Service Marketing Management in Ebay - Case Study Example

Service marketing management in Ebay Brief overview about company EBay (www.ebay.com) is managed by EBay Inc. (NASDAQ: EBAY), an Internet company based in America. Ebay.com offers an Internet based service that allows for online auctions, selling and buying of new and second hand products. While the company originally began functioning in US, today it has localized branches in Belgium, Canada, China, France, Germany, India, Italy, Singapore, United Kingdom, Poland, Philippines and Taiwan to name a few. Besides Ebay.com, EBay Inc also owns the sites of PayPal1 and Skype among its other businesses. Since the site was established in the year 1995, it has become the largest place in the world to buy and sell a range of products to a range of people. In April 2006, eBay also opened its new eBay Express site. This site works like a standard Internet shopping site for consumers from United States. A UK version and then a German version were launched later in the year2 and offers brand new items sold by pre-vetted sellers. The company works with the mission to provide a global trading platform where practically anyone can trade anything. The company has a unique offering of an auction-based sales service where retailers or private seller can present their item to purchasers. Competition for EBay The major competitors for eBay are Amazon.com PriceGrabber.com Yahoo! Auctions Overstock Auctions Backup research of the organization, based on various parameters: Demand and supply: The level of demand and supply on EBay is high as there are many people seeking to sell what they do not need for a good deal. Approximately the site has 212 million registered buyers and sellers as of date. A wide range of things like rare items, new products, collectibles and used goods can be found for sale on the site. The site is well known as a good place for comparison shopping as many similar products are listed side by side. Auction-style listings, fixed price formats and Dutch auctions are a few kinds of auctions the site provides for. However there are cases where the required products are not available. Not much can be done in cases where demand exceeds capacity and customers just have to live with the fact that sellers are not selling the required product. Services marketing integration and management: Customers usually search for products on parameters like price and product features. Ebay allows customers to sort similar items based on pricing, making the task of purchasing a relatively easy one. Phone help is offered to select members only (those who sell a minimum of $3000 worth goods per month through the site). Live chat with customer service representatives is however available. Areas where EBay dissatisfies customers include wrong shipping labels and insufficient customer support as all queries are not addressed with the same interest. The blame culture is high at EBay, and though the site issues regular warnings, blogs and advice, many blame the site for wrong transactions. One criticism regards its privacy policy whereby eBay turns its user information to law enforcement agencies often without a subpoena. While no solid proof has been generated for this case, it is a popular rumour, popular enough to be believed by its wide customer base as true. Finally no panel of experts or support system is available to identify whether a particular product is worth the money or not. Service positioning and targeting: The EBay service has a single positioning statement, as the one place where you can trade anything. The ‘Law of focus’3 works well for EBay as it focuses on the simple positioning that a company can become successful if it can find its way into the customer’s mind through one simple word. Service is offered free of charge to buyers and is quite inexpensive for sellers also. All transactions take place online, allowing people to shop from the comfort of their homes. No strategies for improving communication, distribution or pricing have been identified. The site accepts payments only through PayPal while many sellers accept services like Western Union too. Technically too, the site is not high-end and often takes some time to download. This mainly happens as the site operates from a single database and all users from across the world need to access the update information from that database. Complaints and recovery management: Studies4 indicate that companies can improve their profits by 25% if they can reduce customer defections by 5%. Customers are provided feedback forms where they can rate the quality of the seller and their buying experience. Online help is available through live chat and a ‘help’ section also. This aspect of EBay has come into much criticism as many say that EBay itself indulges in wrong practices. In case where violators are caught, punishments are not severe. While eBay has implemented a feedback system, many complaints have been made regarding the same. These issues have made eBay a topic on both the Watchdog, a television programme on British consumer rights and on the Consumer awareness column in The Daily Mirror. Many customers claim that Ebay often does not respond when a claim is made. Many customers state that since EBay makes commissions from the listings and sales, it is not interested in claims, especially against large sellers. Service quality: Besides the range, item listings are detailed including photos, descriptions, and experiences of owners. Ratings of the seller are also given. However there are various issues with the site. The site has a cluttered frontpage that is difficult to download. EBay has an unstable interface and the site has failed quite a few times, mainly due to bad IT planning and a central database storage structure. One major mishap that occurred with EBay was in January when the site crashed for eleven hours at a stretch. Besides this, 15 such crashes also occurred in the years 1998 and 1999 and the site could not be accessed for over 20 hours. EBay is ground for various unscrupulous sellers to market counterfeit merchandise. No security checks, experiences, references or resumes are required and anyone can say that they own a gallery or store. It can often prove difficult for new buyers to distinguish the quality of the product as they often do not pay much attention to the auction description. With sale postings being automatically generated, the staff of EBay rarely monitors the content as it goes online. Thus there have been attempts to sell unborn children, an entire state, country etc. Unless the bidders notify the authorities at EBay in time, sales can go on to completion also. Substantial evidence of shill bidding on the site has been found as per an investigation conducted in January 20075. Kenneth Walton has given an open description6 of how he and his friends placed shill bids on many Ebay auctions over a year. Many also accuse EBay of encouraging shill bidding after the company's decision to hide the information of bidders, as bids reach a particular amount. This change in policy favours unethical sellers rather than buyers and has significantly weakened the reputation of the company. Allegations against Ebay also state that in various transactions it has acted as an invisible shill bidder, hiking the bid of the buyer even after he was notified that there were no competing bids7. Malpractices like fraud are prevalent and come forth in manners like shipping wrong items, giving misleading product descriptions, sending across faulty merchandise, selling smuggled goods or receiving money but not sending products. While the company claims that its confirmed cases of fraud on transactions are recorded at less that .01%, it also states that the statistics could be underrated or overrated. Service quality issue Most of the issues faced by users of EBay can be narrowed down to the major issue of a huge gap in the service quality. Quality is a perceived and subjective aspect and needs to be experienced by the customer. For this experience, many customers and businesses have acknowledged that consumers and businesses prefer to do business with retailers that can serve online and also locally, in case buyers want to return items (The New York Times Management reader, The dauntingly native global village, Pg 113). A highly satisfied customer on EBay will perceive high quality of the site and will return to make more purchases and larger purchases. Thus a customer using the EBay platform must be led to feel that the site offers high quality products and takes high quality care of its customers. They must feel that they are in safe hands. Objective: Keeping the issues of EBay in mind, the main objective of high service quality for Ebay must be that, ‘quality at EBay must be customer oriented such that it is product based, user based, manufacturing based and value based.’ This objective translates to goals such as, Product based quality: Total attention is paid to every product and its quality is judged by measurable terms. Only legalized and authorized items are sold. User based quality: Customers are taken good care of, whether they purchase a small toy or a large car. Their information is secure and so are their transactions. Customers also perceive certain level of satisfaction from EBay experience. The objective for EBay must be to give them a service that exceeds their expectations. Manufacturing based quality: In the case of EBay, this objective would translate to state that quality of products is judged as per specifications laid down by the seller. Value based quality: Finally the main objective must be that the customer gets value for money, i.e. the service and product match the amount of money spent on the product. This means encouraging cheaper products or high quality products into the market. The SERVQUAL model by Parasuram et al (1988) clearly highlights the comparisons between the expectations of customers from Ebay and the services they actually receive from EBay. Solutions Keeping the above situation, all its parameters and the SERVQUAL model in view, the following solutions can be implemented. Tangible solutions: In the online scenario, a strong frontpage is equivalent to good frontline personnel. An easy to download frontpage that is clean and well organized will enable customers to navigate easily and make decisions faster. Finally as this is the first look of EBay that many customers have, changing it would automatically give the impression of a ‘New, improved and easy to use EBay.’ The design team of Ebay can improve the appearance of its facilities, i.e. its website by making it less graphic intensive and more clear. The entire site is quite overwhelming for users with plenty of listings. EBay can probably introduce a few different ‘branches’ or sister sites. For example it could open separate sites for books and education, electronics etc. Lastly EBay could tap into the corporate sector, offer certain privileged services and encourage an entire new segment to use EBay for official purchases. Reliability: EBay has a need to improve its reliability in the eye of customers. For this it needs to offer stronger customer protection and offer it. It must communicate its intentions to customers through direct communication. Customers are scammed by erroneous shipping labels and shilling. Also content is automatically generated and rarely checked. Filtering mechanisms where the content is regulated by staff of EBay must be put in place. It can also be made compulsory that all items with bids of $500 and above are evaluated and signed by experts. Written proof of authenticity can also be made compulsory for these items. Also subjective language that often misleads the reader, words like ‘rare’, ‘bargain’ and ‘museum quality’ must be removed from product descriptions keeping them strictly objective. EBay should implement a policy where all merchandise must have an exact shipping cost so that buyers can see the shipping cost based on their country. Responsiveness: There have been varied reports that state that EBay is not responsive in case buyers have trouble after paying for the transaction. Many go on to say that as EBay gets its money from big sellers, it usually does not sue them. This image has to be changed through quick responsiveness on the part of EBay. Communication can also be strengthened between the buyer-seller-service relationships by reducing the complexity of communication in the relationship matrix. Assurance: EBay must offer assurance to its customers that it takes the required action preventive and controlling in cases of online fraud or shill bidding, it is important that the site conducts. A customer confidence building exercise could be conducted through a targeted advertising communication strategy. At the backend, services especially customer support must be improved. If possible, phone querying should be made available to all customers. A warm cordial staff at the customer care centre can offer purchasing assurance to the customer. Empathy: EBay must show empathy towards its customers and their transactions, irrespective of the size of the transaction. Infact as per buyer behaviour, a buyer would first buy a small item (to experiment with the service) before gaining the confidence into buying bigger items. Thus every transaction must be dealt with as the most important transaction. Customer experiences with EBay must be improved as this would lead to improved customer satisfaction. Besides the above quality parameters, various researchers have added new parameters to the SERVQUAL model. These are as under, Feel safe: In order to improve the quality of service of EBay, transactions and customer interactions must be given the degree of safety desired. High quality security systems used by EBay must be made known to people. EBay also should not give out user information freely, as it is rumoured that it does. While events like shill bidding are difficult to track and control, security from such issues is not impossible. Security tracking systems can be used to track transactions where auctions have many bidders but the seller has less or no feedback. Other suspicious cases could be where one seller has a particular set of buyers, despite the items he sells. Customer awareness on such cases must also be improved through direct mailers or emailers. Communication: Constant communication with buyers and sellers also helps boost a company’s quality. For this feedback forms, online feedback scores, telephonic surveys, SMS, emails and satisfaction surveys are a good medium. The limit of 80 characters for feedback and responses to feedback must be increased to allow users to give complete details of valid complaints. A panel of experts on various topics can be set up by EBay where buyers can ask queries related to products and transactions. Access to the panel can be provided through phone or online chat and if required, a small fee can be charged from buyers for using the facility. Quality of Ebay services can also be measured through satisfaction surveys of customers. These surveys can further pinpoint the main areas of concern for the business. However, as per studies by Ofir and Simonson (2001) pre-announced satisfaction surveys often lower the level of satisfaction and can also prove detrimental to the morale of employees (Gray and Bergman 2003). Satisfaction surveys that are spontaneous and not pre-informed can be conducted by Ebay to regularly measure what customers need and the lacunae the company can fill. Access: The access to the services and support of EBay must be made easy. Phone service or on-phone help must be rendered to all buyers if possible. A call centre to handle queries could be set up. As a wide range of products and update information reaches customers promptly, so must customer assistance. Customers should have the feel of a real life store where sales persons are there to take them through the buying experience and are there to offer after sales support as well. Customers need to be offered real-time touch and feel experiences on EBay. While hyperreality8 is difficult in the online selling and buying world, it is not impossible. Simulated reality of EBay service can be introduced in an experience room online. Understanding the customer: An effort must be made to understand the behavioural patterns of a customer and understand the general zone of tolerance (ZOT) levels. The ZOT represents a range of services that customers consider satisfactory and that sets expectation standards for a service. This novel concept has attracted the attention of many researchers9 and studies have indicated that there must be a focus on increasing service quality beyond the 'sufficient' level, rather than developing the customer's mindset of 'delight'. Despite all quality service situations that customers face at Ebay, the site is growing in popularity and usage by the day. Experts state that the scale of the site, whether it is measured by number of people visits, purchases, minutes spent on a page, registered users or range of products, is enormous. To manage such a huge pool of products is difficult. And to manage quality with that range is the toughest call of all. However, with all its success stories, the main problem of Ebay is its service that is making a large segment wary of online transactions and very careful about spending a lot of money online. In order to bring in that untapped segment into the market, Ebay needs to take up some serious confidence and quality building exercises. It needs to tone up a bit into shape too. While all of its current sales make it a successful and rich venture, Ebay has vast latent potential that only a quality building service oriented approach can offer. Bibliography http://www.interesting-people.org/archives/interesting-people/200403/msg00139.html http://www.ingentaconnect.com/content/mcb/075/2007/00000021/00000002/art00005 Journal of Services Marketing, 2007, pp. 137-148(12) www.12manage.com http://www.artbusiness.com/eBay.html http://en.wikipedia.org/wiki/Ebay http://www.techweb.com/wire/story/TWB20010111S0021 Trout on strategy, Jack Trout The New York Times Management Reader http://www.thebidfloor.com/ebay_facts.htm Read More