Analysis of eBays Business Strategy - Essay Example

E-Business Marketing Strategy Table of Contents eBay 2 Corporate Strategy 2 Large User Base 3 Trading Pattern 3 e-Loyalty 4 Online Marketing Tools 5 The eBay Marketplace 5 PayPal 5 Skype Internet telephony 5 Social Media 5 Strengths and Weaknesses of eBay 6 Streangth 6 Weaknesses 6 Recommendations 7 eBay eBay is renowned American e-business company specializes in consumer to consumer auction business. The company is headquartered at San Jose, California, USA. The e-business company was founded by Pierre Omidyar in the year of 1995. They operate in more than thirty countries. The company has more than hundred million active users’ accross the world and there is the largest online market place in the world. The online marketers’ conducts transactions valued $2,100 in every second. Last year, total transaction done via eBay was $68.6 billion and the company is showing growth rate more than fifty percent over last few years (eBay, 2012). Marketing Strategy of the Company eBay uses online auction based marketing strategy to expand business across the world. The company has developed community value concept among users while core essence of the concept lies in trusting people. They are trading thousands of dollar daily via online community and the business process is based on faith on online community members. Marketing strategy of the company can entangled with business strategy. Corporate Strategy They implemented the concept of e-commerce to create the online platform for buyers and sellers to do the transaction. They did not limit themselves in USA but designed online platform for international buyers and sellers. They successfuly created an environment complemented with mutual trust for traders and ultimately fosters the concept of e-loyalty among them. Large User Base The company has established strategic relationship with more than sixty website to attract new customers and their partnership with America Online helped them access large internet user base. This Move helped them to create an entry barrier for AOL to enter online auction market. Business Exchange program of the company added local dealers to participate in consumer auction market and this strategy helped the company domestic auction market of the country. Trading Pattern eBay has rightly analyzed trading behavior of local customers and hence they have developed fifty three local sites for the country. They expand distribution channel across the country and designed transaction site in accordance with consumer behavior of local users. They have entered more than thirty countries with establishing hundreds of transaction sites. Customers across the globe can get transaction support on real time basis. Brand Equity The company did not invest single dollar on marketing in the initial years and the relied on time tested viral marketing and word of mouth strategy to promote the brand among customers. Then they shifted to below the line prootion like electronic display, ambient advertising to increase brand visibility aong customers. They shifted their focus to e-marketing after digital marketing revolution. They used web browser, social media platform, emails to generate response among online users. Category Extension Online auction market became hyper competitive after the entry of big players like Yahoo and Amazon. It was happened during the fourth year of eBay’s business life cycle. Amazon and Yahoo had strong customer base while at that time eBay was still a start up organization. In this situation, the company expanded product category and introduced premium priced product categories for customers. They acquired offline auction house Butterfield and Butterfield to gain expertise in auctioning high priced antiques and collectibles. eBay has completly outdone competitors by using this strategic move. e-Loyalty The company directly communicates with customers. In this way they created loyal customer base for online transaction. Traders can directly communicate with each other by using online trading platform. They enhance functionality and application of the website in accordance with the demand of the customer continuosly. The company has established e-loyalty among customers by designing above mentioned marketing program for them (Gopalkrishnan & Gupta, 2007). Online Marketing Tools The eBay Marketplace The company uses search engine optimization technique and online market place platform as marketing. These two techniques contribute seventy percent of company’s total revenue. PayPal The company has acquired Paypal in the year 2003 to enhance their penetration in online payment system. Paypal contributes twenty five percent of company’s total revenue. Skype Internet telephony The e-business company has acquired Skype Internet telephony in the year 2005 and it helped them provide services for MySpace users. Skype Internet telephony contributes five percent of company’s total revenue. Social Media The company uses online channels such as Twitter, Facebook, YouTube, web browser and web blogs to provide information to seller centres and various individuals. Online advertiseent via google and other searengines help them to expand brand relevenace among customers. Web 2.0 Many research scholars describe eBay as original Web 2.0 Company. The e-business company uses eBay wiki and eBay blog for free knowledge sharing among online community. eBay blog helps user to create blogs about their business and product offering to other users. This technology not only helped users to promote but give opprtunity to eBay create innonavative social platform for traders. eBay wiki helps users to share their knowledge about various eBay products among each other. Web 2.0 helps the company to promote their brand among customers via viral marketing and word of mouth. Web 2.0 emerged as cost effective way for the company to promote the brand not only for domestic users but to international users also (Hof, 2006). Strengths and Weaknesses of eBay Streangth The company is largest online shoping place on the planet. The have huge product category variation like antiques, motor parts, books, consumer durables and many more. More than twenty seven thousand product categories helped them to achieve gung ho overe other competiors like Amazon and Yahoo. Supply chain management of the company helps them to create just in time stock management and this facility is the reason for their huge product category offering. Weaknesses Online illegal activities by some unethical users made the eBay vulnerable to transactional frauad and trading malpractice. Technical features like online shoping cart, Skype sometimes creates technical gliches for the company as a ripple effect it simultaneously creates negative brand image of the e-business company among customers. Recommendations The company should increase the efficiency of their online shopping technology. The company acquired Skype technology in the year 2005 but at that time over valued the technology and consequently they invested huge amount of money in the acquisition deal. They need to use Skype technology in differenciated manner for various users to counterbalance the intial loss (Kotler, 2009, p. 386). References eBay. (2012). Who We Are. Retrieved from http://www.ebayinc.com/who. Gopalkrishnan, J., & Gupta, V. K. (2007). eBay: “The world’s largest online marketplace”- A Case Study. Retrieved from http://dspace.iimk.ac.in/bitstream/2259/510/1/543-549.pdf. Hof, R. (2006). eBay Dives into Web 2.0. Retrieved from http://www.businessweek.com/the_thread/techbeat/archives/2006/06/ebay_dives_into.html. Kotler, P. (2009). Marketing Management. (13th ed.). New Jersey: Pearson Education. Read More