Development Factors of eBay - Essay Example

?Running head: eBay eBay eBay II. Company Up Based on up s from the eBay CEO John Donahoe, the company is at the center of current innovations (Sage, 2010). They also project that their PayPal revenue would reach $6-7 billion by the end of 2013. These updates come in the midst of their plans to reinvent themselves as a top innovator in e-commerce. They have managed to abandon and update their image as ‘internet has beens’ and since then, two years after an initial investor meeting, their shares have managed to jump nearly 8 percent (Sage, 2010). Their CEO has also described eBay as one of the leaders in the consumer-driven goal to ensure that e-commerce is faster and more convenient for the users. They have managed to capitalize on this trend in the knowledge that most people have easy access to the internet through their smartphones which allows them to shop and pay anywhere and anytime (Sage, 2010). Technology is shaping e-commerce and changing the behavior of consumers. These changes are giving new worldwide opportunities for eBay and are driving the next generation of e-commerce users (Sage, 2010). There is an expected change in mobile transactions with almost double their numbers from the inception of PayPal. It is estimated that the mobile industry is set to increase to $4 billion in gross merchandise in the next year (Sage, 2010). eBay was a leader in the internet boom, however, it has since met with major competition from businesses which already offered online options for their products. However, eBay now highlights PayPal’s role in making improvements in its company transactions and in stabilizing marketplaces linking in well with all consumers (Sage, 2010). PayPal is utilized by about 59 percent of the major inline merchants in the US and up to 40 percent in the UK (Sage, 2010). Their revenue is expected to reach $6-7 billion by the end of 2013, representing a growth of about 76 to 105 percent. PayPal revenues also rose by 23 percent from 2009 to 2010 (Sage, 2010). The payments set off on two areas – from the buyers and the sellers; and the number of sellers is set to increase by the year 2013 – almost double the current PayPal traders. The company has become highly aware that mobile products and services can evolve and can actually add value to the company and the best thing for the company to do is to improve the consumer’s execution of its transactions (Sage, 2010). eBay investors are very much concerned about seeing the stability and growth of the company marketplace. It is important to note however that they are still lagging behind Amazon.com which is still the leader in e-commerce. eBay has managed to increase the trust and safety of its site while also trying to update its e-commerce experts in reference to its outdated search technology (Sage, 2010). Most of their online buyers have now fixed-prices for their products and the company has tried to increase the mobile applications of their products. Consequently, the consumers have been able to use scan technology in order to compare prices on their smartphones while scanning the internet market (Sage, 2010). These improvements have managed to strengthen the company and improve consumer confidence – helping them improve their profits in the past few years. Despite these improvements, issues in the market and in the general economy have kept eBay shares at half their value of their largest gain in 2004 (Sage, 2010). eBay is still valued below other web-based companies at 16.7 times based on 2010 earnings. Google and Yahoo, on the other hand have been valued at 18 and 21.6 times in earnings respectively (Sage, 2010). Social networking has also been considered as one of the major driving factors of eBay. Facebook and other social networking sites have created a market for many consumers and many sellers (Duryee, 2011). Social networking has fast replaced mobile access in its thrust toward consumerism. And still this trend will again see more changes in the next few years. Nevertheless, the point has been securely made – that eBay is accessible in almost all avenues, 24 hours a day and seven days a week (Duryee, 2011). This internet accessibility has also made consumers more able to set up price comparison for available products and this trend has managed to expand the market for consumers. eBay is now being set-up not just as ‘commerce’ but as e-commerce (Duryee, 2011). The future of eBay is all about technology and the CEOs recognize this as they have now targeted the merchants, sole proprietors, large merchants – online and offline. The company CEOs for both eBay and PayPal has remarked that “PayPal has new opportunities in credit, digital and mobile. It has strong momentum and potential…PayPal had the potential to become bigger than eBay. That has the potential over the next three to five years” (Duryee, 2011). PayPal expects eBay to be able to gain sustainable growth in the long-term however, it has to combine the power of commerce and payments capabilities in order to create an open commerce arena (Duryee, 2011). Such arena would be able to improve the dynamics of the market and help the merchants innovate and compete with each other. Based on a recent survey, eBay has a better social media profile among Facebook and Twitter users, as compared to Apple, Google, or Blackberry (Edwards, 2011). Broadly, the survey suggests that a consistent approach to the social media is expected to produce numerous dividends. eBay has managed to come out on top because it has conducted most of its internal communications through media intranets. It has also set-up community forums for users as early as the 1990s – even before the advent of social networking sites. The popularity of sharing news of bargains with friends through the social media has been a very advantageous enterprise for the company (Edwards, 2011). In any event, eBay’s reach has managed to surpass the reach of Steve Jobs’ Apple empire. The shares of eBay are trading very close to estimated support at 31.74 dollars at current price action closing at $32.85, placing the stock price at levels which would seem to make traders start to pay attention (Paolinetti, 2011). eBay operates as an online auction company and such service is being used to buy and sell products and services in coins, collectibles, computer, memorabilia, stamps, and toys. The company has also managed to secure their online payment services through PayPal and their stock range has been defined by calculated support at $31.74 and with a resistance level at $35.35 which must be used by traders who are conceptualizing their product markets (Paolinetti, 2011). Reports from Zacks Equity Research (2011) also revealed that when markets closed on January 19, 2011, eBay reported fourth quarter earnings of 45 cents which beat the previous consensus by 3 cents or 8.2%. As a result, eBay shares were up at 3.02 % response. The community indicated a great deal of support in their expectations for eBay reflected by the lack of estimate revisions in the ending months of 2010. eBay was also assisted by cost controls and lower tax rates (Zacks Equity Research, 2011). The gross revenue of $2.5 billion increased up to 10.9% sequentially and 5.2% annually in relation to Zacks Consensus, increasing the high end of eBay’s guidance range of $2.39-2.49 billion. About 88% of their total revenues were based on transactions and the rest came from marketing services. The transactions-based revenue and marketing services revenue increased the revenue upside versus guidance. Moreover, company reports showed revenue under the Marketplaces and the Payments segments which credited sales for eBay as a company and for PayPal as the collecting company. All in all, these updates indicate major profit for eBay and for PayPal. III. Strategic Plan (18-20 pages or more, plus exhibits) A. Company analysis: Mission, Vision, Leadership, Culture. eBay’s mission statement is “to provide a global trading platform where practically anyone can trade practically anything” (Hsiao, 2011). This company mission is simple enough. It is also very much encompassing in its desire to offer and provide business for interested traders. This mission has been consistent since 1995, when the company was founded and since then it has become one of the largest buy and sell companies in the world with an inclusive community of millions of regular people undertaking their businesses – both small and large. Millions of items have also become available in eBay, from every condition imaginable, changing hands on a daily basis, with price ranges ranging from one cent to hundreds of thousands of dollars (or pounds and other currencies). It has managed to exceed this mission and has done so in the online world (Hsiao, 2011). eBay’s vision is to build commerce, supported by trust, and inspired by opportunities (eBay.com, 2011). It brings together millions of people on a local, national, and international basis with the different websites which focus on commerce, payments, and opportunities. Its vision is to create a marketplace which has an online platform for the sale of goods and services of individuals and small businesses. It is also to create a global marketplace and to reach as many countries as possible, with as many products as possible. So far, this vision is gradually being met by the company, however, in the process, it is also facing stiff competition from other companies with similar formats. These are bigger corporations which have managed to cover wider markets and wider options in terms of payments and products. The company needs to implement innovative reforms in order to ensure that it would be successful in realizing its vision and mission. eBay’s leadership has mostly been in the hands of Meg Whitman which has been characterized as one of the major movers of eBay. Through her leadership, the company grew from a company run in a single room by 30 people to a bigger corporation. Its leadership has been considered outmoded and outdated with the dawn of new technologies, but is has caught up with the internet craze in the past few years (Bloomberg, 2009). This company has also been run on what Whitman considers ethical concepts of right and wrong which has managed to maintain a relationship of trust with its buyers and sellers. In effect, the company has managed to expand its market to cover more countries and with more innovative features based on improvements and changes in the internet and in technologies. Through the leadership of eBay, it has managed to grow from a small auction company to a bigger and all-encompassing buy-and-sell corporation. The company culture of eBay has been run on the theory of disruptive innovation. This innovation must not be confused with creativity. This creativity has been set forth by Pierre Omidyar when he first founded the company (Red Ink Diary, n.d). This market disruption is based on the concept of new market disruption where a product fits a new and emerging market sector which is not being served by the existing markets in the industry. There are different stumbling blocks to this culture, and one of these barriers is mainly about the risk being assumed by the vendors (Red Ink Diary, n.d). This concept has driven many consumers out of eBay, however, the company has been determined to veer away from the image of being flea market sellers. In the process, it has managed to cleanse the sellers and close down links which manage to manipulate the market for the chosen few only (Red Ink Diary, n.d). The culture of eBay is basically about allowing everyone who has something to sell or buy to access and use the company for these needs. Works Cited Bloomberg Business Week (2009) eBay's Meg Whitman on Building a Company's Culture. Retrieved 26 February 2011 from http://www.businessweek.com/managing/content/mar2009/ca20090327_626373.htm Duryee, T. (2011) Live at eBay’s Analyst Day–Is the Company Future-Proofed? eMoney. Retrieved 26 February 2011 from http://emoney.allthingsd.com/20110210/live-at-ebays-analyst-day-is-the-company-future-proofed/?mod=ATD_skybox eBay. (2011) The Company. Retrieved 26 February 2011 from http://pages.ebay.com/aboutebay/thecompany/companyoverview.html Edwards, J. (2011) Why Ebay and Microsoft Fare Better in Social Media Than Apple and Starbucks. Bnet.com. Retrieved 26 February 2011 from http://www.bnet.com/blog/advertising-business/why-ebay-and-microsoft-fare-better-in-social-media-than-apple-and-starbucks/7653?tag=content;selector-search Hsiao, A. (2011) What is eBay? About.com. Retrieved 26 February 2011 from http://ebay.about.com/od/gettingstarted/a/gs_whatisebay.htm Paolinetti, C. (2011) eBay Closing in to Support. eMoney Daily. Retrieved 26 February 2011 from http://markets.emoneydaily.com/emoneydaily/action/linkout?URL=http%3A%2F%2Fwww.tradershuddle.com%2FTrading-Ideas%2F17265702242011-ebay-closing-in-to-support.html&Title=+eBay+Closing+in+to+Support Red Ink Diary (2008) The Corporate Culture, eBay as Ivory Tower. Retrieved 26 February 2011 from http://redinkdiary.blogspot.com/2008/06/corporate-culture-ebay-as-ivory-tower_05.html Sage, A. (2010) UPDATE 3-Ebay points to PayPal momentum, pledges innovation. Reuters.com. Retrieved 26 February 2011 from http://www.reuters.com/article/2011/02/10/ebay-idUSN1016995920110210 Zacks Equity Research (2011) eBay Tops, Shares Up. Yahoo Finance. Retrieved 26 February 2011 from http://finance.yahoo.com/news/eBay-Tops-Shares-zacks-3273723962.html?x=0&.v=1 Read More