Ebay Case Analysis

e-Bay Case Analysis

Pressures to reduce costs are not are not so apparent in the eBay case. A primary reason for this is that eBay is an online auction and shopping website in which people and businesses buy and sell goods and services. In an online auction buyers are able to compare and search for better prices, while the sellers are exposed to million of buyers. This creates increased price competition since there are more buyers willing to purchase items at higher prices. Ultimately, eBay has provided both buyers and sellers an online marketplace for these auctions and the prices are solely determined by the highest auction bid. Therefore, eBay is not directly influenced or pressurized to reduce its costs.

Initially eBay did not charge fees to buyers or sellers. However, as traffic on the site grew, eBay’s founder Pierre Omidyar, was forced to charge sellers a listing fee to cover Internet service provider costs. Omidyar later noticed that the fees had no impact on the level of bids. This also proves that the listing fees did not create any pressure on eBay’s operations and users still use its services.

Although the pressures to reduce costs have not been an issue with eBay, the pressure to broaden its customer base has caused it to expand into different product categories. In order to compete with competitors such as Amazon.com, eBay has also developed a fixed-price format. Other services eBay has expanded into include Paypal, Rent.com, Skpe, Shopping.com, eBay Motors, and Stubhub.com.

Pressures to adapt to local markets that are observable in the eBay case include its expansion into international markets. In addition to its original U.S. website, eBay has established localized websites in 24 different countries. To gain popularity, these websites provide local language and currency options and also adhere to one of eBay’s core objectives, which is to ensure the sense of community feeling. eBay needed to understand local cultures and meet specific local needs. Therefore, it expanded its business by either acquiring or forming a partnership with a local company. This strategy has proved successful and ebay has achieved in meeting specifis local needs, through its customised sites, and has provided people with many different cultures access to its online global community.

Examples of this include eBay’s equity investment in MercadoLibre.com which targeted Latin America. As the case states, MercadoLibre.com reported 18 million registered users that performed 15.8 million transactions worth $1.1billion.