Case Study Questions on eBay

6 June 2016

1. Contrast eBay’s original business model with its latest proposed business model. eBay’s original business model was to attract sellers to auction goods, products, and collectibles whether they’re brand new or pre owned. They relied heavily on the sellers to gain their income. Now, eBay’s business model has changed quite a bit. The majority of sellers are now big retailers selling out of season or overstocked products at a fixed price. Also, they rely heavily on paypal for revenue since you absolutely must have a paypal to purchase from eBay as all transactions go through them. A portion of the fees goes to eBay.

2. What are the problems that eBay is currently facing? How is eBay trying to solve these problems? A problem that eBay is currently facing is the continued growth of Bill Me Later (BML). It increases overall risk for the company putting downward pressure on stock price. Expanding into loans is coupled with the risk of default and regulatory issues. One of eBay’s solutions is expanding the market place and mobile app technology. They have increased the marketplace by having diverse sections such as autos, electronics, clothing, etc. Also, eBay’s mobile app has received millions of downloads along with millions of listings. The more they list and sell, the higher the revenue.

3. Are the solutions eBay is seeking to implement good solutions? Why or why not? Are there any other solutions that eBay should consider? I don’t necessary believe that their solutions are good. Technically, they’re just forgoing the risk of BML by expanding areas where they can sell. What happens when they reach the ceiling of expansion? One solution that I would suggest is to getting rid of BML. Although they account for 14% of all sales, the risk is greater than their results.

4. Who are eBay’s top three competitors online, and how will eBay’s new strategy help it compete? Will eBay be providing a differentiated service to customer? The top three competitors are Amazon, Google Search, and craigslist. Their new strategy helps broaden their reach making them customers go to store to search for anything. Mobile app is also top notch as it has different apps for different goods such as fashion app, motors app, and even RedLaser checking app. I’m assuming eBay would provide differentiated service to customer as they probably have different reps for the different departments that they have.

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