Online Business eBay - Case Study Example

Relation Management Due to globalization and the emergence of innovative mass communication technologies like the internet, consumers have avariety of choice in terms of what services they consume and what products they buy. The internet serves as a standalone medium as well as compliments the click and mortar establishments of boutiques, high street stores and retail businesses. The combined total for retail options available on the internet and in offline mediums is very extensive, making it hard for the customers to make a choice. Therefore consumers tend to use attribites like timing, type of products, brand name as well as quality of service to finalize their choices. In this regard, service quality is an important metric for retailers both online and offline in order to determine the demand for their business, and their success in the future in terms of more and profitable sales. Moreover quality is highly associated with reputation and price, with high service quality indicating premium brand and service, as well as allowing the retailers to charge a higher margin on the products and services provided. The internet is fast becoming one of the primary medium of communication for people. This technology has been aggressively adopted by the younger and newer generation, but they are not the only ones who seek out the internet for their work, leisure, entertainment as well as shopping. An increasing number of senior citizens, housewives as well as people in their 20s, 30s & 40s are also using the internet for similar reasons. In such a technology oriented world, it makes sense for people to shop online and rate the physical as well as online retailers for their products, service quality as well as value addition and more to the customer. Many sites devoted specific to markets, regions as well as retail companies offer this customer feedback and comment based service, where the customers can review the retailer on the appropriateness of their products, the service provided by they and the quality of their service. However an analysis of such website as reported by Favell in his article provides that such websites vary in their quality and the authenticity of their results as well. The online medium while being convenient and popular for its reach and communication capabilities also provides people with anonymity. As a result many retailers have their marketing companies and PR staff post raving reviews about their companies. Moreover the other disadvantage of such sites is that disgruntled employees of the company can also maliciously blacken the name of the retailer online though these sites by posting negative and damaging reviews about the retailers. The websites have taken steps to legitimize the comments and reviews posted by letting only members and authenticated bodies to post reviews, while special care is also conducted to check the posts before they are published on the website. This ensures the quality and the reputation of the site in the market as well as amongst its customers. Despite all the issues, the internet medium still remains one of the first mediums which the customer seeks out for evaluation the quality of the products and service provided by the retailer and its reputation. The main source for reviews for retailer and products are still the peers, and family members who have had an experience with the retailers however the controlled and regulated sites provide a rather innovative and effective review for retailer based on their service quality. As a result many companies on the internet as well as offline are focusing on their service quality, trying to increase it in orders to increase their profit margin and positioning in the market. One such online business is that of eBay which provides retail auction based services to its customers. The company was the pioneer in the business category of online auctions and has a dominant market share ion the market which is incrementally in volume and size. The eBay business was formed as a facilitation providing site, however the lack of the services as provided by eBay in the market and the focus on increasing customer base in the initial launch phase resulted in the company operating in a diversified market, providing diverse products and services as well s leading to generation of new business online. The eBay values its quality and service standards and has kept hits performance and service standards high in order to attain and maintain the leadership position it enjoys in the market as well as create the brand name of eBay such that it has become the first choice of the customers when it comes to placing an item for auction or looking for something in a competitive marketplace online. “A third part firm, Auction Watch rates top auction sites on five dimensions: inventory, bidding, services/ fees, support, functionality, and community. eBay gets high marks on all dimensions, and is the only company to score four on the community dimension.” (eBay – A Business History) This clearly points out how the eBay Company has been using the service quality as a metric for the assessment of its performance and increasing the satisfaction level of the customers. eBay has also launched a support service for its buyer customers to rate the sellers on the basis of the service quality, the products provided and the appropriate marketing and positioning of the products in the market place. This rating and review system on the hands of the buyers, allows the eBay company to assess its seller customers as well as provides other buyers with authentic and trustworthy buyers in them market place which are known to provide good quality service along with the promised products. Another method through which retailers and businesses are using quality as a metric pertain to using service quality agreements and guarantees to establish a position of quality behind the products and services provided and build a authorized image of the company. “Service guarantees allow firms to signal higher quality when the costs of meeting guarantee obligations differs significantly for high and low quality firms. In addition, service guarantees may indirectly signal better quality by lowering perceptions of performance and financial risk.” (Kasyap, 2001) By using service quality as a metric for assessing the performance of the business and well as establishing a position for the company in the market, the companies s are able to increase their profits and revenues as well as their customer base, as the customers tend to prefer credible businesses especially on the internet where elements of fraud pose a higher risk to consumer d and customers than in the offline medium. References Favell, A. (2002, Oct 25), Opinion Sites Offer Guidance To E-Commerce Consumers, The Wall Street Journal Europe eBay.com, eBay – A Business History Kashyap, R., (2001), The Effects of Service Guarantees on External and Internal Markets, Academy of Marketing Science Review, volume 2001 No. 10, retrieved form http://www.amsreview.org/articles/kashyap10-2001.pdf Read More