eBay

By:Dan McLindonKyle McDanielJeremy SmileyTom AndersonRay Moorman

Key Question for eBay

How can eBay continue to grow as an online retailer?

Secondary Questions

• What are the values on which eBay was founded?• Do eBay’s current actions and strategies align with their

values?• What has happened to the company culture at eBay?• Does the eBay brand create a sense of trust, security,

and community?• Should John Donahoe be the CEO of eBay?• How can eBay position itself for future success?

eBay Company Overview

Founded 1995 by Pierre Omidyar as an online auction site to bring buyers and sellers together.

Vision “Create a place where people could do business just like the old days – when everyone got to know each other personally, and we all felt we were dealing on a one-to-one basis with individuals we could trust.”

Strategic Business Units 1. Marketplaces – online auction and direct retail sites2. Payments – PayPal3. Communications - Skype

Organization Size 15,000 employees, revenues of $5.9 billion in 2008

eBay Key Acquisitions

Company Year Anticipated Result Actual Result

PayPal 2002 Allow eBay users to make credit card payments.

Success within eBay marketplace as well as adoption by other online retailers (57 million registered active accounts ins 2008).

Rent.com 1st quarter 2005 Natural extension of online real estate mkt.

N/A

Shopping.com 2nd quarter 2005 Bolster traditional online retailer presence.

50 million visitors per month, world’s 3rd largest internet shopping site.

Skype 2006 Create synergies with Marketplace SBU, enabling buyers and sellers to communicate better.

2007 had to take a $900 million writedown on value, synergies not realized. CEO indicates potential sale.

StubHub 2007 Synergies with existing ticket business.

Successful expansion into adjacent mkt.

PEST Analysis for eBay

Industry Overview (Supply)

Porter’s five forces:

Rivalry among existing competitors

High

Threat of substitute products

High

Bargaining powerof buyers

High

Threat of new entrants

High

Bargaining power of suppliers

Medium

Porter’s Five Forces

Internal Analysis – Core Values

Conclusion: eBay’s recent

changes to their fee structure and feedback forum go against the

company’s core values.

Management Timeline

Whitman vs. Donahoe

Meg Whitman John Donahoe

SWOT Analysis for DellStrengths

• Well established brand.•Large number of user accounts.•PayPal acquisition.

Weaknesses• New CEO John Donahoe.•Company culture becoming stale, employees not fully engaged.• Skype acquistion.• Fee structure has alienated some sellers.•Limitations on feedback hurt ability to create sense of trust and community.•Moving away from online auction, into direct retail.

Opportunities• Find a new revenue stream with online advertising with Skype.• Growth in total online retail means more potential users of PayPal.•Other competitors, Overstock.com and uBid.com are struggling, possible acquisition targets.

Threats• Sellers moving to other auction sites, taking the variety of items they supplied to the competition.•Possible shift in online shoppers preferences from auction-based to traditional online retailing.

Registered & Active eBay Users

0

50

100

150

200

250

300

2000

2001

2002

2003

2004

2005

2006

2007

# o

f U

sers

in

Mil

lio

ns Registered Users

Active Users

Linear (RegisteredUsers)

Linear (Active Users)

•Reg users continues to grow but Active users has flattened out

Core Business: Online Auctions

0

500

1000

1500

2000

2500

2000 2002 2004 2006 2008*

Online Auctions

• # of online Auctions declining during same time frame as users are increasing

eBay’s Business Model – 3 Operating Segments

% of eBay's Net Revenues

68%

25%

7%

Marketplaces

Payments

Communications

Net Revenues By Segment

0

1000000

2000000

3000000

4000000

5000000

6000000

2005 2006 2007

Marketplaces

Payments

Communications

Forrester Research: 2012 Prediction of Internet Sales

• B2B predicted to be 10x larger than retail sales 91%

9%

Retail

B2B E-commerce

Worldwide Internet Users in 2008

32%

47%

21%

Asia, 550m

Europe, 380m

North America, 250m

•220m of NA was from US.

Recommendations1. Fire John Donahoe, leverage strong board of directors to

find a replacement that can lead eBay into the future.

2. Focus on restoring the eBay brand name. Make eBay.com a 100% auction site. Use Shopping.com and other possible acquisition targets to compete in traditional online retail space.

3. Revamp fee structure to be friendly to both small and large sellers. Tier the structure based on monthly or annual trade volumes.

Recommendations

4. Look into acquiring either or both Overstock.com and uBid.com