E-Bay Case Analysis

MSEM EMG 216

Case Analysis – The Challenges Facing eBay in 2008: Time for a change in Strategy?

1. Overview

eBay.com was launched in 1995 to provide a venue for online sellers to auction or retail a wide variety of products ranging from computer parts, videos, books, movies, automotives and real estate to buyers from different locations.

Effectively, eBay created a meeting place or community where different sellers and buyers can meet, exchange, trade and make business transactions with each other. The said virtual community marketplace concept destroys the physical barriers of time and geography in real world marketplaces. eBay’s business model is based not only on providing the infrastructure for the said community but also maintaining the trust and safety programs that ensured the integrity of the trading community. This marketplace integrity has continually helped eBay increase its customer base and in the establishment of its brand name through its years of operation.

The eBay Business model is built around three operating segments which are:

* Marketplaces – eBay’s largest segment which is composed of several platform websites including eBay.com where sellers auction or retail different products to buyers from different locations. This segment is the main revenue generating division of the company as it accounts to almost 70% of its net revenues as of 2007.

* Payments – This segment includes Paypal and Bill Me Later. These platforms allow seamless online person to person payment through credit cards. This segment amounts to 25.11 percent of eBay’s net revenues.

* Communications – This segment is comprised of eBay’s Skype platform which it purchased in 2005. This segment allows global internet communication and was originally intended to synergize with the marketplace segment to facilitate buyer-seller communication. The said segment is accountable for 6.78 percent of eBay’s net revenues.

eBay’s Strategic Statement...