eBay: The Establishment of Strong, Revolutionary E-Business

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This case outlines a business where it became greatly successful due to early e-business strategies but is a warning as to how volatile online presence really is and how it greatly requires consistent and aggressive changes to remain relevant. Born on September, 1995 under an original title of Auction Web, this company born over a long holiday of coding by a 28 year old coder named Pierre Omidyar. He viewed an opportunity to balance internet commerce through allowing sellers to set minimum prices while at the same time allowing buyers to continue to set market value on the commodities through a bidding process. He also tried to set safeguards in place by including a way to rate buyers and sellers which works to minimize fraud and unjust practices. Omidyar went as far as saying that this rating system allowed the opportunity to “give the individual the power to be a producer as well. It was letting the users take responsibility for building the community” (PBS.org, n.d.). Shortly after, this emerging site became renamed to eBay, which stands for Echo Bay, Omidyar’s consulting firm. Their original model also changed through time as well, being free initially but soon began to charge fees to cover internet service provider costs.

A Strong E-Business Model

eBay.com surged right from the start by providing new and revolutionary ways to purchase items over the internet causing people to transition from interest to craving products. The entire business built it’s strength and presence within the marketplace through fairness and trust. People now had the ability to evaluate product, choosing their specific needs due to comparing various types, functions and price. They grew to trust a very timely delivery and could reach a significantly larger audience in the process. Further, they could unearth seedy or fraudulent users and effectively ban them from the marketplace altogether.

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Further, the functionality of this online presence allowed a significant amount of new entrepreneurs ranging in experience from novice to experienced business people. To put this in perspective, a study done in 2006 found that “724,000 people make a full-time or part-time living selling on eBay. As more people turn to eBay to generate income from online sales, the number of buyers flocking to the site has also increased. (In 2006), merchandise on eBay (sold) at a rate of nearly $85,000 every minute” (Elms, 2006). In 2018, there were roughly 167 million users and around 25 million sellers (McGregor, n.d.). Financially speaking, growing to US$2 billion in the first three years, it quickly became a solid fixture due to solid economic earnings. Today’s current value is $33.78B and has become a global commerce leader upon varying online platforms (dianomi, 2019).

Remaining Relevant

In an effort to remain relevant to users, e-Bay has created or launched several ventures to enhance their branding and improve the user experience, including improvements to payment and communication structures.

Payment Venture: PayPal

Seeing the need to strengthen their payment structure, e-Bay acquired PayPal in 2002 for $1.5B. This allowed them the ability to further enhance their branding of trust and reliability by offering individuals and businesses to easily and securely send and receive payments online. This venture builds upon existing financial foundations such as bank accounts and credit cards, all the while offering state of the art fraud prevention systems, thus creating a reliable and safe global real-time payment option. Continuing to evolve, PayPal plans on expanding it’s brand by adding Bill Me Later Inc, a similar online payment option into it’s service. The theory here is that e-Bay wants to position their company as one of the only leading edge global online payment contenders. To further work towards ensuring solid usage of this service, PayPal is planning to roll out an open development platform which would allow other companies to build and integrate their platforms around PayPal. This has a two-fold opportunity. First, it will strengthen the brand naturally through the use of the product and second, it will work to decrease development costs as developers around the world will essentially do it for them to profit from and sustain their own business (PYMNTS, 2016).

Payment Venture: Skype

Skype was originally developed in 2003 for the ability to allow people to make free, unlimited voice and video calls through the use of microphone, webcam and instant messaging (Wiki, 2019). In 2005, eBay bought it for $2.6B to help improve their communications between sellers and buyers. The goal was to help strengthen their global brand, while at the same time opening up differing avenues of business opportunities (Wiki, 2019). However, sensing their mistake at integrating these two businesses and enduring much criticism for their efforts, they eventually sold all of their share of Skype for more than $4B to focus solely on their e-commerce operation (Kopytoff, 2011).

Remaining Relevant?

E-Bay has evolved through the ages from early stages of building sophisticated infrastructure and auction abilities that allowed large amounts of user traffic and transactions. From there, it began to focus on purchases and integrations of new platforms to expand operations through companies such as PayPal and Skype. However, they soon discovered that new tools weakened and diluted their main focus and goal of the company and offloaded some of their brands as a result. Currently, e-Bay is focused on bringing clarity and depth to e-commerce itself by emerging in different markets around the world. Their business seems beaten down to attempt new ideas and growth opportunities. The question that comes to mind is whether e-Bay has evolved enough to remain relevant in today’s demanding online markets. For example, while e-Bay remains focused solely on their auction platforms, Amazon has shuttled past them by offering different branding opportunities such as prime tv, whole foods, news, delivery etc. Shouldn’t e-Bay be bringing new and engaging experiences to their online world that invites old users to remain and new users to come and explore?

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