The purpose of this study is to examine a company named ‘EBay” which is known as one of the market leaders in America for its superior services. This report will provide a thorough analysis of the external and internal factors contributing to the success of the company and will also provide various recommendations on how it can improve its strategy to attract more and more customers and generate more revenue.
The company in view was inaugurated in by Pierre Omidyar as online retailer store of customer to customer and business to business sales in 1995. It is now famous all over America for its vast reach and online global presence all over the world. The website includes a broad range of products including outfits, makeup items, electronics, shoes, furniture, kitchen equipment and all sorts of jewelry items. EBay also has a lot of individual product section like Sephora Makeup, optical centers, Seattle’s Best Coffee and various picture studios, along with online purchase options for jewelry and clothing items and electronic equipment, etc. The company mainly operates in the USA and California.
The theme of the report is to find out how the external and internal environmental factors like the company’s competitors, suppliers, and customers along with its employees and senior management shape up its success in the market. The study will provide some recommendations for the industry after analyzing these factors to help make the company more successful in the long run.
The primary target population are all segments of population including children, teenage boys and girls and men and women especially mothers in the age group 35 to 45, with a family of 3+ members and belonging to middle-to-low class families.
The constant increase of growth of developing countries’ economically offers an opportunity to improve revenue growth for the company grounded on cumulative trade capacity. For instance, eBay Inc. can make use of this knowledge to tactically increase its online retail/auction services while operating in these developing states to produce additional proceeds from expanding trade. The influence of rising disposable incomes in each countries can also be declared as an prospect for the company as higher revenues can be expected with the increase in the customer buying capacity for each online purchaser in such countries.
The company’s associates are responsible and have an individual liability in case of breaching any laws. The company follows all standards for ensuring a better and safer environment and associated health and well-being concerns for individuals.
Consumers all over the world are moving towards online and mobile based shopping owing to ease of use and time-saving. EBay in that regard has launched a mobile app for its online store which has largely garnered consumer’s interests.
EBay tries to capture all the target customers both online and via retail stores. By offering a mobile purchasing policy to its customers, EBay can extend its reach to thousands of clients. The company also provides discounts and sale promotions on online purchases, thus enabling it to attract new and more buyers.
The PESTEL forces can help pave the path for EBay stores if incorporated in the main strategies of the business.
The company has a vast web existence with services which are widespread all across the country. However, the increasing needs of the customers have shaped the wide range of the online store into different categories like Fashion, Electronics, Collectibles & Art, Home & Garden, Sporting Goods, Motors and Daily Deals.
The main market segments in USA are inner-city and peripheral areas of the Midwest U.S. with people of all ages. The company’s global existence however, makes it difficult to mark its market size. Statistics show that “the size of the market they are competing within is around $6-700B excluding the Chinese domestic market”
The company has a better ratio of 1.7 concerning its competitors. Having a current increased ratio as compared to its competitor shows that the business has a sturdier financial situation. The current assets are estimated to be around $4,833 million, with an improvement of 31.2%. Its current liabilities are estimated to be around $2,846 million. The company has a robust cash and liquidity spot which proves a strong suit for it when investing in any probable prospects.
The biggest trends in the online stores industry in 2018 are known to be:
- Stinginess and cognizant consuming patterns
- Heed towards environmental safe products and services, green amenities, and environmental preservation activities are immensely advertised and focused on by the U.S. retailers, attracting more customers.
- Integrating of latest technology including web-based shopping to cater to the needs of newer demographics.
- State of the art inventory management systems in stores for efficient warehouse management
As the company is acknowledged for its presence globally, so it’s hard for new entrants to enter and compete effectively in the market. This is a plus point for EBay to survive and maintain its position once it has entered the market. Other websites will face robust and durable barriers for entrance as it is time and cost efficient. However, with technological advancements, the risk is high since many local manufacturers offer similar products at a lower cost online without incurring any costs.
The company has around 2,700 local and overseas suppliers and aims to control the quality of its products and services by internationally purchasing subsidiary. The company further has various quality assurance offices in different countries.
Buying power is the assessment of how easy it is for buyers to drive prices down. Keen buyers can pressure sellers to lower costs, improve product quality, and offer more and better services. As the web store provides innovative and unique prices for each product, so there will be more buyers of it. Some of the consumers enjoy shopping according to seasonal trends while some prefer buying off-season to avail sale lineups. These consumers tend to purchase thing in bulk for added significance. They are also the ones who focus on buying products through different deals and offers.
The main rivals like Amazon, Etsy, Rakuten and Newegg etc. have identical characteristics offering the similar prices and promotional activities to the EBay store. However, a major difference is that all of these web stores lack sheer customer facility networks like the EBay stores. EBay offers some of the high end commodities as well along with focusing on its famous brand image to appeal to the buyers. EBay also has a vast access to sponsored programs through which it tries to take up more customers, along with this EBay has a historical base too.
The primary competitors of the EBay include Amazon, Etsy, Rakuten and Newegg etc. Looking at the profitability ratios of the past three years, the toughest opponent was Amazon when it comes to improved revenues and sale proceedings.
Some of the rivals like Amazon are launching new strategies to attract more customers. Amazon lacks the improved customer service like EBay but is immensely popular in customers because of such activities. A supplementary force for Amazon is that it has endorsement and marketing deals with celebs. Many of holiday advertisements of Amazon will now target a diversity of celebrities increasing the webstore’s appeal to its consumers. The promotional sales for holidays are also an excellent way to attract more buyers.
The company should make use of all these factors to gain more and more buyers and gain an edge over its competitors.
Internally speaking the company has a combination of in-house circulation and particular dissemination categories. The company mainly operates all over USA and has headquarters at San Jose, California. It has around 12,600 employees.
EBay has a combination of various international and local brands. The company mainly wants to target the power brands which will appeal to more and more customers like Sephora 11, Worthington, Ralph Lauren, Olsenboye by the Olsen twins, A.N.A, Super Girl by Nastia Liukin and I Heart Ronson by Charlotte Ronson.
The main leaders of the company include the Chairman of the Board & CEO called Mr. Devin Wenig. While the hierarchy of the officers of the store is Mr. Scott Cutler is the SVP, Americas and Mr. Steve Fisher is the SVP, Chief Technology Officer, Marie Oh Huber is SVP Legal Affairs, General Counsel & Secretary, Wendy Jones is SVP, Global Operations and Jay Lee is SVP, EMEA along with Mr. Kris Miller as SVP, Chief Strategy Officer and Jooman Park as SVP, APAC, Mr. RJ Pittman as SVP, Chief Product Officer and Scott Schenkel as SVP, Chief Financial Officer.
Overall the organization focuses on a Low power distance where employees follow an individualistic approach. EBay has a high uncertainty avoidance at middle management while its remains small at senior management who continually try new things to innovate. The company overall focusses on a long term orientation.
The new CEO of the company highlight working in teams and incorporating better, more emphatic Long Range Plans to pave the path for business growth. It includes changes in the enterprise resources like reformed variations in the supply chains and distribution cores. It also included using a RFID system for the operation. The strategy, in turn, would help the company keep track of all its inventory and attract more consumers.
The active leadership of the current CEO has carefully integrated all the internal factors like the employees and the upper management to work together seamlessly to attain EBay’s goals. Analysis of Firm Resources
EBay’s Tangible assets are fixed assets are its manufacturing plants, the retail stores and inventory houses along with land and current assets like stock. Intangible assets include patents, trademarks, and copyrights along with the brand name. One of the best intangible resources regarded for the company is its chairman and CEO, Devin Wenig.
Ebay’s central theme is to capture the interest of mothers especially homemakers to purchase their family items at reasonable prices. The primary skill of the company is its customer first strategy where it incorporates the use of sale promotions to attract more customers. Sale promotions enable buyers to gain the opportunity of an incentive along with motivating them to make a purchase decision they didn’t intend for.
The company is perfectly able to design newer strategies and attract more buyers with the increasing rates of proceeds and better strategic implications by its senior management in the long run.
The financial analysis shows that company can benefit by offering more value to its customers by providing various offers and discount promotions. The company can also attract more customers by providing the convenience of online shopping at the time anywhere from the web stores.
The company is known to have immensely increased rates of employee dissatisfaction and morale were found to be quite small with a very high turnover rate. The top rate of turnover is alarming since they charge the company with around one thousand dollars for every worker that leaves immediately after employee training. The cost adds up to more when the experienced workers leave. Additionally, the company only focusses on long term planning making no room for short-term planning skills.
EBay Company’s biggest attribute is how the customers are orientated. The customer first strategy of the company gives a company a significant competitive edge over its rivals since the primary focus of EBay is the needs of the client. Since, the company is following a long term approach it always welcomes new and innovative abilities with arms wide open, rendering it with a better position in the minds of the customers.
The key advantages of EBay includes a state of the art supply chain, a unique selling and manufacturing approach, robust proceeds, and variety of product and services. However, the weak economic performance in the recession period and a deficiency in merchandise recall present challenges to the company. Reduced recall show product inferiority, leading to a weak brand’s image and greater operation overheads.
The company faces an imminent threat in the form of counterfeit products from local manufacturers along with an upsurge in workforce expenses, and continued rates of growth by its competitors. However, the rates of consumer spending in the U.S. have improved after the recession period opening up avenues of strategic investments for EBay.
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