First of all, eBay has to deal with more and more competitors in the e-commerce market. For instance, both Alibaba and Walmart said in 2009 that they were launching competitors in the US to services like eBay and Amazon. The problem is that small share gains over time (for new entrants) could potentially pinch margins at both Amazon and eBay. That is why eBay has to improve its competitive strategy. What I recommend to the company is to think about strategic collaboration with global social networks such as Facebook and Twitter in order to create more efficient and effective communication -and thus improve its brand image.
The company may develop a discussion forum where customers can communicate the different products they would like to buy : other users can add comments and suggest companies and products options for that product. eBay could also suggest other current items that the customer may buy in that category (Amazon uses this system : you can see what customers bought in addition to the first item). This recommendation is the most crucial one since it will give them a direct advantage over competitors which have not thought about it yet.
The second strategic issue eBay has to deal with is the increasing dissatisfaction from its customers. According to the 2012 ACIS (American Customer Satisfaction Index), even though the eBay score is 81, eBay is the only e-retail company measured by the ACSI to have lower satisfaction now than it did when it was measured twelve years ago. Moreover, there have been more and more complaints from eBay customers concerning frauds, non-respected time deliveries or even problems within the eBay community (no trust between the buyer and the vendor).
Consequently, not only consumers are taking their business elsewhere, but so are retailers. In this context, what I recommend to eBay is to strengthen the brand image, preserve the vitality of the eBay community, but, above all, eBay must foster its community affinity and improve community trust and safety through services such as insurance and user verification. Ebay should also cooperate with shipping companies both global (such as DHL and FedEx) and local in order to make sure that time deliveries are respected, hence more trust between customers and retailers.
Thirdly, eBay has to manage better its brands, firms and subsidiaries. Let’s focus on the two most important ones : Paypal and Skype. Since the Paypal division is thriving, eBay needs to focus on the Paypal marketing strategy, especially in the growing smartphone and tablet industry, making it easier and safer for customers to make purchases online. It would contribute to solve the second strategic problem : indeed, there would be more trust between buyers and vendors.
On the other hand, Skype is facing more and more competition from Google + and its free videoconferencing calls for multiple users. eBay should take Google as an example and make its service free for its customers. Since Skype is preferred to Google + -because it provides better quality services-, Google + users will easily switch to Skype if this service is free. eBay should first improve the Skype advertisement campaign in order to satisfy existing customers and to appeal to new customers.
Last but not least, eBay has many difficulties doing business in emerging markets, especially in Asian markets. Let’s remember that by 2003, eBay’s global expansion plan had reached China through its acquisition of the country’s dominant auction player, EachNet, in July 2003 : consequently, eBay had an overwhelmingly dominant position in China, but then lost its dominance to Taobao mainly because of its bad decision to move its technology platform from China to the US.
Moreover, many eBay customers complained about difficulties buying goods in China (time deliveries and payments problems). What I recommend to eBay is simple : exiting the Chinese market (where there are stronger competitors and too many difficulties buying Chinese goods from foreign countries) and focusing on strong relationships built with successful local companies in Hong Kong, South Korea, Singapore, Thailand or even Vietnam.