eBay

eBay Analysis- Lam Le, Hyunah, Sally, Daniel

1. Introduction2. Business Model3. Value chain4. Competitive forces5. Financial Situation6. Challenges7. Long-term Growth8. Recommendations

Table of Contents

Founded in 1995 by Pierre Omidyar

#1 in e-commerce, online payment and

voice over Internet

Store no inventory & Produce no products

16,200 people (including temporary employees)

eBay Overview

81,000,000 average monthly visitors

133,096,249 concurrent listings

$60,146,000,000 PayPal transactions

eBay Overview

eBay: “ technology has always been a

key enabler of our growth and a tool to connect and

empower millions of people globally”

MarketplacesProvide platforms for online commerce

PaymentsProvide online payment solutions

CommunicationsProvide low-cost connectivity

eBay Businesses

Seller Buyer

Product categorie

s

Communication

Sells

Pays

Feedback

Fees

Acquisition & Partnerships

Network

eBay Business Model

Strategic Alliance and Acquisition

LegalHuman ResourceTechnology

Marketing• Word of mouth•Partnerships • Classifieds websites

Product Categories• Old and new • Variable

Purchasing process• Traditional auction• Buy it now• Fixed price

Communication• Ask a question• Skype• Click to call

Payment• Variable• Reliable

Peer review

Customer services• A Rules, Trust and Safety committee• Voices• Community Wiki• My Collectible

Value Added

eBay Value chain

New Market Entrants- Froogle

- The industry is very attractive with no

significant barriers to enter

Substitutions

- Traditional retail

- Switching cost from

online auction to traditional retail is high

Buyers- Strong buyer

bargaining power with

many options in the

industry

Suppliers- Strong bargaining power

for software suppliers - Weak bargaining power

for product suppliers

Rivalries - Strong competitors

(Amazon, Yahoo, MSN, FNAC)- Others (ubid.com,

overstock.com, CQout.com, bidville.com)

eBay Competitive Forces

Net Income

08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q30

100

200

300

400

500

600

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

Net incomeLink relativeYear to year

$ Millions

MARKETPLACES

08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q30

200

400

600

800

1000

1200

1400

1600

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Internet Auc-tion

Link relative

Year to year

$ Millions

PAYMENTS

08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3520

540

560

580

600

620

640

660

680

700

-5%

0%

5%

10%

15%

20%

25%

30%

35%

Paypal

Link relative

Year to Year

$ Millions

INCOME FROM OPERATION

07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q31700

1800

1900

2000

2100

2200

2300

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Total operation income

Link Relative

Year to Year

$ Millions

STOCK PRICE IN 10 YEARS

STOCK PRICE IN 5 YEARS

STOCK PRICE IN 1 YEAR

• Exposure to large contingent liabilities due to litigations

• Insufficient screening process to control counterfeit products

Weaknesses

• Exposure to internet fraud and security concerns.

• Increased business risks because of technological obsolesces and reliance on third parties for licenses

• Unavailability of services leads to loss of income

• Increasing competition

Threats

Challenges

Valuable Assets- Strong market position- Effective Integration of

segments- Efficient business model- Rapid growth of internet display and classifieds ads- Increasing popularity of

used goods- Increasing reliance on

alternative payment systems due to safety

issues - Rapid international

expansion

Rareness- Strong market

position- Efficient

business model

Imitability- Efficient

business modelOrganization

Support

Can eBay still Grow?

• Make eBay interface easier to use

• Improve value and selection by

combining fixed price with auction-style listing

• Expand Payment segment, i.e. Paypal

Recommendations

• Expand product and service base

• Acquisition or mergers must fit strategic business of the company.

• Diversify, but unprofitable/unfit businesses should be closed

Recommendations