SWOT analysis of eBay This is an eBay Inc. SWOT analysis for 2013. For more information on how to do SWOT analysis please refer to our article. Company background Name| eBay Inc. | Industries served| Internet, Online retailing| Geographic areas served| Worldwide| Headquarters| U. S. | Current CEO| John Donahoe| Revenue| US$ 14. 07 billion (2012)| Profit| $ 3. 229 billion (2011)| Employees| 27,770 (2012)| Main Competitors| Amazon. com, Craigslist, Ubid, eBid Auctions, Google, Overstock. com| eBay is an international online marketplace with a global customer base of 233 million.
It is a multibillion business operating in 37 countries.
There are millions of items listed on eBay across thousands of categories, including antiques, toys, books, computers, sports and electronics, amongst many others. You can find more information about the company in its official website or Wikipedia’s article. SWOT analysis of eBay eBay SWOT analysis 2013| Strengths| Weaknesses| 1. World’s largest internet marketplace2. Business model (no strong direct competition)3. Economies of scale4. Localization5. Payment system6. Brand reputation| 1. High fees2.
No further growth strategy| Opportunities| Threats| 1. Growing number of mobile shoppers2.
Become a retailer3. Increase services and product portfolio through acquisition4. Open more online stores in other countries| 1. Online security2. Regional low cost online retailers3. Increasing competition from Amazon4. Exchange rates| Strengths 1. World’s largest internet marketplace. eBay has more than 150 million live listings and more than 105 million active users globally in 37 countries. That makes eBay the largest marketplace online, having a great power over other online retailers. 2. Business model. Bay only acts as a middleman between sellers and buyers, who bid and sell items in eBay’s marketplace. Being a pioneer in online auctions, eBay had no competition and currently has only few strong direct competitors. Thus, company’s business model is a competitive advantage over such giant retailers as Amazon. 3. Economies of scale. In the beginning, eBay had to invest heavily to gain IT and customer relationship management (CRM) knowledge and skills, but since then, used its skills to serve over 100 million users and to create the largest online marketplace with little additional costs. . Localization. The company operates its marketplaces in 37 countries. Each marketplace is using local language and is adapted to local product offerings. No other global online marketplace is localized to such degree. 5. Payment system. eBay uses PayPal, its own payment system, to proceed nearly all of the payments going from eBay’s marketplace. From eBay’s perspective, such tight integration has the benefits of more fees collected (PayPal takes transaction fees from the businesses) and tighter control over buyer’s shopping experience.
From buyer’s perspective, PayPal provides easy to use online payment method. 6. Brand reputation. eBay is a trustworthy brand, known all over the world and is valued at $11 billion. Weaknesses 1. High fees. eBay’s fees for the sellers has risen significantly over the years. The firm receives fees on listed goods, sold goods, some adornment fees and PayPal transaction fees. The sellers often make zero profit on their low price products sold on eBay due to its high fees. 2. No further growth strategy. eBay hasn’t unveiled any plans on how the company is going to sustain its growth.
Firm’s top management team is unsure whether eBay should become a retailer or to introduce new products and services and how to do that: developing its own products or acquiring new business. As a result, there is high uncertainty over eBay’s future and business direction. Opportunities 1. Growing number of mobile shoppers. eBay has a strong payments system PayPal that is widely accepted and used by many online retailers and online shoppers as it is convenient and easy to use. The growing number of mobile shoppers represents a huge growth opportunity for PayPal as its one of the ew payment systems that meets the requirements for convenient shopping and payment processing on the go. 2. Become a retailer. eBay has an access to hugest online marketplace in the world and is well placed to take an advantage of that by becoming a retailer. The company has its IT and CRM systems in place already and could easily stake out a market share from Amazon and other online retailers. 3. Increase services portfolio through acquisition. The company has successfully acquired many companies to extend its services offering and should continue adding new services through mergers and acquisitions. 4.
Open more online stores in other countries. To sustain current growth levels, eBay could open its online marketplaces in other large and growing economies in Asia and Europe. Threats 1. Online security. PayPal stores online shoppers’ personal information, such as bank account details, which is a target for online thefts. The more online customers PayPal has, the more attractive as a target for identity thefts it becomes. 2. Regional low cost online retailers. Regional low cost online retailers could outrival eBay on faster and cheaper shipping, more localized product offering and better knowledge about home market. . Increasing competition from Amazon. Amazon’s online presence has significantly increased and now Amazon’s marketplace is just behind eBay’s. 4. Exchange rates. eBay receives a part of its income from foreign operations. The profits that are sent back to US have to be converted into dollars and may be affected by the exchange rates, especially when the dollar is appreciating against other currencies. Sources: 1. eBay (2013). Company overview. Available at: http://pages. ebay. co. uk/aboutebay/thecompany/companyoverview. html 2. eBay (2013). Investors. Available at: http://investor. bay. com/annuals. cfm 3. Interbrand (2013). Best Global Brands in 2012. Available at: http://www. interbrand. com/en/best-global-brands/2012/Best-Global-Brands-2012. aspx 4. Wikipedia (2013). eBay Inc. Available at: http://en. wikipedia. org/wiki/EBay * SWOT Analysis A SWOT analysis of eBay was prepared to examine what the company does well and what aspects may need some attention (Appendix C). Also, eBay has many opportunities that are available to them in the future. Just like any company though they do have threats that may pose a problem for them.
Some of the main strengths of their company include the variety of products offered, their customer service, and a tremendous global reach. Although they do not have very many weaknesses eBay should 3 * 4. Coghlan, Pauley, Scott 8/18/2010 eBay, A Company Analysis still work on keeping illegal activity to a minimum on their site. Also, they should look at Amazon. com to help provide better product descriptions for their customers. eBay must continue to look for opportunities to expand their company in the future.
The changing lifestyles of people can be an opportunity for eBay to penetrate the market even further and broaden their customer base. Also, eBay should look at other online auction sites for possible acquisitions or partnerships. eBay must continue to expand internationally to keep the number one spot in this market. Threats to eBay’s reign include the continual growth of Amazon. com and also thievery within their own site. eBay should keep a close eye on threats to their company and do what they can to make them opportunities for change. * eBay S. W. O.
T Analysis Strengths Weaknesses Largest online trading forum Inability to measure illegal activity on site Sense of community Inability to penetrate some foreign markets Recognizable Brand Name Lack of in depth descriptions of products Over 250 Alliances Technology malfunctions Partnerships with international companies Global reach eBay University Entertaining site Over 27,000 different categories Publicly Traded Zero inventory held by company No need for the traditional sales force Opportunities Threats Changing lifestyles of people Thieves Acquisition of Yahoo. om Increasing number of online auction sites Continued international expansion Rapid growth of Amazon. com Increasing use of the internet Increasing number of online stores Expand community services 1/3 of internet users already registered on eBay eBay’s Strengths EBay is the leading provider of online auction and customer-to-customer trading in the world. They have many competencies, core competencies, and distinctive competencies that set them apart from their competitors. Their alliances, international dominance, and recognizable brand, name just to name a few, are some of the main reasons why eBay is a company that is hard to top.
Largest Online Auction Forum(core competence) From its beginning in the mid-1990s, eBay has been growing in leaps and bounds. They now have over 94. 9 million registered users in more then 150 different countries. eBay’s founder Pierre Omidyar did not even see the tremendous possibilities that eBay had when it was first developed over ten years ago. eBay now holds the top spot in the online auction industry. In the United States alone one-third of the population is already registered with the site and with increasing use of the internet that number is sure to grow.
Recognizable Brand Name(core competence) A recognizable brand name is important to the success of a company. eBay has made sure to use color and unique writing to show their brand name off. They also use television and Internet advertising to get continued publicity on different media avenues. Amazon. com does not have as much face value as eBay. Their name is not distinctive to the customers like eBay’s. 9 * 10. Coghlan, Pauley, Scott 8/18/2010 eBay, A Company Analysis Over 250 Alliances (competence) eBay holds alliances with some of the largest companies in the world. They include UPS, America Online, IBM, PayPal, and Walt Disney.
These alliances create more opportunities for eBay to advertise and reach potential customers. eBay has also created alliances with companies that help to maintain customer satisfaction. Tradesafe and I- Escrow have both partnered with eBay to make sure that all customers get what the pay for. Partnerships with International Companies (competence) Partnerships abroad can be crucial to a company succeeding in foreign markets. By partnering with established foreign companies eBay is able to easily transition into that countries culture with the help of citizens who work with the partnering company. Bay also immediately acquires ties with companies in the foreign market, which makes it simple for them to make more partnerships and alliances. Global Reach (core competence) The global reach that eBay has obtained is not matched by any other online auction site. Although Amazon. com is in a close second to eBay, customers obviously prefer eBay’s global ability. They have the capability to reach people in virtually any part of the world and get them the product they are looking for.
Sense of Community (distinctive competence) Caring about your customers and making sure they know the lengths you go for to keep them happy is crucial to the success of a business. eBay makes their community a main priority at all times. eBay is continually coming up with new ways to reach out to their customers. They have come up with the Feedback Forum that is used for customers to provide comments about their trading partners. Two new personalization features have also been added for their members, My eBay and About me. eBay takes great pride in their community and will go to great lengths to make sure that it stays intact. Bay University(competence) eBay University is a distinctive feature of the eBay community. It was created in hopes of gaining more entrepreneurs and also educating new users. It has been a great success for eBay. It has helped new users gain knowledge as well as eBay. eBay used the many questions asked by participants in eBay University to their benefit. Entertaining Site (competence) eBay has created a site that makes people want to come back again and again. They are constantly revamping their site to make sure that it is the easiest, fastest, and most fun auction site on the web.
Over 27,000 Different Categories (distinctive competence) The wide variety of products offered on eBay gives them a competitive advantage above all other online auction sites. They are like the Wal-Mart of the Internet! They say that anything you want you can find on eBay. 10 * 11. Coghlan, Pauley, Scott 8/18/2010 eBay, A Company Analysis Publicly Traded (core competence) EBay is a publicly traded company. The initial public offering generated $66 million in new capital for the company. Their second IPO generated another $600 million for the company.
Being a publicly traded company has been a success for the company and brought in new capital. Zero Inventory Held by the Company (competence) eBay does not have stores or warehouses. They do not hold any of their own inventories. This is strength for the company because it keeps costs down and does not put any threat of having to liquidate the company. eBay has kept it simple by simply being a place for people to trade items. No Traditional Sales Force(competence) EBay has no need for the traditional sales force. This is another way that they keep their costs down.
The do not have to train or keep a sales force on payroll. eBay’s Weaknesses Like any company, eBay has weaknesses. They are not able to do everything to the best of their abilities. A lack in ability to monitor all illegal activity as well as failure in some foreign markets is two weaknesses of eBay. Inability to Measure Illegal Activity on Site eBay has taken many precautions to prevent illegal activity on their site. They estimate that only 1 percent of transactions on their site involve fraud. The customers however disagree to some extent. Some say that there are as much as 10 percent fraudulent transactions.
EBay has no real way to measure the extent of illegality on their site. Inability to Penetrate Some Foreign Markets Penetration in foreign markets is crucial to the success of online auctions. EBay has done an outstanding job of penetration in foreign markets. However, they have been unable to take over one of the most crucial foreign markets, Japan. Japan is one foreign market that is on the rise. They are becoming more prosperous and use of the internet is growing. If eBay is not able to gain ground in this market it could hurt its foreign market standing.
Lack of In-Depth Descriptions for Products Amazon. com boasts in-depth product descriptions for all merchandise sold on their site. This is not one of eBay’s outstanding features. The lack of description in products could be a factor in the amount of counterfeit and wrongly identified products that are sold to customers. Technology Malfunctions Technology malfunctions are always going to be a factor when dealing with websites and online shopping. eBay must take measures to keep malfunctions as low as possible to retain happy customers and to keep hackers out of personal PayPay and eBay accounts. 11 * 12.
Coghlan, Pauley, Scott 8/18/2010 eBay, A Company Analysis eBay’s Opportunities EBay must continue to search out new opportunities for its company. Continuing its growth and innovation is crucial to continuing its success. eBay can continue to seek alliances, partnerships, and new customers to continue its reign as number one. Changing Lifestyles of People People are using the internet more and more to pay bills, talk to family, and shop. eBay can use this opportunity for continued market penetration and expansion. Acquisition of Shop Yahoo. com Yahoo. com’s shopping site is very weak in the online auction industry. Bay should explore the possibility of acquiring their shopping site, along with its members and alliances already formed to broaden their customer base. EBay already has partnerships with Yahoo. com in other areas so this acquisition would benefit both parties. Continued International Expansion As internet use continues to grow throughout the world eBay must take every opportunity to enter desirable international markets. With the amount of internet users already registered on eBay in the United States continued international expansion is critical. Increasing Use of the Internet The internet is being used more and more each day. Bay can take this opportunity to expand and penetrate new markets. Expand the eBay Community For continued customer satisfaction eBay can increase its community feel. With new resources and sites tailored specifically to their community members eBay will continue to be the most highly respected internet auction site by its members. eBay’s Threats eBay must take its threats head on. eBay should acknowledge their threats and take steps to protect their company. There might also be the potential of turning some threats into opportunities. Thieves There will always be the threat of fraud and illegal actions in online shopping.
No matter how many precautions eBay takes computer hackers and thieves will find new ways to trick honest shoppers. eBay has taken precautions to prevent these illegal actions and they must stay on their toes to make sure they do all they can to prevent illegal activity on their site. Increasing Number of Online Trading Sites When an industry is attractive new competitors will always try to enter and steal some of the market share. eBay already has many competitors surrounding them including 12 * 13. Coghlan, Pauley, Scott 8/18/2010 eBay, A Company Analysis Amazon. com, uBid, and ePier.
Some boast that they are an alternative to eBay while others just try to be better than eBay. To sustain a competitive advantage above their competitors eBay must continue to grow and advance in the online auction industry. Strategies must be determined and defenses formed. Rapid Growth of Amazon. com Amazon. com has continued to grow since it was formed in the mid-90s. They the largest competitor of eBay and may have the potential to take over the largest market share in the online auction industry. Increasing Number of Online Stores Online shopping is becoming more and more common.
Stores such as Target and JC Penny have developed sites where people can shop from the comfort of their own home. This poses a large threat to eBay. They are now not only competing with other online auction sites but also online retailers. eBay already allows people to purchase products on their site with a set price system. This system accounted for 28 percent of eBay’s gross merchandise sales. They must make sure that they continue to offer a fixed price program for customers who are not looking to auction products and instead only want to purchase or sell with a set price. /3 of Americans Already Registered on eBay The United States is eBay’s largest customer. This poses a threat to their continued rapid growth because they will start to run out of customers to join their site. This is why international markets are so crucial 13 * 14. Coghlan, Pauley, Scott 8/18/2010 eBay, A Company Analysis Appendix D: Weighted Competitive Strength Assessment Key Success Importance eBay Amazon Yahoo Auctions uBid Factors/Company Weight Strengths BRAND NAME 0. 15 10/1. 5 8/1. 2 8/1. 2 5/. 75 QUANTITY OF BUYERS AND 0. 3 10/3 8/2. 7/2. 1 4/1. 2 SELLERS CONVENIENCE 0. 1 8/. 8 10/1 5/. 5 4/. 4 CUSTOMER SERVICE 0. 1 8/. 8 9/. 9 7/. 7 6/. 6 SPEED OF TRANSACTION 0. 05 5/. 25 10/. 5 6/. 3 8/. 4 ERROR RATE 0. 05 7/. 35 9/. 45 8/. 4 6/. 3 LOW INVENTORY/COST 0. 1 10/1 7/. 7 7/. 7 8/. 8 GLOBAL DISTRIBUTION 0. 15 10/1. 5 8/1. 2 6/. 9 1/. 15 WEIGHTED TOTAL 9. 2 8. 35 6. 8 4. 6 By using a weighed average to assess eBay’s competition, we were able to conclude that eBay ranked ahead of all the others. We ranked each category based on the information provided to us in the case study.
The scale ranged from 1-10, with 1 being the worst, 5 being average, and 10 being the best. Even though eBay was last on Speed of Transaction and second to last in error rate, it did not affect them as much due to the low weight the categories carried. However, the three categories they were on top of; Quantity of Buyers and Sellers, Brand Name, and Global Distribution, were the three most heavily weighted factors. This analysis shows that a company does not have to be better than its rivals in every category, just as long as they are ahead in the most important ones.
Cite this eBay Inc. SWOT analysis for 2013
eBay Inc. SWOT analysis for 2013. (2016, Oct 14). Retrieved from https://graduateway.com/ebay-inc-swot-analysis-for-2013/