Term Paper on E-Bay Analysis

 

 

E-Bay is a most unusual Web site, a virtual marketplace where people who want to sell stuff--just about any kind of stuff--can link up with buyers across the planet, who bid against each other and create an instant market. E-Bay is a bona fide Internet success story, profitable since its inception on Labor Day 1995. E-Bay is projected to grow revenues at about 50% annually over the next five years. It dominates consumer-to-consumer Internet auctions, with a 75% market share, dwarfing its not-so-close rival Yahoo. On the road to being the little new-economy business model that could, e-Bay helped thousands of small businesses make it too. By listing their wares on e-Bay, antiques stores, collectibles shops, and many other businesses got access to a burgeoning worldwide audience--more eyeballs than a store in any mall could offer, even if it was next to Cinnabon. For many of the merchants, business on e-Bay was so good that they could close their brick-and-mortar shop and sell exclusively online, where the market was bigger and the overhead lower. Newer businesses--like Lowery's--skipped the retail store entirely.

 

Order Your Custom Term Papers, College Essays and Research Papers

“As e-Bay has evolved under the leadership of CEO Meg Whitman, an experienced corporate manager who took the reins from Omidyar in 1998, a growing share of items are being sold at a fixed price, rather than by auction; those sales accounted for 20 percent of revenues last year, a figure Whitman would like to boost to 33 percent.” (Adler 2002)

Of all the problems out there for small businesses on e-Bay, the most troublesome is the fee issue. Each time fees have gone up (they've risen twice since January 2001), the e-Bay community has exploded, clogging online message boards with angry, sometimes downright hostile comments. Meanwhile, listing items on e-Bay remains a grueling, labor-intensive process, since each title is different and needs a unique posting describing its content and condition. He took his first vacation in four years this summer and has decided not to expand his listings beyond his current volume. But e-Bay has no incentive to lower rates. eBay's 2002 growth was due primarily to the higher fees. Sellers are flooding the market and buyer demand for collectibles has leveled off, with a higher percentage of goods getting no bids at all. Big businesses, though, are staking out the same territory as many savvy longtime sellers, threatening to ruin their business. Bill Shaw' s Tampa-based ToppSoft Computer Solutions has used e-Bay to sell overstock computer-networking gear, among other products, for more than two years. But big merchants like Dell have started selling similar items on e-Bay at fixed prices far lower than what small business sellers traditionally get at their auctions, and Shaw has seen profits shrink dramatically.

Big business's impact on small business sellers doesn't stop there. Some entrepreneurs charge that major corporations are providing sub par customer service (they point to eBay's own buyer-feedback system as evidence) and that this hinders their own ability to do business online. Sellers complain, too, that some of eBay's newest features--like its option to sell goods for a fixed price rather than at auction--are being misused and are driving down their own prices. The small businesses with the best chance of success on e-Bay today are either those with access to a steady supply of goods or niche players with some awfully creative markets. The bulk of e-Bay sellers, however, are smaller entrepreneurs who rely on e-Bay exclusively, and these days they must find an exclusive niche to survive. Cars are big business on e-Bay; its motors division is now projected to be its largest sales generator.

The business that poses the biggest threat to e-Bay sellers, though, may be e-Bay itself. Small business sellers and e-Bay share the same customers, and despite eBay's public pronouncements, the two sets of interests don't always align. What are irksome to small businesses are eBay's ever-tightening restrictions on marketing. It's a sore point, especially for those who operate websites and brick-and-mortar stores in addition to their auction postings on the site, and want to use e-Bay to drive traffic to those outlets (where, conveniently, they can sell without paying eBay's fees). e-Bay, obviously, wants to keep that traffic on e-Bay.

 

Order Your Custom Term Papers, College Essays and Research Papers