University of Northampton BUS3005: eBay Evaluation and Strategy

This report provides a comprehensive evaluation of eBay, examining its internal and external environments. It begins with an introduction to eBay, followed by an internal analysis using the TWOs matrix to identify strengths, weaknesses, opportunities, and threats. The report delves into specific areas such as high fees, growth strategies, and the company's strong business model, cash flow, and market position. The analysis then transitions to future strategies using the Ansoff Matrix, exploring market development, market penetration, diversification, and product development. A resource-based view strategy is also applied, utilizing VRIO analysis to assess eBay's resources. The report concludes with a reflection on the Strategy Process Model, highlighting key learnings from online activities and workshops, and how the student's understanding of strategic thinking has evolved.

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Evaluation of eBay
Author’s Name
Institutional Affiliation
Date

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Evaluation of eBay
Introduction
eBay is a successful e-commerce company headquartered San Jose, California US. The
company was founded in 1995 by Pierre Omidyar and operates on platforms such as
Marketplace, Classifieds, Stubhub and Corporate (Johns, 2017, p.2). The company is a multi-
dollar business with presence over thirty countries. eBay provides consumer-consumer sales via
its platform. Also, this American MNC facilitates B2C (business-to-consumer) sales via its
online platforms. Furthermore the company manages the eBay website where customers visit in
order to make purchases (Johns, 2017, p.2). eBay gets revenue mainly from the final value of
products sold by sellers and the revenue collected. The company has been able to register
growing profit since its launch. In addition eBay Company runs an affiliate program known as
eBay partner network.
Internal analysis of eBay
TWOs Matrix
Threats
Increase in competition from other online stores.
Since the industry is growing drastically and many companies coming up each time
offering customers exclusive products, eBay should come up with new strategies to remain
competitive in the business. On the other hand eBay excels over Amazon because products
which are not found in these websites can be found in eBay.
Online security

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Notably, customer’s physical address, phone numbers, details of the bank are saved
online by the company. According to Ghafir, Saleem, Hammoudeh, Faour, Prenosil, Jaf, Jabbar,
and Baker (2018, p.2) organizations with online operations are facing cybersecurity challenges
arising from hacking ,malware and other viruses. Hence, the vast information the company is
storing is vulnerable online theft.
Exchange rates
eBay operates in various countries and the exchange has a huge impacts on its profits.
The varying exchange rate is likely to affect the company and this should be treated as threat to
its operations.
Opportunities
However, despite the company having some facing threats it still has opportunities to
explore. These opportunities can help the company become the best retailer. The e-commerce
corporation has the capability and advantage of becoming the leading retailer in a few years.
Tontini (2016, p. 228) noted that e-commerce offers essential opportunities that can allow the
business to maximize profits. As stated in the introduction, eBay offers consumer-to-consumer
sales, which the company can explore to make more profits. The corporation has strong CRM
and IT systems in place to get the top position regarding sales made.
Weaknesses
High fees
The structure of fees has risen drastically over the last few years. eBay receives money on
goods , some adornment fees, listed goods and also PayPal transaction fees. Therefore, due to

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this reason sellers do not make huge profits. This is likely to affect consumers as well because
the retailers are likely to transfer the costs they incur on customers.
Growth strategies
The growth strategies of eBay are surrounded by uncertainty. It is the only online e-
commerce company which does not tell about the growth of the company. Amazingly, the
company senior manager is not sure if eBay will become a retailer in the next years or whether
they will introduce new products (Silva, Moro, Rita, and Cortez, 2018, p.312). Therefore there is
a high degree of uncertainty in the company and direction in which the company is moving to.
Strengths
The business model
eBay is the only company which acts as the link between middleman, the seller and the
buyer. According to Hui, Saeedi, Shen, and Sundaresan (2016, p.3604) the company has been
able to succeed in acting as a link with other stakeholders in the supply chain to generate
significant revenues. The authors add that automation of activities have earned the company a
good reputation that is good for business. The company has also been able to support consistency
of quality and that is why customers have confidence in the company. The sellers bid their items
in the website owned by the company where customers can access them and purchase. eBay are
pioneers in online auctioning and this has served as a strength of the company and helped the
company gain a competitive advantage over their competitors like Amazon and Flipkart.
Cash flow

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eBay has been able to maintain a stable cash flow. When a company has a strong flow of
cash it can support its activities and develop new projects. According to Lendle, Olarreaga,
Schropp, and Vézina (2016, p. 406) ebay has been able to hasten trade flows especially in the
countries it operates. To add, the authors believe that the company reduces distance due to its
seller-rating technology. The company also supports its innovations and product differentiation
because of its strong cash flow. A company such as eBay stands to gain a competitive advantage
on account of its free cash flow.
Strong foundation and focus on skill development
Right from the outset eBay was built on a strong foundation. A large amount of money
was invested in the company objectively to better customer relationship management and IT
skills. Today, the corporation has skilled personnel that have been exposed to learning new
programs objectively to improve skill base. The knowledge gained has helped eBay to become
the largest online marketplace with less additional costs. Today, eBay is a reputable organization
with skilled and motivated workforce that is committed to improving customer service as well as
supporting development of new innovations to transform the company.
Strong market position and brand value
The company has enjoyed massive recognition all over US and the countries in which
they operate. It was mainly during the initial days of foundation of the company. Therefore this
illustrates to us that eBay has a huge market share and lots of active members hence acquiring a
competitive advantage.
Future strategies of eBay

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Ansoff Matrix
Retrieved from: https://www.mindtools.com/pages/article/newTMC_90.htm
(Mindtools)
Market development and market penetration- eBay has several opportunities to grow its
brand. The emerging economies in Asia and Africa should be target markets for eBay (De, and
Eeckhout, 2018, p.3). In this case, the company needs to focus on geographic. According to eBay
developing countries are its the targets. In the current world eBay has expanded to the growing
markets in Asia and Middle East. Expanding geographically is essential for the company in order
to increase the profit margins and acquire new customers.
Diversification- Some customers prefer to get the one of its kind experiences. It is
therefore necessary for eBay company to cater for the customer needs, demands and expectation

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by diversifying its product portfolio. For instance, going forward eBay aims to come up with a
technology that helps customers design their own products in the way they like them to look like.
By implementing the strategy customers will be more attracted to the company and connections
to the company strengthen.
Product development- Product development at eBay will depend on how it manages its
supply chain logistics. eBay is mounting pressure to the supply management department to
deliver goods to their customers in a short period of time. Delivering goods to customers in very
little time will help the company stay ahead from rival companies. According to authors Wang,
Wang, and Liu (2016, p.625) all e-commerce service provider are building networks to satisfy
the customers by delivering goods as quickly as possible.
In its efforts to develop new products, eBay has launched its smartphone application. The
mobile application has helped customers purchase products anytime they want to and do not
have any kind of problems in making purchases (Silva, Moro, Rita, and Cortez, 2018, p.311).
Previously eBay customers would use tablets and laptops in purchasing by using the website but
now customers prefer to shop from their phones and in their comfort. The introduction of the
application has led to increased number of purchases and therefore growth in profits.
Resource-based view strategy
This model looks into resources of eBay that determine its failure or success in e-
commerce. eBay’s resources are valuable, rare, imitable and substitutable. This is likely to affect
its competitive advantage, but if it utilizes its human resource and physical resources it stands a
change to remain competitive. Unfortunately, the VRIO analysis show below depicts the eBay’s

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resources to be imitable and easily substitutable, and this shows that the company is not able to
sustain its competitive advantage in the event; it lags behind in service delivery.
VRIO analysis
Resources or
capabilities
Valuable Rare Imitable Organization implication
Brand image
or equity
Yes Yes Yes Yes Competitive
advantage
Number of
customers
Yes No No Yes Temporary
Advantage
Technological
innovation
Yes No Yes Yes Competitive
advantage
Product range Yes Yes Yes Yes Competitive
advantage
Vargas-Hernández, and Garcia (2019, p.19) describes VRIO analysis is a tool that examines a
company internal sources and the capabilities to come out with the company’s source of
competitive advantage.
Value
This is the first part of VRIO analysis. It is used to determine if a resource is adding value
to the organization. If the resource adds value to the company it is considered as precious.

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Brand image
The brand is the main source of competitive advantage of eBay Company and that is
portrayed by the company’s efforts to focus on the brand image it portrays. The brand has also
helped in gaining of trust from all levels of customers because eBay sells best quality products to
their customers.
Rarity
Products which can be sold by very few business units are referred to as rare products.
These products therefore have temporary competitive advantage to the company.
Large customer base
eBay deals in many unique products. Hence, the company has a huge customer base in
different countries hence providing a competitive advantage in the e-commerce company.
Imitation
A product is considered costly to copy if the other organization imitates, substitute or buys at a
reasonable price rate. The process of copying can occur in two ways, such as copying and
duplicating. For the e-commerce business imitating of products is very easy and can be done in a
short period of time.
Technological innovation- Advancing in technology and new innovations have helped
eBay Company to launch various products to their customers (Neto, Bloemhof, and Corbett,
2016, p.371). Looking at dresses the company provides very fashionable dresses which are liked
by their customers. Furthermore the company invests in research and development so that its

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products are different from other online retailers and makes it difficult from other companies in
copying of their style.
Organization
When a product is not organized in a certain manner it does not give a competitive
advantage to the company. A company should know how to organize the product or else the
selling rate will come down.
Product range- eBay Company has huge range of products from electronic gadgets to
home appliances. Therefore customers can purchase anything from their website. Furthermore
the prices of their products is lesser compared to other e-commerce companies. For this case the
company has managed to build a high level of trust from customers and loyalty which helps in
retaining a large number of customers (Neto et al., 2016, p.371)..
Reflection
This assignment has enabled me to understand Strategy Process Model. When giving an
analysis of eBay I was able to learn how organizations put efforts to develop strategies that can
make it competitive. To sustain a competitive advantage, I discovered that eBay applies this
model. Organization success only comes when right strategies are employed to steer an
organization to the right direction. eBay has been able to grow only and sustain competition from
other online giants such as Amazon and Walmart. This has left me thinking has strategy process
model, help organizations make right decisions that are needed to help the company grow.
Indeed, I am no longer in doubt that for companies to success, they have to consistently follow
the strategy process model.

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Despite e-commerce providing a platform for corporations such as eBay to make profits,
it presents numerous challenges. These challenges require that organizations conform to strategic
process model. It is only by doing so that an organization can develop a vision, identify
opportunities, develop future strategies and make strategic decisions that are essential to the
business. Thus, this module has changed my perspective. Through it, I have believed that
organizations do not just come up with strategies blindly, but evaluate every idea and see
opportunities to exploit in order to make profits.
Conclusion
In conclusion eBay Company provides various kind of products to customers. Through
their website customers gain access to a range of products provided by sellers. Some people do
not prefer online retailing and opt to go to a brick and mortar store because they need to feel the
product well and evaluate it keenly before purchasing. Besides, some people do not prefer online
retailing because they need the human interaction during purchase. eBay has various strengths
and weaknesses which have an impact to its growth.

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References
De Loecker, J. and Eeckhout, J., 2018. Global market power(No. w24768). National Bureau of
Economic Research. pp. 1-15. https://www.nber.org/papers/w24768.pdf [Accessed 29 May
2019].
Ghafir, I., Saleem, J., Hammoudeh, M., Faour, H., Prenosil, V., Jaf, S., Jabbar, S. and Baker, T.,
2018. Security threats to critical infrastructure: the human factor. The Journal of
Supercomputing, pp.1-17.
Hui, X., Saeedi, M., Shen, Z. and Sundaresan, N., 2016. Reputation and regulations: evidence
from ebay. Management Science, 62(12), pp.3604-3616.
Johns, J., 2017. Becoming an eBay Power Seller: Tips and Tricks to Increase Your eBay Sales
and Make More Money. CreateSpace Independent Publishing Platform.
Lendle, A., Olarreaga, M., Schropp, S. and Vézina, P.L., 2016. There goes gravity: eBay and the
death of distance. The Economic Journal, 126(591), pp.406-441.
MindTools. The Ansoff Matrix.Understanding the Risks of Different Options.
https://www.mindtools.com/pages/article/newTMC_90.htm [Accessed 29 May 2019]
Neto, J.Q.F., Bloemhof, J. and Corbett, C., 2016. Market prices of remanufactured, used and new
items: Evidence from eBay. International Journal of Production Economics, 171, pp.371-380.
Silva, A.T., Moro, S., Rita, P. and Cortez, P., 2018. Unveiling the features of successful eBay
smartphone sellers. Journal of Retailing and Consumer Services, 43, pp.311-324.