Discussion

Discuss about the Shopping E-companies & their Strength and Weakness.

EBay and Amazon are two online shopping sites that are growing rapidly and are widely popular among the customers. The two sites are seen as a shopping sites however there are differences in operations and functions of both the sites. Amazon directly provides goods from its storage house whereas EBay provides auction house where bidding of goods are done (Haucap & Heimeshoff, 2014).  The purpose of this report is to analyze EBay and Amazon where EBay is incumbent and Amazon is challenger, through strategic analysis frameworks.

The structure of this report is strategic analysis frameworks, SWOT analysis, PESTEL analysis and Porter’s five force model, for incumbent EBay along with summary of status and solutions.

The comparison of EBay and Amazon are given as follows.

• Market size- EBay is completely a market place whereas Amazon has its own products and services which it sells (Arbi, Kausar & Salim, 2017). The market size of EBay is less than Amazon’s market size Amazon enjoys more active user-base than EBay.
• Function- Amazon is like a regular store where it has its own inventory, stocks and data warehousing (Kiran & Kumar, 2015). However, EBay is an auction place which operates through third part and connects sellers and purchasers.
• Demographics- Amazon is focused majorly on younger groups than the groups use EBay on an average. More precisely, the average users of Amazon are slightly younger than EBay’s average users.
• Products- EBay is considered for used products and Amazon is considered for new products (Arbi, Kausar & Salim, 2017). Amazon uses UPC codes for sold item where it can be complicated to use for used items.
• Operations of services- Amazon has particular price with the items and they are very restricted towards any third party involved with Amazon (Schiborr, 2016). However, EBay primarily operates through third party where there are risks of scammers on EBay.
• Orientation of services- Amazon is buyer-oriented where customers are invited to go through the site and purchase from Amazon’s inventory (Reid, 2015). However, EBay is seller oriented where seller’s list products on EBay and buyers are allowed to purchase products from the store or auction’s classified section.
• Pricing strategy- Amazon has operations as a retail outlet having fixed prices of all products provided to customers (Hassan, Sistani & Raju, 2014). However, EBay has strategy of wholesale pricing strategy that buyers bid on items that are for sale.
• Automation- Amazon has less time consuming features for performing basic tasks. However, EBay does not has automated feature and sellers require more attention for using EBay.
• Payment process- The payment process related to sale in Amazon is that when any refund or return is done then generation of cash flow takes time (Reid, 2015). However, EBay pays directly when a sale is made and there is no waiting time for getting cash.

Strengths

• Biggest online auction platform- EBay is the biggest online auction platform for sellers and buyers. There are large network of sellers and buyers on EBay where they sell and buy products respectively (Wang, 2016). This platform has global presence which makes it a strong player in the current market.
• Broad range of products- There are various products available on EBay that are required from household to fashion to outdoor products.
• Brand reputation- They have brand reputation in marketplace having high market share that helps them to stay as top player in ecommerce market (Arbi, Kausar & Salim, 2017).
• Digital growth- EBay uses combination of various advanced technologies that helps to deliver better services (Onur, & Velamuri, 2014). The improved interfaces, tools and transactions for buyers and sellers in EBay helps for better and reliable transactions.
• EBay Valet- EBay Valet has helped to make stronger value proposition of EBay. EBay utilizes EBay Valet to improve its value proposition (Onur, & Velamuri, 2014). EBay Valet where pre-approved sellers will handle all the processes of products selling.

• Control failure over sellers- The fraud sellers are not controlled in EBay site. The sellers can be fraud and they can run away with the money without giving product to the customer (Hassan, Sistani & Raju, 2014).
• Control failure over products- There is no control over EBay products that are displayed on EBay websites for selling or auction that leads to illegal products selling.
• Weak position against its competitors- EBay may be a major player however, with growing services of Amazon, it has found place in the current market (Pang et al., 2015). The technologies used by EBay are great however, it is still struggling to become top player due to presence of Amazon.
• Internal control issue over financial reporting- The identification of material weaknesses in internal control of EBay where the material weakness can have negative on its business (Pang et al., 2015).

• Social media usage- The marketing of EBay on social media will help them to sell their products more to maximum age group
• Acquisition leads to growth- The acquisition of other small industries will help them to extend their business to wide area (Kiran & Kumar, 2015).
• Amazon’s prime membership- The rate of Amazon prime membership is increased and it is too high that forced customer to move to EBay.

• Security- The model of EBay is fully based on IT and hence it is open to security issues where it suffer from several legal issues because of hackers.
• Increased competition- The high competition from online shopping sites like Amazon has posed threat of driving EBay from the current market (Reid, 2015).
• High fees- There are high fees related to selling and buying where high charges are taken from seller ad in return they do not get high profit share.

The bargaining power of buyers is high due to several other online shopping sites in the current market who are catering the different kind of needs of customers (Xie & Lui, 2015). Therefore, there are options that customers may buy from other sites if they provide better offer and options.

The bargaining power of suppliers is low as there are various options of suppliers supplying products on EBay that limits suppliers and keeps control on EBay. There are huge number of sellers that are there on EBay that does not pose any challenge to EBay working process.

The threat of substitutes are low as EBay offers huge range of products and services. The other brands selling similar products and EBay is continuously expanding its products and services (Lemley, 2016). The wide variety of products in EBay shows that it has everything that no other ecommerce can substitute.

The competitive rivalry in the market place is medium to high as there are several online and offline retail shop that are emerging (Lemley, 2016). The various online payments has also influenced competition for EBay.

The threat of new entrants in the market place is moderate to high as there are ecommerce sites that can improve their business with investing technologies to erect their site. The established retail industry such as Amazon, Flipkart are major threat and new entries with advanced technologies can also be a threat (Saihani et al., 2016).

The politicized issue faced by EBay is what EBay does with the information related to transaction in the system, which is done on a daily basis. The sharing of information has policies which shows that there are policies laid down by EBay to share only the required information to anyone and that too with the consent of the company (Zhang & Chung, 2016). The sale of firearms where discontinued on EBay as it posed challenge where buying of firearms cannot be distinguished whether it is for harmful agenda or any other agenda.

Comparison of eBay and Amazon

The offerings from international, national and local sellers in EBay allows customers to choose from wide variety of products within similar category. The cost of buying products from EBay instead of local store saves lot of amount (Team, 2018). The single platform of EBay provides accumulation of buyers and sellers together for interacting and making purchases. The unemployment is the key factor where local stores will be largely affected.

Nowadays, people are following latest trends in fashion and they want to exchanges their previous goods with new ones. In this way, they do not have to throw their previous goods. Ebay serves as a platform where people can sell their old items and buy new items (Elvin & Rampen, 2016). However, unfamiliarity to its features has failed its presence in some countries.

The advanced technologies has driven the market of EBay and it is continuously growing with introduction of new technologies (Saihani et al., 2016). The electronic gadgets such as smartphones, tablets, smart watch and iPad has contributed in this growth.

EBay is the first ecommerce platform that has introduced green products buying which means products that already exist. The consumption of products leads to emission of carbon dioxide resulting in pollution (Schiff, 2014). This shows that products are moving from one customer to another without getting wasted and thus less spending and getting much more from a single platform.

The customers could not identify between fake email ids and genuine email ids on EBay as there are many unauthorized sellers on EBay. There are report that stolen items were sold on EBay by the hackers and this people often take cash from buyers and fly away without giving those products (Zhang & Chung, 2016). This leads to legal issues whether these sites should be allowed to run in the current market place or shut down.

The above strategic analysis frameworks shows the current status of EBay and it shows that there are various factors that influence its business processes. The brand recognition is high for EBay and it cannot be faded easily due to strong presence in several countries. However, there are competitors and new entrant’s threats that can drive away EBay. The biggest challenger is Amazon that has open wide opportunities for customers by providing several products and services. EBay has introduced advanced technologies and it is continuously introducing technologies to improve their business. EBay has high market share in the current scenario due to various products introduced by EBay regularly. The payment process of EBay is easy to use and faster than other ecommerce sites. However, there are challenges such as low marketing of EBay in various parts of world due to which its presence adoption is not up to the mark. The security issues in EBay poses problem where third parties are involved and they can be genuine or fake.

SWOT analysis

Therefore, there are issues however, there are opportunities also which can be solved through possible strategies. EBay is the largest platform and its competition with Amazon will not affect its brand or business processes due to factors such as payment process and single platform for sellers and buyers. The possible solutions are given in the next section that can help EBay to manage the issues and improve its business.

The solutions for EBay to manage weaknesses and threats in the current market are given as follows.

• Increasing rate of innovation- EBay should increase its innovation rate to address frequent changes in existing and new technologies and addressing the imitation threat.
• Increasing degree of decentralization- EBay should increase its decentralization degree for improving flexibility business for market difference of e-commerce.
• Expanding operations internationally- EBay expands its operations internationally that builds on economies scale.
• Marketing- EBay should advertise to reach the smaller groups across the world. The social media is the strongest platform for advertising and marketing.
• Acquisition- EBay, as an acquisition, should identify and choose the companies to which they can take over to create a strong presence in the current market.
• Precautions for screening- It should undertake precautions for screening of third parties, sellers and buyers before proceeding with any business processes. This will reduce fraud risks and eliminate any fraudsters from doing illegal businesses.

References

Arbi, K. A., Kausar, A. R., & Salim, I. (2017). Minimizing Asymmetric Information in Online Markets through Knowledge Management. International Journal of Management Excellence, 8(2), 924-931.

Elvin, L., & Rampen, J. (2016). The secrets of eBay millionaires revealed – you could be next. mirror. Retrieved 17 April 2018, from https://www.mirror.co.uk/money/ebay-millionaires-secrets-biggest-online-6114629

Hassan, S. M., Sistani, A. J., & Raju, R. S. (2014). Top Online Shopping E-companies and their Strength and Weakness (SWOT). Research Journal of Recent Sciences ISSN, 2277, 2502.

Haucap, J., & Heimeshoff, U. (2014). Google, Facebook, Amazon, eBay: Is the Internet driving competition or market monopolization?. International Economics and Economic Policy, 11(1-2), 49-61.

Kiran, B. B. V., & Kumar, M. S. (2015). SOCIAL SUMMARIZATION FOR E-COMMERCE SITE BY EVALUATING THE COMMENTS AND RATINGS.

Lemley, M. A. (2016). Did eBay Irreparably Injure Trademark Law. Notre Dame L. Rev., 92, 1795.

Onur, I., & Velamuri, M. (2014). Competition, endogeneity and the winning bid: An empirical analysis of eBay auctions. Information Economics and Policy, 26, 68-74.

Pang, G., Casalin, F., Papagiannidis, S., Muyldermans, L., & Tse, Y. K. (2015). Price determinants for remanufactured electronic products: a case study on eBay UK. International Journal of Production Research, 53(2), 572-589.

Reid, S. (2015). A Critique on the Multinational Marketing Strategies. Scholedge International Journal of Business Policy & Governance ISSN 2394-3351, 2(3), 1-5.

Saihani, S. B., Rashid, W. E. W., Kamaluddin, N., & Abdul, A. J. (2016). Conceptualizing Reputation as Determinant for Born Global New Internet Ventures Intangible Success. J. Appl. Environ. Biol. Sci, 6(6S), 40-44.

Schiborr, L. A. (2016). How to emerge as a digital platform leader?: Envelopment and business model innovation at eBay and Amazon (2006-2011) (Bachelor’s thesis, University of Twente).

Schiff, J. (2014). Pros and Cons of Selling on Amazon, eBay and Etsy. CIO. Retrieved 17 April 2018, from https://www.cio.com/article/2836077/e-commerce/pros-and-cons-of-selling-on-amazon-ebay-and-etsy.html

Team, T. (2018). Forbes Welcome. Forbes.com. Retrieved 17 April 2018, from https://www.forbes.com/sites/greatspeculations/2018/01/29/steady-growth-from-marketplaces-segment-to-drive-ebays-earnings/#67ca86287495

Wang, W. (2016). Chinese Cross-Border Electricity Supplier Logistics Development Analysis. Modern Economy, 7(08), 875.

Xie, H., & Lui, J. C. (2015). Modeling eBay-like reputation systems: Analysis, characterization and insurance mechanism design. Performance Evaluation, 91, 132-149.

Zhang, L., & Chung, D. J. (2016). Strategic Channel Selection with Online Platforms: An Empirical Analysis of the Daily Deal Industry.