eBay Chapter 10

eBay Case Study Questions

2. eBay is currently facing a couple of problems having to do with competition, slowing growth, new acquisitions and customer satisfaction. Both Google and Yahoo have now set up shopping applications on their sites which are in direct competition with eBay. Growth is slowing for eBay in the U.S. market about 20%-30% annually. In 2005 eBay acquired two businesses; Shopping.com that cost $620 million and Skype which cost eBay a whopping $2.6 billion. eBay’s core is all about the customer and what they do to practically run eBay. They need to constantly be considered and taken care of in order for the site to continue to be as successful as it has been in the past.

3. eBay is taking steps in order to solve these problems however some of the steps I do not believe will help them in the long run. They are dealing with incoming competition from Google and Yahoo however eBay just made deals with each of the companies to let them advertise on their site. International competition is also a growing concern to which eBay is trying to tap into the markets quickly and become known before others will be recognized. By doing this hopefully they will be able to continue their growth. I believe part of the reason that eBay’s growth is slowing in the U.S. has to do with options that buyers and sellers have. I would never pay fees to post something online because I am able to buy and sell whatever I want locally for free on Craigslist. Craigslist may not have a worldwide connection available to me but I don’t need it for the items I am looking to buy or sell. I do not think that Shopping.com will help eBay too much in its endeavors in becoming or maintaining success, since people who are already buying and selling online already know how to shop for the best deals and may not need a specified site to help them. I do think that the acquisition of Skype, though pricey was a great idea since eBay is trying to move towards selling higher end items that need more buyer and seller communication. They can also use this Skype technology to possibly have live reviews for smaller items, which may improve customer’s sense of security in their purchases. I do think though, that eBay will have to set up some type of monitoring system in order to prevent transactions via Skype with buyers and sellers avoiding eBay fees. Since customer service and satisfaction are such a large part of eBay functioning I think they need to cut back on the buying and selling fees. If they charge less in fees it is possible that more people may start to use the service. They also need to take more responsibility for fraud that is being committed on the site and set up a company guarantee that ensures you will be getting what you paid for. This means that they may have to hire employees that strictly watch for fraud and investigate but it will be worth it to gain full customer trust.

5. I believe that eBay will be successful in the long run but may not see the type of success it had when it first started. There is a lot more competition out there and people have access to do things on their own now for cheap. I think eBay may want to eventually scale down and possibly concentrate on the collectables aspect of their business. There is a large niche of people who are passionate about their collections. The fact that eBay is worldwide helps people find the rare items they are looking for. This may be the best way for eBay to move in the next maybe 10-20 years. It will be much smaller scale but I believe they can still be a successful business with this model in place.