Ebay has revolutionized shopping online as we know it. An analysis of its impact on our society reveals its advantages and disadvantages. The large numbers of its competitors, which have sprung up over the years, have necessitated the use of newer technologies and business strategies in the future.
EBay inc. is one of the leaders in the online shopping arena which provides users with an easy to use marketplace, equipped with an international community and secure payment interface. The EBay marketplace is its main branch organized as a platform featuring the widely used auctioning services and traditional shopping on the web (as seen in rent.com, mobile.de and shopping.com). Amazon.com, built in fashion similar to EBay, is one of its primary competitors. The EBay trust program, a publicly viewable forum for feedbacks and the safeharbor program and tools to assist their customers are some of its services. The “My Ebay” feature allows every user to have their personal account management interface which can be used to track all the activities made in the past, currently in progress or expected in the future. An option to bookmark the favorite sellers, product categories, bids won or lost and recently received feedbacks are some additional features of My Ebay (“Brief Introduction,” 2006).
EBay has devised its payment system primarily based on Paypal, with additional options available for transferring money to sellers who may be located in different parts of the world. Paypal is accepted in a majority of countries which use EBay and eliminate financial issues. Everyone, including merchants operating on the web, small businesses and individual sellers have to go through a verification process to prevent fraud. EBay communications have incorporated the use of voice over internet protocol technologies, such as skype which allows connectivity to traditional phone lines. Product rentals and the shopping comparison feature are some other functionalities of EBay (“Brief Introduction,” 2006).
History of EBay
The origin of EBay can be traced back to September, 1995 when a 28-year-old software developer named Pierre Omidyar came up with the idea. He was pondering over the outcome of allowing a worldwide access to a marketplace, where all users could have similar options available. The EBay website was his solution which has evolved from his first sale as a broken laser printer to millions of sales in different categories in recent years. It started with the name AuctionWeb which went on to become ebay.com (which stands for Omidyar’s consulting company called Echo Bay Technology Group). The company soon became pretty big as skilled individuals like Jeffrey Skoll (an MBA from Stanford) and Meg Whitman ( a Harvard Business school graduate) got involved in 1996 and 1998 respectively. The EBay market was soon associated with companies like Disney, Sun and GM which had their sales range in millions (Valasek, n.d.).
Its potential for auctions brought in business from art galleries and individuals selling celebrity souvenirs. The fact that the EBay marketplace could be used to list anything led to several issues in the late 1990’s where people started selling things like human organs, military equipments, ivory etc., most of which are banned nowadays. EBay bought Paypal in later half of 2002 as a way of incorporating a safe online payment system in their transactions. It has evolved over the years to become the preferred method of payment in EBay and thousands of other websites as well (Valasek, n.d.).
EBay has grown on to become one of the busiest online marketplaces with daily visitors in the range of millions. It has had a lot of impact on the how our society views shopping in general. It can be considered as one of the pioneers in the online shopping arena. EBay allows an easy platform for anyone to present items for sale in front of a large audience. The advantages of Ebay promotion have augmented the yard sale culture to a new level. Items, of literally any kind (with a few exceptions) can be placed on their marketplace. One of the main advantages of EBay is the fact that it is recession-proof. The sheer reach of EBay eliminates the sellers from variations in job market or customer purchasing patterns. Setting up an EBay profile and listing out items for promotions is fairly simple to understand. It is most certainly easier than organizing a business from scratch and figuring out its promotional strategies. EBay already has the traffic one needs to start generating sales (“The powerful Advantages,” 2010).
Successful EBay campaigns have improved social connections, especially within families. It allows people to work from home, letting them be with their spouse and kids rather than having to work outside all week trying to make ends meet. Running the business from a computer allows them to familiarize their kids with their strategies so that they can take over the reins in the future. This kind of flexibility helps disabled individuals who can use a computer, to have a decent livelihood. A system displaying recent feedbacks, sellers and the EBay staff, secure account management and payment options, different auctioning options to bring in profits, easy communication between the buyers and multiple search filters to find the exact product one wants are some other advantageous features (“The powerful Advantages,” 2010).
The widespread reach of EBay brings forth several disadvantageous factors as well. The fact that anyone and everyone can use it introduces a lot of scam in its marketplace. It is fairly easy to create fraudulent seller profiles to cheat the buyers off their money. EBay does come equipped with a buyer protection system, however refunds tend to be delayed or partial. In a similar fashion, buyers can cheat sellers by demanding refunds for items they modified themselves. EBay has directed a large section of our society towards shopping online. This can be a drawback due to the fact that they can’t actually touch the product they are buying. In several cases the product description and feedback reports are not enough. The item received may not match expectations which can nullify a great bargain (EBay: The top 11, 2009)
EBay allows its sellers to have the freedom of manipulating market rates. This can be considered as a disadvantage to society as the customers are allowed access to cheap alternatives which can be harmful later. Sellers tend to modify the products and their prices to win over their competitors. Customers are lured into buying these fake substitutes due to their lower costs, which might not last long or perform well enough. This cuts down the profits of companies selling the real thing. This image of EBay as a marketplace for cheap items affects sellers who may have some quality items to sell. A significant section of the EBay using community would skip over higher priced products and consider the discounted items only. Variations in shipping rates, fees charged by EBay (listing fee, final value fee, listing visibility fee etc.) and Paypal for their transactions are some of the financial disadvantages which affect the section of the society dependent on EBay profits for their income (EBay: The top 11, 2009)
Future of EBay
The total revenue of EBay in the initial half of 2004 grossed up to a total of around $756.2 million. This has been declining in the years which followed due to a variety of reasons. The revenue accumulated in the latter half of 2008 was around $367.2 million which was almost $163.7 million lower than its previous year. These kinds of ups and downs can be attributed to the fact that sellers have found better alternatives over the years. According to its CEO, John Donahoe, the future of the EBay marketplace will see the inclusion of several new policies and will be headed by Paypal. EBay plans are jumping back and forth over establishing it as a place for new products in the lines of Amazon or developing it like an online adaptation of Biglots for secondary market merchandise. The secondary market deals with products which could not be sold due to overstocking or changing customer needs causing them to go out of fashion. According to the representatives of EBay, this is a $500 billion dollar industry with a lot of potential (Conneally, 2009).
Ironically EBay is making efforts to incorporate the business strategies of companies like Paypal and Skype in the future, rather than staying with its original approach which proved successful in the past. According to Donahoe, Paypal is the answer to future growth in this business which has the probability of reaching new heights (Segal,2009). They expect Paypal’s gross revenue to amount from the current range of around $2.4 million to over $5 million in the year 2011. Regardless of its competitors, there has always been a strong synergy between EBay and Paypal. In the words of Donahoe at an interview with CNBC, “EBay makes Paypal stronger by offering new customers, Paypal makes EBay stronger by offering a safer shopping experience.” The evolution of mobile devices has boosted the way Paypal works along with EBay. New methods like the peer-to-peer bump technology and mobile payment systems in offline stores are aimed at the future. EBay has been developing applications for popular devices like the iPad and the iPhone along with specific sections dedicated to clothing, electronics etc. which indicate a positive step towards the future (Donahoe, 2010). Since EBay has its revenues coming mostly from North America and Europe (48% and 41% share respectively), any future decisions made need to be keeping customers from these places in mind (Conneally, 2009).
The performance of EBay has seen several stages of improvement since its launch. The minor weaknesses can be overcome by formulating an approach targeted towards them. These include strengthening the methods to deal with phishing using the EBay brand name, introducing a better content filter to identify undercover illegal auctions and a fair shipping estimator to protect the customers from getting cheated. The international aspect of EBay can be concluded as being both as a good and a bad thing. While it allows users in North America to access merchandise from other parts of the world, solving an international dispute can be pretty arduous. Incorporating SWOT analysis is a reputable way of identifying the possible threats and future issues. It allows the employees to continue using the successful strategies while working on the ones which fail. EBay has done a good job in associating itself with external businesses to augment its profits. The fact that it has maintained its status among the leaders of the online shopping business, even though hundreds of other websites have come up, is worthy of praise.
(2006, 19 December).Brief Introduction of eBay, Inc. Retrieved from http://english.cri.cn/3126/2006/12/19/
Valasek, R. A Brief History of eBay. Retrieved from http://www.life123.com/technology/internet/ebay/history-of-ebay.shtml
(2010, 25 May). The Powerful Advantages of Ebay. Retrieved from “http://onlineprofitable.com/ebay/the-powerful-advantages-of-ebay
(2009, 12 March). Ebay: The Top 11 Disadvantages. Retrieved from http://blog.cashforlaptops.com/tag/ebay-disadvantages
Segal, J.(2009, 13 March). Ebay’s future lies in payments not auctions. Retrieved from http://www.telegraph.co.uk/finance/breakingviewscom/4986056/Ebays-future-lies-in-payments-not-auctions.html
Conneally, T.(2009, 12 March). A future for eBay that’s solidly on the back burner. Retrieved from http://www.betanews.com/article/A-future-for-eBay-thats-solidly-on-the-back-burner/1236883500
Donahoe, J.(2010, 6 June). John Donahoe on the future of eBay. Podcast retrieved from http://tamebay.com/2010/06/john-donahoe-on-the-future-of-ebay.html
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