EBay and Amazon

This report analyzes EBay and Amazon through strategic analysis frameworks such as SWOT analysis, Porter’s Five Forces, and PESTEL analysis. It compares EBay and Amazon, and provides solutions for EBay to manage its weaknesses and threats in the current market.

Running head: EBAY AND AMAZON
EBay and Amazon
Name of the Student
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Executive Summary
The purpose of this report is to analyses EBay through strategic analysis framework which
includes SWOT analysis, Porter’s Five Forces and PESTEL analysis. The report is presented
where EBay is incumbent and Amazon is challenger. The report shows the comparison of EBay
and Amazon in the current scenario and analyzes EBay, the incumbent through different
frameworks. The EBay is analyzed to understand its strengths and the weak areas where it needs
improvement and how it stands in the current market. Finally, the report concludes that EBay
although a major player, also has issues that needs to be solved through proper measures that are
provided in this report.

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Table of Contents
Executive Summary.........................................................................................................................1
Introduction......................................................................................................................................2
Discussion........................................................................................................................................3
Comparison of EBay and Amazon..............................................................................................3
SWOT analysis............................................................................................................................4
Porter’s Five Forces.....................................................................................................................6
PESTEL analysis.........................................................................................................................8
Summary of status of EBay.............................................................................................................9
Solution for EBay..........................................................................................................................10
References......................................................................................................................................12

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Introduction
EBay and Amazon are two online shopping sites that are growing rapidly and are widely
popular among the customers. The two sites are seen as a shopping sites however there are
differences in operations and functions of both the sites. Amazon directly provides goods from
its storage house whereas EBay provides auction house where bidding of goods are done
(Haucap & Heimeshoff, 2014). The purpose of this report is to analyze EBay and Amazon
where EBay is incumbent and Amazon is challenger, through strategic analysis frameworks.
The structure of this report is strategic analysis frameworks, SWOT analysis, PESTEL
analysis and Porter’s five force model, for incumbent EBay along with summary of status and
solutions.
Discussion
Comparison of EBay and Amazon
The comparison of EBay and Amazon are given as follows.
 Market size- EBay is completely a market place whereas Amazon has its own
products and services which it sells (Arbi, Kausar & Salim, 2017). The market
size of EBay is less than Amazon’s market size Amazon enjoys more active user-
base than EBay.
 Function- Amazon is like a regular store where it has its own inventory, stocks
and data warehousing (Kiran & Kumar, 2015). However, EBay is an auction
place which operates through third part and connects sellers and purchasers.
 Demographics- Amazon is focused majorly on younger groups than the groups
use EBay on an average. More precisely, the average users of Amazon are slightly
younger than EBay’s average users.

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 Products- EBay is considered for used products and Amazon is considered for
new products (Arbi, Kausar & Salim, 2017). Amazon uses UPC codes for sold
item where it can be complicated to use for used items.
 Operations of services- Amazon has particular price with the items and they are
very restricted towards any third party involved with Amazon (Schiborr, 2016).
However, EBay primarily operates through third party where there are risks of
scammers on EBay.
 Orientation of services- Amazon is buyer-oriented where customers are invited
to go through the site and purchase from Amazon’s inventory (Reid, 2015).
However, EBay is seller oriented where seller’s list products on EBay and buyers
are allowed to purchase products from the store or auction’s classified section.
 Pricing strategy- Amazon has operations as a retail outlet having fixed prices of
all products provided to customers (Hassan, Sistani & Raju, 2014). However,
EBay has strategy of wholesale pricing strategy that buyers bid on items that are
for sale.
 Automation- Amazon has less time consuming features for performing basic
tasks. However, EBay does not has automated feature and sellers require more
attention for using EBay.
 Payment process- The payment process related to sale in Amazon is that when
any refund or return is done then generation of cash flow takes time (Reid, 2015).
However, EBay pays directly when a sale is made and there is no waiting time for
getting cash.

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SWOT analysis
Strengths
 Biggest online auction platform- EBay is the biggest online auction platform for
sellers and buyers. There are large network of sellers and buyers on EBay where
they sell and buy products respectively (Wang, 2016). This platform has global
presence which makes it a strong player in the current market.
 Broad range of products- There are various products available on EBay that are
required from household to fashion to outdoor products.
 Brand reputation- They have brand reputation in marketplace having high market
share that helps them to stay as top player in ecommerce market (Arbi, Kausar &
Salim, 2017).
 Digital growth- EBay uses combination of various advanced technologies that
helps to deliver better services (Onur, & Velamuri, 2014). The improved
interfaces, tools and transactions for buyers and sellers in EBay helps for better
and reliable transactions.
 EBay Valet- EBay Valet has helped to make stronger value proposition of EBay.
EBay utilizes EBay Valet to improve its value proposition (Onur, & Velamuri,
2014). EBay Valet where pre-approved sellers will handle all the processes of
products selling.
Weaknesses
 Control failure over sellers- The fraud sellers are not controlled in EBay site. The
sellers can be fraud and they can run away with the money without giving product
to the customer (Hassan, Sistani & Raju, 2014).

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 Control failure over products- There is no control over EBay products that are
displayed on EBay websites for selling or auction that leads to illegal products
selling.
 Weak position against its competitors- EBay may be a major player however,
with growing services of Amazon, it has found place in the current market (Pang
et al., 2015). The technologies used by EBay are great however, it is still
struggling to become top player due to presence of Amazon.
 Internal control issue over financial reporting- The identification of material
weaknesses in internal control of EBay where the material weakness can have
negative on its business (Pang et al., 2015).
Opportunities
 Social media usage- The marketing of EBay on social media will help them to sell
their products more to maximum age group
 Acquisition leads to growth- The acquisition of other small industries will help
them to extend their business to wide area (Kiran & Kumar, 2015).
 Amazon’s prime membership- The rate of Amazon prime membership is
increased and it is too high that forced customer to move to EBay.
Threats
 Security- The model of EBay is fully based on IT and hence it is open to security
issues where it suffer from several legal issues because of hackers.
 Increased competition- The high competition from online shopping sites like
Amazon has posed threat of driving EBay from the current market (Reid, 2015).

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 High fees- There are high fees related to selling and buying where high charges
are taken from seller ad in return they do not get high profit share.
Porter’s Five Forces
Bargaining power of buyers
The bargaining power of buyers is high due to several other online shopping sites in the
current market who are catering the different kind of needs of customers (Xie & Lui, 2015).
Therefore, there are options that customers may buy from other sites if they provide better offer
and options.
Bargaining power of suppliers
The bargaining power of suppliers is low as there are various options of suppliers
supplying products on EBay that limits suppliers and keeps control on EBay. There are huge
number of sellers that are there on EBay that does not pose any challenge to EBay working
process.
Threat of substitutes
The threat of substitutes are low as EBay offers huge range of products and services. The
other brands selling similar products and EBay is continuously expanding its products and
services (Lemley, 2016). The wide variety of products in EBay shows that it has everything that
no other ecommerce can substitute.
Competitive rivalry in the industry
The competitive rivalry in the market place is medium to high as there are several online
and offline retail shop that are emerging (Lemley, 2016). The various online payments has also
influenced competition for EBay.
Threat of new entrants

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The threat of new entrants in the market place is moderate to high as there are ecommerce
sites that can improve their business with investing technologies to erect their site. The
established retail industry such as Amazon, Flipkart are major threat and new entries with
advanced technologies can also be a threat (Saihani et al., 2016).
PESTEL analysis
Political factors
The politicized issue faced by EBay is what EBay does with the information related to
transaction in the system, which is done on a daily basis. The sharing of information has policies
which shows that there are policies laid down by EBay to share only the required information to
anyone and that too with the consent of the company (Zhang & Chung, 2016). The sale of
firearms where discontinued on EBay as it posed challenge where buying of firearms cannot be
distinguished whether it is for harmful agenda or any other agenda.
Economic factors
The offerings from international, national and local sellers in EBay allows customers to
choose from wide variety of products within similar category. The cost of buying products from
EBay instead of local store saves lot of amount (Team, 2018). The single platform of EBay
provides accumulation of buyers and sellers together for interacting and making purchases. The
unemployment is the key factor where local stores will be largely affected.
Social factors
Nowadays, people are following latest trends in fashion and they want to exchanges their
previous goods with new ones. In this way, they do not have to throw their previous goods. Ebay
serves as a platform where people can sell their old items and buy new items (Elvin & Rampen,
2016). However, unfamiliarity to its features has failed its presence in some countries.

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Technological factors
The advanced technologies has driven the market of EBay and it is continuously growing
with introduction of new technologies (Saihani et al., 2016). The electronic gadgets such as
smartphones, tablets, smart watch and iPad has contributed in this growth.
Environmental factors
EBay is the first ecommerce platform that has introduced green products buying which
means products that already exist. The consumption of products leads to emission of carbon
dioxide resulting in pollution (Schiff, 2014). This shows that products are moving from one
customer to another without getting wasted and thus less spending and getting much more from a
single platform.
Legal factors
The customers could not identify between fake email ids and genuine email ids on EBay
as there are many unauthorized sellers on EBay. There are report that stolen items were sold on
EBay by the hackers and this people often take cash from buyers and fly away without giving
those products (Zhang & Chung, 2016). This leads to legal issues whether these sites should be
allowed to run in the current market place or shut down.
Summary of status of EBay
The above strategic analysis frameworks shows the current status of EBay and it shows
that there are various factors that influence its business processes. The brand recognition is high
for EBay and it cannot be faded easily due to strong presence in several countries. However,
there are competitors and new entrant’s threats that can drive away EBay. The biggest challenger
is Amazon that has open wide opportunities for customers by providing several products and
services. EBay has introduced advanced technologies and it is continuously introducing

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technologies to improve their business. EBay has high market share in the current scenario due to
various products introduced by EBay regularly. The payment process of EBay is easy to use and
faster than other ecommerce sites. However, there are challenges such as low marketing of EBay
in various parts of world due to which its presence adoption is not up to the mark. The security
issues in EBay poses problem where third parties are involved and they can be genuine or fake.
Therefore, there are issues however, there are opportunities also which can be solved
through possible strategies. EBay is the largest platform and its competition with Amazon will
not affect its brand or business processes due to factors such as payment process and single
platform for sellers and buyers. The possible solutions are given in the next section that can help
EBay to manage the issues and improve its business.
Solution for EBay
The solutions for EBay to manage weaknesses and threats in the current market are given
as follows.
 Increasing rate of innovation- EBay should increase its innovation rate to
address frequent changes in existing and new technologies and addressing the
imitation threat.
 Increasing degree of decentralization- EBay should increase its decentralization
degree for improving flexibility business for market difference of e-commerce.
 Expanding operations internationally- EBay expands its operations
internationally that builds on economies scale.
 Marketing- EBay should advertise to reach the smaller groups across the world.
The social media is the strongest platform for advertising and marketing.

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 Acquisition- EBay, as an acquisition, should identify and choose the companies
to which they can take over to create a strong presence in the current market.
 Precautions for screening- It should undertake precautions for screening of third
parties, sellers and buyers before proceeding with any business processes. This
will reduce fraud risks and eliminate any fraudsters from doing illegal businesses.


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References
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Markets through Knowledge Management. International Journal of Management
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Hassan, S. M., Sistani, A. J., & Raju, R. S. (2014). Top Online Shopping E-companies and their
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