Online Auction Industry - Essay Example

As pointed earlier, eBay uses an online bidding system, which essentially implies that buyers have bargaining power provided by the industry. In this regard, the bargaining power of the buyers affects eBay’s strategy due to the demand for better services by consumers and the competitive pricing offered by similar companies in the industry. On the other hand, the online auction industry experiences robust growth and development due to the advancements in information technology infrastructure with eBay, Yahoo, and Amazon being the most dominant firms.

In effect, this implies that the intensity of rivalry is very high with the bidding platform in the industry exacerbating the rivalry. Finally, many other resellers and auctioneers, who do not operate on the online platform, offer substitute products similar to those offered by eBay. In this regard, these resellers and auctioneers compete with eBay for market share, which threatens the company’s profits. Consequently, this affects the strategy that eBay adopts to ensure productivity and maximizing profits while at the same time ensuring that the company remained competitive in the online auction industry.