SWOT Analysis of eBay
|Founded||September 3, 1995|
|Industries served||Internet, Online retailing|
|Geographic areas served||Worldwide|
|Current CEO||John Donahoe|
|Revenue||$ 14.07 billion (2012)|
|Profit||$ 2.60 billion (2012)|
|Main Competitors||Amazon.com, Craigslist, Ubid, eBid Auctions, Google, Overstock.com and many others.|
eBay is an international online marketplace with a global customer base of 233 million. It is a multi-billion business operating in 37 countries. There are millions of items listed on eBay across thousands of categories, including antiques, toys, books, computers, sports and electronics, amongst many others.
You can find more information about the business in its official website or Wikipedia’s article.
- World’s largest internet marketplace. eBay has more than 150 million live listings and more than 105 million active users globally in 37 countries. That makes eBay the largest marketplace online, having a great power over other online retailers.
- Business model. eBay only acts as a middleman between sellers and buyers, who bid and sell items in eBay’s marketplace. Being a pioneer in online auctions, eBay had no competition and currently has only few strong direct competitors. Thus, company’s business model is a competitive advantage over such giant retailers as Amazon.
- Economies of scale. In the beginning, eBay had to invest heavily to gain IT and customer relationship management (CRM) knowledge and skills, but since then, used its skills to serve over 100 million users and to create the largest online marketplace with little additional costs.
- Localization. The business operates in 37 countries. Each marketplace is using local language and is adapted to local product offerings. No other global online marketplace is localized to such degree.
- Payment system. eBay uses PayPal, its own payment system, to proceed nearly all of the payments going from eBay’s marketplace. From eBay’s perspective, such tight integration has the benefits of more fees collected (PayPal takes transaction fees from the businesses) and tighter control over buyer’s shopping experience. From buyer’s perspective, PayPal provides easy to use online payment method.
- Brand reputation. eBay is a trustworthy brand, known all over the world and is valued at $11 billion.
- High fees. eBay’s fees for the sellers has risen significantly over the years. The firm receives fees on listed goods, sold goods, some adornment fees and PayPal transaction fees. The sellers often make zero profit on their low price products sold on eBay due to its high fees.
- No further growth strategy. eBay hasn’t unveiled any plans on how the business is going to sustain its growth. Firm’s top management team is unsure whether eBay should become a retailer or to introduce new products and services and how to do that: developing its own products or acquiring new business. As a result, there is high uncertainty over eBay’s future and business direction.
- Growing number of mobile shoppers. eBay has a strong payments system PayPal that is widely accepted and used by many online retailers and online shoppers as it is convenient and easy to use. The growing number of mobile shoppers represents a huge growth opportunity for PayPal as its one of the few payment systems that meets the requirements for convenient shopping and payment processing on the go.
- Become a retailer. eBay has an access to hugest online marketplace in the world and is well placed to take an advantage of that by becoming a retailer. The company has its IT and CRM systems in place already and could easily stake out a market share from Amazon and other online retailers.
- Increase services portfolio through acquisition. The company has successfully acquired many companies to extend its services offering and should continue adding new services through mergers and acquisitions.
- Open more online stores in other countries. To sustain current growth levels, eBay could open its online marketplaces in other large and growing economies in Asia and Europe.
- Online security. PayPal stores online shoppers’ personal information, such as bank account details, which is a target for online thefts. The more online customers PayPal has, the more attractive as a target for identity thefts it becomes.
- Regional low cost online retailers. Regional low cost online retailers could outrival eBay on faster and cheaper shipping, more localized product offering and better knowledge about home market.
- Increasing competition from Amazon. Amazon’s online presence has significantly increased and now Amazon’s marketplace is just behind eBay’s.
- Exchange rates. eBay receives a part of its income from foreign operations. The profits that are sent back to US have to be converted into dollars and may be affected by the exchange rates, especially when the dollar is appreciating against other currencies.