Internet Marketing - E-Bay - Case Study Example

Internet Marketing Name Institution Executive Summary E-Bay is an e-commerce business that offers C2C and B2C sales services and is headquartered in the United States. Over the years, the company has gained success and has grown considerably. However, due to intense competition from players such as Amazon and Yahoo, the operations of the company have been compromised. There is therefore a need to come up with strategies to enhance competitive advantage. One way of doing this is to enhance social media and website presence. E-Bay has received a number of complaints from its users about the poor condition of its website. One of the challenges facing eBay is its out-dated website and seller and buyer system. There is therefore a need to improve website content, keywords tools and Meta descriptions. In addition, the social media use by the company has been criticised which has affected its market share. It is important for the company to enhance its social media use in order to be successful. Also, E-bay can differentiate itself from the competitors by enhancing its marketing and advertising strategies. Table of Contents Executive Summary 2 Table of Contents 3 Background/Introduction 4 Competitive Analysis 4 SWOT Analysis Table 5 Market Structure (Porters Five Forces Analysis) 6 Competitive Rivalry 6 Threat of New Entrants 6 Power of Buyers 7 Power of suppliers 7 Threat of substitute 8 Market Segmentation and Target Market 8 Web Presence 9 General Web Strategy 10 Website Analysis 11 Social Presence 13 Conclusion 14 References 15 Background/Introduction EBay is an e-commerce multinational company located in the United States that offers C2C and B2C sales services through the internet (Sinclair, 2007). The company was founded in 1995 and has grown to become one of the largest e-commerce companies worldwide. Being among the largest ecommerce companies, the objectives of eBay is to allow online shopping through auctions. EBay’s mission is to discover new communities across the globe built on commerce and founded upon trust and stirred by opportunities (Sinclair, 2007). The overall goals of the company are to increase its revenues by focussing on acquisition, activation and activity. EBay has physical stores as well as online shopping website where customers buy and sell their products and services. The company generates its profits and revenue through fees for services, final value fee as well as listing products features (Sinclair, 2007). EBay charges about $0.10 to $2 as an installation fee. The final value fee makes up about 10% of the overall sales of the company. The company’s strategy involves exploring new markets. The company has expanded in over 30 countries such as China and India (Sinclair, 2007). This paper will highlight the audit of the company and the recommendations for improvement. In the audit, the paper will describe the competitive analysis, market structure, segmentation and target market and the company’s web presence. In the recommendation part, the paper will offer general web strategy, website analysis and social presence of the company. Competitive Analysis The major competitors of eBay include Yahoo and Amazon Inc. Amazon is said to be the leading ecommerce company in the United States. Amazon offers a variety of products such as electronics, food stuff and furniture (Luthge, 2004). The company also produces electronics like TVs and e-book readers. Amazon’s value proposition includes convenience, speed and choice. The online business of Amazon is extremely convenient as it is easy to find what one is looking for (Luthge, 2004). The company delivers its products fast due to warehouses located in convenient locations. Amazon offers choices for its customers from books to electronics. The company has acquired large market percentage due to its safe auction through insurance (Luthge, 2004). Yahoo value proposition includes fast, fun and focussed. The company delivers their products and services fast and has offered a fun environment for the employees (Luthge, 2004). In addition, the company focuses on the needs of the employees and customers which have contributed to its success. Yahoo is the most known brand name that offers services for free of charge. In addition, yahoo offers quality products and services due to its investment in technology that improves its overall performance. Overall, eBay has dominated the online industry followed by Amazon and then Yahoo. Amazon and eBay hold a larger market share compared to Yahoo. Yahoo has been faced with many challenges gaining grounds (Luthge, 2004). They have failed in their global venture and their operations in foreign markets have been unsuccessful. The strengths, weaknesses, opportunities and threats of eBay compared to the competitors can be summarized in a SWOT Analysis table. SWOT Analysis Table Strength EBay is considered pioneer of ecommerce business Joint venture with AOL Effective business model and brand building Global presence and recognition High availability and accessibility The company auction variety of products It has established anti-fraud measures that has strengthened its brand name Weaknesses EBay does not have insurance for their products Minimal use of technology to enhance products There is need for search engine when verifying products The website is faced with web application challenges Opportunities Opportunity to explore other markets through internalization Acquisitions and alliances will expand eBay’s operations Market development in foreign countries Joint ventures and other strategies have increased its market penetration. Threats Intense competition from Yahoo and Amazon Its products have many substitutes Threat of attach from illegal practices and insecurity Operations of the company is unaccepted by some cultures like Japan Require high tech employees who are paid high salaries Market Structure (Porters Five Forces Analysis) Competitive Rivalry EBay faces both direct and indirect competition. Individuals and businesses can buy products and services from different players such as search engines, distributors, retailers as well as directories which make the competition intense (Trefis, 2014). In addition, in order to woo the customers, e-commerce companies reduces their prices which also raise industry rivalry. Also, new players such as Alibaba and Apple Pay have entered the market which will heighten the competition in the e-commerce industry. eBay also faced competition from online payment mechanisms including bank wires and credit cards (Trefis, 2014). Threat of New Entrants The e-commerce and online industry is considered to having low barriers to entry. New players can easily enter the industry and start doing business with a few restrictions (Trefis, 2014). Nevertheless, it is very hard for them to gain brand recognition as well as gain high standing on search engines. E-commerce is an expensive industry and requires high marketing budget in order to compete with already established brands (Trefis, 2014). This may restrict new players from entering the market. Therefore, the threat of new entrants is medium. Power of Buyers Due to the large number of e-commerce companies which has intensified the competition, many companies are forced to reduce its prices in order to attract more customers (Trefis, 2014). This allows the customers to win in terms of demanding for better prices. In addition, customers are able to choose from the wide variety of products and services from both offline and online players. Customers can buy products from other websites or physical stores if they are unsatisfied with a specific player. Since customers can demand better prices and have access to variety of products and services from different players, their bargaining power is high (Trefis, 2014). Power of suppliers There is huge number of suppliers who list their products on the eBay marketplace which limit their bargaining power. Nevertheless, suppliers have an opportunity to list their products on other platforms and e-commerce sites (Trefis, 2014). If eBay comes up with unsatisfactory policy and pricing, suppliers can sought other e-commerce sites which may limit the number of listings in its marketplace. Therefore, although there are a large number of suppliers in the market, due to variety of e-commerce sit, they hold some bargaining power (Trefis, 2014). Threat of substitute There are a number of substitute products and services. For instance, physical stores and online and offline payment systems may pose as a threat to the operations of eBay (Trefis, 2014). However, the company offers a large number of products to its customers which keep the threat of substitute low. Market Segmentation and Target Market Market segmentation entails demographic segmentation, psychographic segmentation, geographical segmentation and behavioural segmentation (Weinstein, 2004). Behavioral segmentation separates customers into classes with regard to their knowledge, response, their rate of usage and also their readiness stage to purchase a certain product. It is renowned that building market segments most at times commence with the behavior variables. On the other hand, psychographic segmentation also referred to as lifestyle segmentation divides customers according to their activities, interests and the way they spend their leisure time (Weinstein, 2004). The lifestyle products entail the high involvement products and lifestyle of an individual may affect the purchase decisions. Geographic segmentation categorizes the market intonations, regions, cities, and states among others. This criterion brings together both geographic and demographic data to form a definite profile (Weinstein, 2004). For instance, the company’s retail stores are located in town centers where there is high accessibility. The largest geographical market segment for eBay is United States and China. EBay has targeted about 30 countries but has ignored customers from other nations. This segmentation strategy is a step towards international marketing. Demographic segmentation is founded upon variables like age, education level, occupation and sex etc. the benefits of a product may be perceived different by different types of customers (Weinstein, 2004). The recommended market segment for eBay is demographic segmentation. The company will be able to divide the market into different groups which will allow marketing and promotion massages to be tailored accordingly (Weinstein, 2004). For instance, eBay may provide its customers with different products depending on aspects such as age, gender and income levels. This can be a very important aspect of marketing since eBay can maintain a very respectable and sustainable relationship with every buyer. Web Presence One of the challenges facing eBay is its out-dated website and seller and buyer system. Its website system is known to favour the buyers over sellers which is a huge challenge they face (Scupola, 2009). In addition, eBay website is faced with traffic-related challenges that have been brought about by security breaches. The company has received a number of complaints from sellers and buyers due to issues related to its website. Another challenge eBay face is its ranking in Google search results. Recently, Google made some changes with regard to its search engine algorithm. Due to this, many companies were removed from high-ranking search results. In the past, eBay was among the high-ranking search results but after Google changes, its Google ranking dropped considerably (Scupola, 2009). The Google Panda update impacted eBay as it was penalized for inadequate content on listings and poor search strategies. Although eBay is the second biggest company in the Google’s product listing ads, it spends a lot of money on this. Also, the company has not implemented search best practices to improve its keywords searches and this has led to many queries and complaints from customers (Scupola, 2009). The ability of eBay to surface in the search results is low which makes it very hard for the company to woo its users on the site. EBay uses Autocomplete service as its keyword tool. The keyword tool offers search suggestions when searching for any product on its website (Luthge, 2004). The keyword tool used by the company imitates a real human user. EBay offers a list of predictions of the searched keyword. However, compared to Amazon, eBay has a long way to go I terms of keyword search. Amazon keyword tool is able to find long tail keywords. The eBay’s social channels include Tumblr, Instagram and Twitter. EBay is effective at creating interesting content in the social media. In addition, through these social media channels, the company can access millions of brand stories monthly (Luthge, 2004). However, compared to the competitors such as Amazon and Yahoo, eBay does not frequently engage in conversations on the social media. The company has a long way in building good relationship with consumers through the social media. Also, they have a long way in cross-promoting their products in the social channels. General Web Strategy EBay can differentiate itself from the competitors by using different strategies. For instance, the company can invest capital in promotional and marketing activities (Luthge, 2004). It can use intensive marketing and advertising strategies and expand on its social media marketing in order to expand its market share. In addition, it can differentiate itself from the competitors by incorporating secured and cheap payment system (Luthge, 2004). The company should offer its products according to the taste and preference of its consumers. For instance, it should differentiate its products according to income status, age and gender. This will enable them modify its marketing strategy according to different target market segment. In addition, eBay should make use of geographical segmentation. The company has been unsuccessful in some markets such as Japan due to cultural difference and different customer preferences in different countries (Luthge, 2004). The company should modify its products according to the needs of different markets across the globe. It should also tailor its marketing strategies in different countries. In addition, eBay is faced with challenge of determining the targeting content for audiences. It is difficult to come up with ways to market a product to the international audience due to different tastes and preferences (Luthge, 2004). One way eBay can deal with targeting challenge is to identify the target market and organize and enhance the business website for different countries. EBay has not implemented new technology in its operations. The company still uses old online system which has led to Amazon taking a larger market share. In order to fight competition and improve its operations, eBay should invest in technology (Luthge, 2004). This will enhance its sites overall visual and aesthetic feel and reduce overuse of capital on out-dated technology. Website Analysis There are a number of strategies eBay can implement in order to improve its website. High quality content is an enabler of search engine rankings (Chiou, Perng and Lin, 2009). Therefore, in order to ensure effective website, there is need for great content. EBay should create quality content for the intended target market in order to increase site traffic and relevance. The company should write longer content in order to be ranked higher than its competitors. High quality content will get users to come back and will increase its sharing (Chiou, Perng and Lin, 2009). The company should find a keyword phrase for every page. It is important to think what users will search for any specific page and repeat this phrase throughout the page. The company uses a lot of keyword phrases that the browser sometimes ignores the data. In order to improve on this, the eBay should use 6-10 phrases with the phrases having 1-4 words. In addition, in order to improve website efficiency, it is important for eBay to update its content regularly. This will enhance the site’s relevancy and freshness (Chiou, Perng and Lin, 2009). Also the company should make its Meta description act as the site’s window display. It should be appealing description of the content of the website which encourages people to enter. The most important metadata in any website is the title metadata. The page titles should be appealing and should focus on different target markets (Chiou, Perng and Lin, 2009). In addition, one simplest way to improve eBay’s website is to enhance its design and layout. It has been reported that the company’s website pages are clustered, redundant and confusing. It has a lot of products which are misbranded, poorly photographed and mischaracterised. This often makes it very hard for customers to find what they are looking for. Improving these contents will improve the experience of website users (Chiou, Perng and Lin, 2009). Another way to improve website SEO is to improve website usability. SEO is enhanced when the users stay on the website longer, revisit pages or view more pages. In addition to improving keywords use, it is important for eBay to enhance user engagement and usability. This can be done through error prevention and website efficiency and effectiveness (Chiou, Perng and Lin, 2009). Social Presence EBay should improve its social media presence in order to expand market share and enhance its competitiveness. EBay only utilizes limited social connections such as Twitter and Facebook. The company has limited social media presence. EBay should make use of other social media such as Snapchat and instagram. Snapchat has more than 100 million daily active users and is world’s fastest-growing social network (Cole, 2015). More than 70 per cent of snapchat users are in 18-34 age brackets. However, they are growing to be one of the most important global marketing strategies. EBay can use snapchat in various ways. For instance, the company can offer access to live events such as launching new products. The company can post video clip of new products (Cole, 2015). Fashion brands and electronics can be rebutted to followers before their launch. This will make the customers feel included and part of the company. Every person loves giveaways and promotions. EBay should think of a way to keep the followers engaged. For instance, the company can provide discounts to specific group of followers. Ask followers to take a snap with the products in order to receive the discounts or watch the whole snapchat video (Cole, 2015). In addition, in using social media channels, it is important to partner with influencers. Social media influencers are able to assist in brand awareness and recognition. When eBay partners with influencers, it will be able to spread awareness especially in regions that are difficult to access due to cultural differences. Social media influencers are able to create marvellous video content that will spread brand voice and personality (Cole, 2015). In every social media page, eBay should use content mix which means that it should include more video contents (Cole, 2015). Nevertheless, in order for this to be effective, the company should eliminate the habit of implanting video contents from other sources on its page. This creates return traffic for producer rather than the company. When the company produces its own video contents, the customers often come back to view the videos and there is also a SEO benefit of producing a content first. EBay should also create close relationship with its social media followers. The company should get engaged more on conversations and should look for the best way to enhance engagement (Cole, 2015). For instance, the company can create an event or can develop a hashtag in order to chat with the potential customers. Also, eBay should increase its chat times in order to have a personal interaction with the customers. Conclusion EBay is an e-commerce company that offers C2C and B2C sales services through the internet. The company generates its profits and revenue through fees for services, final value fee as well as listing products features. The major competitors of eBay include Amazon and Yahoo. These competitors have better website usability and effectiveness compared to eBay but eBay has dominated the online business. The competitive rivalry is medium to high, the power of customers is high, the power of suppliers is low to medium, the threat of substitute is low and the threat of new entrance is medium. The effective segmentation strategy to be used by eBay is demographic segmentation since the company can divide the market into different groups which will allow marketing and promotion massages to be tailored accordingly. Generally, the web presence of eBay is limited and needs some improvements. To improve the web presence, the company should improve its content, Meta description and design. In addition, to enhance marketing strategy, eBay should expand its social media presence by using instagram and snapchat was a promotional tool. References Chiou, W., Perng, C., & Lin, C. (2009). Website evaluation: consistency between website presence and strategy. International Journal Of Information Systems And Change Management, 4(1): 66-72. Cole, G. (2015). The value of social media. Strategic Direction, 31(1): 3-5. http://dx.doi.org/10.1108/sd-10-2014-0152 Lüthge, M. (2004). Strategic Analysis of eBay. Munich: GRIN Verlag GmbH. Scupola, A. (2009). Cases on managing e-services. Hershey, PA: Information Science Reference. Sinclair, J. (2007). EBay the smart way : selling, buying, and profiting on the Web's #1 auction site. New York: AMACOM. Trefis T. (2014). eBay Through the Lens Of Porter's Five Forces, the Forbes. Retrieved from http://www.forbes.com/sites/greatspeculations/2014/11/24/ebay-through-the-lens-of-porters-five-forces/#36b5b8532179 Weinstein, A. (2004). Handbook of market segmentation: strategic targeting for business and technology firms. New York: Haworth Press. Read More