Ebay

Why has Ebay succeeded as an online auction marketplace while so many others have failed?

eBay was one of the first online marketplaces on the world-wide web. It was created as an online auction website, but it has now became the largest online marketplace that exists. eBay’s success truly created a pricing revolution by allowing buyers to determine what they would pay for an item; the result pleases both sides because customers gain control and receive the best possible price while sellers make good margins due to the site’s efficiency and wide reach. This is what we know as perceived value pricing: The customers value perception is estimated on the image of the product etc., then the price is determined, and later this will be observed. Nowadays even companies first check items on eBay before they estimate the price they will charge for their products.

Evaluate Ebay’s fee structure. Is it optimal or could it be improved? Why? How?

eBay doesn’t sell or buy anything itself. It earns its money by collecting fees: an insertion fee for each listing plus a final value fee based on the auction or fixed price. This pricing structure was developed to attract high-volume sellers and deter those who list only a few low-priced items. This price setting is also known as second degree price discrimination: eBay charges less to buyers who buy in a larger volume. This pricing strategy is a good way to attract larger volume buyers, but I think that eBay should not forget the small consumer who will also buy more and more online. It is not a good idea to charge the small consumers with high fee’s because this can scare them off to other online marketplaces.

What’s next for Ebay? How does it continue to grow when it needs both buyers and sellers? Where will this grow come from?

When a company needs more buyers and sellers it will need to expand. eBay should invest more in mobile applications. They must develop a mobile application that tells you where you can buy it,...