EBAY CASE STUDY

EBay Case Study



EBay Case Study

Introduction

The main purpose of this paper is to make a case analysis of eBay and then to analyse that how eBay's strategic capabilities can help in providing the sustainable competitive advantages.

eBay, which was launched in the mid-1990's and turned into a public limited company in 1998 is the pioneer of such type of business. EBay created the trading platform in the market and acted as an intermediary providing the pre-and post-value-added services on the three main categories of online auctions.

EBay has achieved remarkebale growth since 1995 and got the exceptional fame and became the largest online auction platform in the new millenium. This platform then in 2001 facilitated almost 42.4 million registered users and 423 millions have been served by these auctions worldwide(Reno 2000 102).

Discussion

The main strategy of eBay is to build a leading position in the online face-to-person trading. For this purpose it is continuously increasing its brands and introducing new product categories and geography in order to eoncourage the customers. The company is also introducing the new features in its existing products. During a recent conference, E-Bay management said that plans to expand its user base to 37.6 million (Q3 2001) to 150 million users in 2005. International earnings will be 33% of its revenues in 2005 compared to 16% today. Internet is still in its infancy, and hundreds of millions of users who will be coming online within the next 5 years, all of whom are potential users of E-Bay. But the arrival of Meg Whitman in 1998 as CEO resulted in an effort to build a brand in the E-Bay(Hein 2007 12). Whitman made the branding of one of his first initiatives. It is determined by E-Bay as a personal trading community, where users can buy and sell almost anything. This set the company apart from his competitors. With the help of marketing research, she discovered that the collectors and small dealers were the worst of the users (20% of users create 80% of income). Based on this information, the company decided to focus its marketing and brand-based clients, which helped to E-Bay success.

How eBay's strategic capabilities might provide sustainable competitive advantage?

In order to gain the sustainable competitive advantage, eBay follows different strategies. These strategies are as followed:

Ebay has based its strategy on a simple basis: Buy and Sell. Its search speed attracted the audience. The company was the creator of the cyber-net material fluctuation.

Ebay offers Internet users a free registration to sell items(Pavlou 2002 243). The individual must confirm a PIN number received via e-mail provided to enter their credit card number. After getting the code, this new user may publish an advertisement or to sell an object by defining a starting price (Bid) or a fixed price (Buy Now). In the case of an auction, eBay requires a "reserve price" according to the object. If this price is not met, the sale does not occur, and the object is removed from the ...