller charges: Insertion Fee-ranges 30 cents to
$3.30 cents, depends on sellers opening bid on item
Final Value: Fee is charged at the end of a sellers auction, fee ranges from 1.25% to 5% of the sellers final sale price
Uncommon items sold on eBay 1999( Human Kidney), 500 Pounds of
Marijuana (1999) Rights to name baby (2005), the Internet,
Jetliner Ghost in a Jar, Vampire Killing Kit, Russian Test
Space Shuttle, The Meaning of Life($3.26)
GENERAL ENVIRONMENT
Key External Drivers Per Capita Disposable Income Percentage of Households with computers Median age of population # of broadband connections Consumer sentiment index
ECONOMIC ENVIRONMENT
Recession has caused consumption in all segments to drop.
Housing market collapse led to a drop in disposable income per capita (0.4%).
Demand for ecommerce companies is expected to rise much quicker than brick and mortar retailers.
In order to stay competitive with brick and mortars, must remain price competitive. This results in very low margins: 3.0 %
PER CAPITA DISPOSABLE INCOME
SOCIO CULTURAL TRENDS/DEMOGRAPHIC TRENDS
Shifts in lifestyle at home and globally As internet progresses and become accessible to
more people, ecommerce sites will gain more market penetration.
In US: Majority of each household has at least 1 computer.
Around the world, pcs and the internet are starting proliferate other parts of the world.
Median age for computer use around the world dropping.
Currently no financial infrastructure in developing nations.
PERCENTAGE OF US HOUSEHOLDS WITH PCS
2000 2002 2004 2006 2008 2010 2012 2014 201640
50
60
70
80
90
100
%
Data provided by Ibis World
CHINESE HOUSEHOLDS WITH PCS OR ACCESS TO PCS.
Data Provided by Gallup
TECHNOLOGICAL TRENDS
Better Broadband access. Faster Internet in the US. Increases the amount of online shoppers.
POLITICAL/LEGAL TRENDS
State Legislatures want to tax purchases inside their state.
You are required to pay use tax on online purchases inside your home state.
Have to abide by each states different regulation rules.
GENERAL ENVIRONMENT SUMMARY
Demographic
Economic
Political/legal
Sociocultural
Technological
Global
Porter’s Five Forces Model
THREAT OF NEW ENTRANTS
Because of low concentration, easy to enter market. Major players only amount to 40% of Market.
Entrance into the market requires a modest capital investment.
Reoccurring maintenance costs for databases and servers can be costly.
Hard to build trustworthy reputation.
Threat of New Entrants Is Low.
BUYING POWER OF SUPPLIERS
3 kinds of suppliers Casual Sellers Collectors Powerful Business Sellers
Not very many options for sellers other than ebay.
Bargaining Power of sellers is low.
BUYING POWER OF BUYERS
Buying Power Very High Ebay is an auction site Buyers set the price that they are willing to buy
at 3 Kinds of Buyers
Casual Collectors Professional Buyers
RIVALS
Biggest Industry Rival is Amazon Market leader @ 15 % market saturation
Ubid.com Bidz.com Buy.com
Threat from Rivals is Very High.
THREAT OF SUBSTITUTES
Search engine and price compare websites moving cutting into online auction business
Fixed based sales on auction sites.
Traditional brick and mortar retailers is the biggest threat of substitute.
Threat of Substitutes is high.
PORTER’S FIVE FORCES IN REVIEW
Threat of New Entrants Buying Power of Suppliers Buying Power of Buyers Rivals Threat of Substitutes
STRENGTHS
Brand power eBay is still a big name in e-business
Large customer base (90 million)
PayPal Quality control
Competes as both and auction site and instant purchase site More customers
WEAKNESS
Auctions vs. instant purchases There has been a shift in online buying
preferences The excitement of auction purchasing has
lessened Consumers have come to prefer fixed price
purchases Less of a hassle then auction buying
Need more advertising Last new eBay commercial?
WEAKNESS
Amazon buying experience is more reputable than eBay's
eBay needs to improve its buying experience in order to remain competitive with Amazon
They have copied Amazon to improve Better Buying Suggestions
eBay needs to innovate, not copy
WEAKNESS
In 2010, 54% of PowerSellers opinions of eBay have been negative Amazon ratings are 69% positive and improving
eBay needs to improve the buying/selling experience to improve its brand image
OPPORTUNITIES
China Huge market- 1.2 billion people Growing number of PCs
Add an optional bartering feature for sellers More accessible to some international cultures
THREATS
The Economy Consumer spending is low Many eBay items are not essential
Collectables, novelty items
eBays sales are suffering as a result
THREATS
Amazon eBay has made an effort to push buyers
towards “Buy it now,” rather than auction sales This put them in competition with Amazon
eBays market share is 5.3% Amazon has 15%
STRATEGIC ALTERNATIVESo Online Store vs. Online Mall
Move from the Online Mall to Online Store Business Model
o Fixed Pricing vs. Bidding Move from bidding to Fixed Pricing Hybrid
o Monitoring Controls Employ more monitoring personnel Build/Expand customer service
o Legal Issues Change locations to lower tax state Lobby for tax breaks Adjustments to shipping and price
STRATEGIC ALTERNATIVES
Innovation Bartering system
Cultural Changes Developing a business model for specific
countries Employ local personnel
o Distinguish and Strengthen Brand Equity Increase promotion and advertising http://www.youtube.com/watch?v=o7_u5p2PheE 24 hr shut down to make customer calls
“But I just want to buy these here and take them home with me”
RECOMMENDATIONS
Maintain top market in bidding sites, focus on rare/collector items Buyers and purchasers of collectors items prefer
bidding Fixed Price selling is where growth will occur
Invest more money/personnel into monitoring controls and customer service Cut down sales of illegal/counterfeit items Customer service/difficulties with site
RECOMMENDATIONS
Handling State Taxes: Threaten to move to other states Lobbying? Will effect all online retail Lowering shipping costs
Global Expansion: Different business model for specific countries Fixed-price vs. bid vs. barter Employ local personnel
Invest into price comparison websites Future of online shopping