As the pioneer of e-commerce, eBay is “sustained by trust, and inspired by opportunity. ” In this case study, I am trying to figure out that how the characteristics of the digital media with strategic decisions taken by its management team have supported eBay, the world’s largest e-business, growth. Analyzing the growth of eBay can definitely help me impress the acknowledge of e-Commerce. Case Study Facts Bay is an online auction and shopping website where people and businesses buy and sell goods and services world wide.
eBay’s mission statement is, “pioneer new communities around the world built on commerce, sustained by trust, and inspired by opportunity (Chaffey, Dave). ” As the world’s largest e-business, eBay has various to avoid the risk of fraud, such as PayPal and “Trust and Safety Programs”.
The cost of access the largest online marketplace in the world is extremely low. “The vast majority of eBay’s revenue is for the listing and commission on completed sales.
For PayPal purchases an additional commission fee is charged. ” eBay thinks highly of the interaction between buyers and sellers. eBay released a social media called Neighborhoods in which buyers and sellers can discuss brands and products they have a high involvement with. eBay announced the Detailed Seller Ratings (DSRs) in 2008. It significantly increases the conversion rate by increasing positive shopping experiences. Generally, eBay’s objectives are to increase the registered users; increase the active users who are the sellers, bidders, and buyers on the eBay marketplace; increase the volume and value of each transaction.
At the same time, three defining approaches increase the growth of eBay marketplace. First, increase the number and size of categories within the marketplace. Second, formats for interaction. Third, “delivery specific sites localized for different for different geographies. ” Analysis Digital media particularly the internet is the key to success of online auction sites. eBay introduced several crucial innovations functions for the internet. One was the model of online auctions bringing together buyers and sellers to establish prices for goods and services before 2002.
The online auction model marks an important extension of e-commerce, offering millions of individuals a low-cost opportunity to engage in a new type of economic activity. “eBay built an online person-to-person trading community in the internet. ” Computing power is what makes an internet auction effective. The combination of the digital media and eBay’s strategic business concept makes it possible for a few hundred people to handle transactions worth over 7 million dollars every day of the year. The eBay system can handle all aspects of the auction process. It sends emails when users register for the service, when they place a successful bid, and when they are out bided, and it communicates the outcome of auctions in which they participate.
When an auction successfully closes, the system automatically calculates the fee, bills the seller’s billing account, and sends a monthly invoice via email. Other parts of the eBay information infrastructure support eBay customer service and the various community bulletin boards and chat rooms that undergird the online user community. The internet is the key element on eBay’s success. Over the internet, participate wherever they are as long as they have an internet connection. The internet makes eBay more accessible to the bidders and sellers. The large number of bidders and sellers makes the system bigger and the auction site successful. eBay built a free market. As a facilitator, users are allowed to decide what they want to sell, encouraging continuous growth. The users are the ones who control the direction of the site. eBay created a legal system that promotes self-governance.
The auction site devised a feedback forum to let users rate one another to discourage fraud. The users are constantly educated; eBay teaches people how to use the site. eBay also has its own banking system, PayPal. Building brand recognition is another key element they focused. It was broken into two parts. eBay is a personal trading community where users could buy and sell almost anything. This definition set it apart from most existing auction competitors and the several that eventually followed. Part 2 is the market segmentation.
Serious collectors and small dealers were identified as the heaviest site users. These individuals and the people who sold to them accounted for 80% of total eBay revenues even though they represented only 20% of registered users. eBay’s success based on those elements. Control the lion’s share of transactions. Buyers and sellers gravitate to the site with the greatest volume of participants – the network effect. Provide a large and interesting selection of goods. Product depth and variety attract buyers, which in turn will attract more sellers.
Achieve system reliability. Outages are costly and undermine user loyalty. Provide high-quality customer service. Users need to have their questions answered and their problems resolved; otherwise, they will stop trading or go elsewhere. Assure the reliability of user deliveries and payments. Increase website convenience an accessibility. If a site is easy to access and navigate, more people will log on, stay loner, and make more transactions. Develop high-quality search tools. People will not buy what they cannot locate quickly on the site.