Ebusiness development for competitive advantages: Ebay a case study

1
E-business development for competitive
advantages Ebay - a case study

• Group 7
• Michele Donovan
• Andrew Jahn
• Brad Rickert

2
E-business concepts

• Categories of e-business (Based on various types
  of trading partners, there are many categories,
  for example)
  
• Business to Business (B2B)
• Business to Consumer (B2C)
• Consumer to Business (C2B)
• Consumer to Consumer (C2C)
• People to People (P2P)
• Government to Citizen (G2C)
• Citizen to Government (C2G)
• Exchange to Exchange (E2E)
• Intra-business (Organization Unit to Organization
  Unit)

3
E-business concepts

• Principal categories of e-business applications
• Electronic markets or e-marketplaces
• Inter-organizational systems
• Customer service

4
E-business concepts

• The Value Chain Model
• The Value Chain Model highlights interdependence
  activities in businesses where competitive
  strategies can be best applied and where IS are
  most likely to have strategic impact.

5
E-business strategies

• Operational effectiveness
• ? Build upon proven principles of effective
  strategy
  
• o       Do the same as your competitors, but do
  it better
  
• o       Internet should be a compliment to
  rather than a cannibal of

6
E-business strategies

• Strategic positioning
• Key principles
• Goals that aim at long-term return on investment
• Distinctive value chains
• Trade-offs for uniqueness in the market
• Strategies that fit together
• Continuity of corporate direction

7
Ebay as an example

• Company Overview
• Founded in September 1995, eBay (Nasdaq EBAY
  http//www.ebay.com) is The World's Online
  MarketplaceTM for the sale of goods and services
  by a diverse community of individuals and
  businesses. Today, the eBay community includes
  tens of millions of registered members from
  around the world. People spend more time on eBay
  than any other online site, making it the most
  popular shopping destination on the Internet.

8
Company Overview

• Our Mission eBay's mission is to provide a
  global trading platform where practically anyone
  can trade practically anything.

9
Company Overview

• Our Marketplace On any given day, there are more
  than 12 million items listed on eBay across
  18,000 categories. In 2002, eBay members
  transacted 14.87 billion in annualized gross
  merchandise sales (GMS, the value of goods sold
  on eBay).

10
Company Overview

• People come to the eBay marketplace to buy and
  sell items across multiple categories, including
  antiques and art, books, business industrial,
  cars other vehicles, clothing accessories,
  coins, collectibles, crafts, dolls bears,
  electronics computers, home furnishings,
  jewelry watches, movies DVDs, music, musical
  instruments, pottery glass, real estate,
  sporting goods memorabilia, stamps, tickets,
  toys hobbies and travel.

11
Company Overview

• Members from all over the world buy and sell on
  eBay. Currently, eBay has local sites that serve
  Australia, Austria, Belgium, Canada, France,
  Germany, Ireland, Italy, Korea, the Netherlands,
  New Zealand, Singapore, Spain, Sweden,
  Switzerland, Taiwan and the United Kingdom. In
  addition, eBay has a presence in Latin America
  and China through its investments in
  MercadoLibre.com and EachNet, respectively.

12
Company Overview

• eBay offers a wide variety of features and
  services that enable members to buy and sell on
  the site quickly and conveniently. Buyers have
  the option to purchase items in auction-style
  format or items can be purchased at fixed price
  through a feature called Buy-It-Now. In addition,
  items at fixed price are also available Half.com,
  an eBay company.

13
Company Overview

• eBay is dedicated to its community of members,
  and has numerous services which enhance the
  trading experience. Our marketplace services
  include online payments by PayPal wide array of
  Buyer and Seller tools and Preferred Solution
  Provider programs.

14
Ebays Competitive Strategy

• Operational efficiency
• Half a dozen companys offering similar types of
  auction
  
• Ebay was only site offering auctions with
  no-inventory
  
• Customers supply the product

15
Ebays Competitive Strategy

• Strategic positioning
• Buyers
• Great product selection
• Sellers
• Cluster of Buyers
• Attract brand-disloyal buyers
• Network effect
• Support of the value chain
• Small merchants sell at a loss on Ebay to gain
  new customers
  
• Large merchants liquidate excess inventory

16
Ebays Competitive Strategy

• Virtual Space
• No inventory

17
Ebays Competitive Strategy

• Software
• Feedback system
• Once susceptible to tampering
• Self-Regulating mechanism
• Complaints light up the system
• Community with lots of communication
• Posted bulletins
• Interactive message boards
• Unusual accessibility of top level executives
• Keep site up an running
• Once crashed for 22 hours (summer 1999)
• Lost millions in transfer fees
• Lost billions as investors dumped shares
• Hired Maynard Webb as CIO from Gateway

18
Key Success Factors

• Keeping its buyer and seller happy
• A unique community atmosphere
• First on the scene with business model
• Keeping web site up
• in the right place, with the best idea, at the
  right time
  
• Network effect

19
Ebays Successes

• 15 Billion in sales in 2002 (Compared to Amazon
  4 Billion)
  
• Ebay Motors 3 Billion
• Home Electronics 2.2 Billion
• Home appliances and furniture 1.4 Billion
• Baby merchandise (50 growth over 2001)
• International business 15 of total revenue
• 2002 Net Revenue 1.21 billion (up 62 from
  2001)
  
• 61.7 million registered users (up 46 from 2001)
• 27.7 million active users (up 56 from 2001)

20
Ebays Challenges

• The company's need to manage an increasingly
  broad range of businesses
  
• To deal with the increasingly competitive
  environment for online trading, both in specific
  vertical categories and generally
  
• To manage the integration of PayPal and the
  litigation, regulatory, credit card association
  and other risks specific to PayPal
  
• To manage other regulatory, tax and litigation
  risks even as its product offerings and
  geographies expand
  
• To maintain site stability on all of its sites
  to continue to expand its model to new types of
  merchandise and sellers
  
• To continue to expand outside of the U.S.
• The timing and commercial success of new features
  and functions added to the company's sites
  
• The success of the company's commercial partners
  and commercial relationships
  
• The costs and benefits of announced and
  prospective joint ventures, acquisitions and
  other commercial transactions

21
Room for improvement

• Only operating at 3 of its capacity
• International business

22
Sources

• http//bctim.wustl.edu/articles/pdf/ACF17DD.pdf
• http//www.ecommercetimes.com/perl/story/20900.htm
  l
  
• http//pages.ebay.com/community/aboutebay/index.ht
  ml

23
Questions??????