EBay and Amazon case
Meanwhile, eBay aims to offer online arketplaces for the sale of goods and services, supplemented by other e-commerce platforms and online payment solutions. This case briefly explores the situation faced by both Amazon and eBay as they compete with each other for sales revenue. In addition, this case also explores the business model as well as the different types of strategies in which both companies utilize since the day their company was founded. Lastly, this case also provides two businesses strategy in which eBay should improvise on in order to better compete with Amazon.
What industry is the company in? eBay offered a marketplace that connects buyers nd sellers. It started out as an online auction and shopping website mainly targeting people and businesses, allowing them to buy and sell a broad variety of goods and services worldwide. The company generated revenue from sellers through fees for listing items and commission fees on completed transaction. Since the day it was founded, eBay had expanded to include a “Buy-lt-NoW’ feature, thereby enabling buyers to won an auction at a seller’s pre-established price.
In addition to that, it had also introduced online money transfer for example Paypal as well as a rating system, llowing buyers and sellers to rate each other and a Bill Me Later option which also allows buyers to take out a loan and pay within thirty days. As of writing this case, eBay’s market share of revenue, operating income and net income had dropped to 15%, 14% and 21% as compared to Amazon’s. Amazon is an online retail which first started out an online bookstore, but soon diverse out to selling electronic device, tools, music and toys.
It mainly targets consumers and sellers through its web service. Since the day it was founded, it had launched a program called “Prime” that llows members to free, unlimited two day shipping for an annual fee. It also launched its auction business and also an online supermall called “zShops”, allowing small and medium sized merchants to operate within Amazon’s site for a monthly fee. Lastly, Amazon also launched “Fulfillment by Amazon” that allowed third party seller to build and operate business across multiple channels.
As of writing this case, Amazon had been very successful with its online business. Its market share increase and overtook its main competitor eBay, making it the market leader since 2010. Main competitor: eBay’s main competitor is Amazon. Below are some of the features which botn company launched in order to compete witn each other. eBay : Introduced fixed-pricing trading called Buy-lt-Now feature, allowing buyers to acquire the product directly at seller’s pre-established price Launched eBay stores, allowing large retail sellers like The Home Deport to offer goods through fixed price store fronts.
Launched a Feedback Forum, a rating system that allowed buyers and sellers to grade each other based on their transaction Acquired Paypal to handle almost all electronic transaction payments exchange between eBay users. Had a Bill Me Later ption that allowed buyers to pay within 30 days, at which point they could either pay the bill outright or take out a loan. Amazon: Launched a review system that allows buyers to see those helpful reviews before purchasing an item. Introduced a free shipping policy on orders of $99 or more Launched a program called “Prime” that gave members free and unlimited two days shipping for an annual fee.
Launched its auction business and at the same time also guaranteed purchases up to $250 in case of fraud. Launched zShops, an online supermall that offered small and medium sized merchants the ability to operate torefront within Amazon’s site for a monthly fee and per sale commission. Adopt a “single store” strategy that allows third party merchants to sell their products alongside with Amazon’s own goods. Launched a service called “Fulfillment by Amazon”, also allowing third party sellers to use Amazon’s distribution and warehousing network to ship and store products.
Primary and secondary target markets: eBay and Amazon’s primary target market are buyers looking to buy products online. This is because with more customers visiting their website, they can generate more sales and earn more. Meanwhile, their econdary target markets are third party sellers who wish to sell products through their website. They help to connects buyers and sellers, in the process generating revenue from sellers through a fee for listing items and commission fees payable on completed transaction.
What are the main problems in the case? The main problems are: In 1999, Amazon launched its auction business as well as zShops, an online supermall that offered small-and-medium sized merchants the ability to operate storefronts within Amazon’s site for a monthly fee. However, Amazon’s revenue from its auction site, Shops and other services-related offering totaled only $13 million, or less than 1% revenue. EBay bought the company Billpoint, which allowed person-to-person credit card payments over the internet.
However, EBay was slow to integrate the service and did not fully launch it until a year later. Billpoint’s rival company, PayPal was quick in integrating the service and account for 40% of all transaction, compared to less than 30%for Billpoint. What are the main solutions in the case? The main solutions are: In 2000, Bezos and other senior managers decided to adopt a “single store” strategy in which third party erchants would be allowed to sell their products alongside Amazon’s own goods in the primary “product-detail” pages.
In July 2002, the community of EBay voted for PayPal when it comes to handling electronic payments exchange between eBay users, thus eBay acquired PayPal tor nearly $1. 5 billion in stock. What is the company’s main strategy? Since the company’s launch, Amazon offered a full suite services to attract merchants to its platform: its WebStore service helped merchants build and operate a direct to customer business across multiple channels, its Checkout service offered merchants complete payment solution and companies could advertise on Amazon product pages. Bay, on the other hand grew beyond its core auctions business and introduced fixed priced trading with the acquisition of retail site Half. com and the addition of “Buy-lt-NoW’ feature in its traditional business. This allows buyers to instantly win an auction at a seller’s pre-established price. In addition, it also launched eBay stores which allow sellers including large retailers like The Home Deport to offer goods through fixed pric