eBay
By:
Dan McLindon
Kyle McDaniel
Jeremy Smiley
Tom Anderson
Ray Moorman
Key Question for eBay
How can eBay continue to grow
as an online retailer?
Secondary Questions
• What is eBay’s history?
• What is happening in eBay’s external environment?
• How is eBay performing today and what does the future look
like?
• Who are eBay’s competitors and how is their performance in
comparison?
• Does eBay still adhere to the strategies and values on which it
was founded? (Note: incl. company culture)
• Does the eBay brand create a sense of trust, security, and
community?
• Should John Donahoe be the CEO of eBay?
• What does a SWOT analysis show regarding eBay’s position?
• How can eBay position itself for future success?
eBay
Company Overview
Founded
1995 by Pierre Omidyar as an online
auction site to bring buyers and
sellers together.
Vision
“Create a place where people could do
business just like the old days – when everyone
got to know each other personally, and we all
felt we were dealing on a one-to-one basis with
individuals we could trust.”
Strategic Business Units
1. Marketplaces – online auction and
direct retail sites
2. Payments – PayPal
3. Communications - Skype
Organization Size
15,000 employees, revenues of
$5.9 billion in 2008
Company
Year
Anticipated Actual
Result
Result
PayPal
2002
Allow eBay users Success within
to make credit
eBay
card payments.
marketplace as
well as adoption
by other online
retailers (57
million registered
active accounts
ins 2008).
Rent.com
1st quarter 2005
Natural
N/A
extension of
online real estate
mkt.
Shopping.com
2nd quarter 2005
Bolster
traditional online
retailer
presence.
50 million visitors
per month,
world’s 3rd
largest internet
shopping site.
Skype
2006
Create synergies
with Marketplace
SBU, enabling
buyers and
sellers to
communicate
better.
2007 had to take
a $900 million
writedown on
value, synergies
not realized.
CEO indicates
potential sale.
StubHub
2007
Synergies with
existing ticket
business.
Successful
expansion into
adjacent mkt.
eBay Key Acquisitions
Conclusion: eBay’s
strategy of growth by
acquisition in core and
adjacent markets has
been hit or miss. Major
success was PayPal,
which was more of a
horizontal integration
than an adjacent market.
Secondary Questions
• What is eBay’s history?
• What is happening in eBay’s external environment?
• How is eBay performing today and what does the future look
like?
• Who are eBay’s competitors and how is their performance in
comparison?
• Does eBay still adhere to the strategies and values on which it
was founded? (Note: incl. company culture)
• Does the eBay brand create a sense of trust, security, and
community?
• Should John Donahoe be the CEO of eBay?
• What does a SWOT analysis show regarding eBay’s position?
• How can eBay position itself for future success?
PEST Analysis for eBay
Category
Issue
Threats/Opportunities
2008 Economic downturn
Threat – lower retail spending.
Opportunity – new sellers looking to
supplement income, buyers looking
for better deals.
Ranking
(1-5)
Political
Economic
Growth in popularity of social
networking sites
Opportunity – possiblity to align with
sites for advertising and to gain new
users.
Development of mobile society,
beginning of the “Connected
Era”
Opportunity – enables buyers and
sellers to constantly monitor status
of ongoing auctions.
3
4
4
Social
Search capabilities
Technological
Global expansion of Internet
Opportunity - developments in
search make it easier for users to
find items they are looking for.
Opportunity – 1.4 billion Internet
users, ½ will buy something online.
5
3
5
Industry Overview (Supply)
Porter’s five forces:
Threat of
substitute products
High
Bargaining power
of suppliers
Rivalry among
existing competitors
Bargaining power
of buyers
Medium
High
High
Threat of
new entrants
High
Porter’s Five Forces
Factor
Analysis
Threat of substitute
products
Consumers can choose to go to brick and
mortar stores or trade without the use of a
website.
Impact
Can go to a number of competitors to sell their
goods. Low switching costs to use .
eBay must work with
Sellers to keep them as
active suppliers to buyers
on the site.
Bargaining power of
buyers
Online consumers can find what they are
looking for on a number of sites, unless good
is very rare.
eBay needs to find a way to
entice buyers to site and
keep them coming back,
like variety and free
shipping.
Competitive rivalry
Amazon coming on strong with well
established brand and customer service
focus. Traditional retailers also moving online
with varying degrees of success. Little to no
switching costs.
eBay will have to find a way
to differentiate itself, either
by variety, cost, or ease of
website use. Will likely
need all three.
Threat of new entrants
Many retailers moving online. Minimal costs
to setup a website and configure a payment
engine.
eBay well positioned in
market with large number of
users. Key will be to keep
existing and attract new.
Bargaining power of
suppliers
Secondary Questions
• What is eBay’s history?
• What is happening in eBay’s external environment?
• How is eBay performing today and what does the future look
like?
• Who are eBay’s competitors and how is their performance in
comparison?
• Does eBay still adhere to the strategies and values on which it
was founded? (Note: incl. company culture)
• Does the eBay brand create a sense of trust, security, and
community?
• Should John Donahoe be the CEO of eBay?
• What does a SWOT analysis show regarding eBay’s position?
• How can eBay position itself for future success?
Registered & Active eBay Users
250
200
150
100
Registered Users
Active Users
Linear (Registered
Users)
Linear (Active Users)
50
0
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
# of Users in Millions
300
•Reg users continues
to grow but Active
users has flattened out
Core Business: Online Auctions
2500
2000
1500
Online Auctions
1000
500
0
2000
2002
2004
2006
2008*
• # of online Auctions declining during
same time frame as users are increasing
eBay’s Business Model –
3 Operating Segments
% of eBay's Net Revenues
7%
Marketplaces
Payments
Communications
25%
68%
Net Revenues By Segment
6000000
5000000
4000000
Marketplaces
Payments
Communications
3000000
2000000
1000000
0
2005
2006
2007
Forrester Research: 2012
Prediction of Internet Sales
• B2B
predicted to
be 10x
larger than
retail sales
9%
Retail
B2B E-commerce
91%
Worldwide Internet Users in 2008
21%
47%
32%
•220m of NA was from US.
Asia, 550m
Europe, 380m
North America, 250m
Secondary Questions
• What is eBay’s history?
• What is happening in eBay’s external environment?
• How is eBay performing today and what does the future look
like?
• Who are eBay’s competitors and how is their performance in
comparison?
• Does eBay still adhere to the strategies and values on which it
was founded? (Note: incl. company culture)
• Does the eBay brand create a sense of trust, security, and
community?
• Should John Donahoe be the CEO of eBay?
• What does a SWOT analysis show regarding eBay’s position?
• How can eBay position itself for future success?
Secondary Questions
• What is eBay’s history?
• What is happening in eBay’s external environment?
• How is eBay performing today and what does the future look
like?
• Who are eBay’s competitors and how is their performance in
comparison?
• Does eBay still adhere to the strategies and values on which it
was founded? (Note: incl. company culture)
• Does the eBay brand create a sense of trust, security, and
community?
• Should John Donahoe be the CEO of eBay?
• What does a SWOT analysis show regarding eBay’s position?
• How can eBay position itself for future success?
Internal Analysis – Core Values
An honest,
open
environment
can bring out
the best in
people
Treat others
the way that
you want to
be treated
Recognize
and respect
everyone as
a unique
individual
Core
Values
Everyone
has
something
to
contribute
People are
basically
good
Conclusion:
eBay’s recent
changes to their
fee structure and
feedback forum
go against the
company’s core
values.
Secondary Questions
• What is eBay’s history?
• What is happening in eBay’s external environment?
• How is eBay performing today and what does the future look
like?
• Who are eBay’s competitors and how is their performance in
comparison?
• Does eBay still adhere to the strategies and values on which it
was founded? (Note: incl. company culture)
• Does the eBay brand create a sense of trust, security, and
community?
• Should John Donahoe be the CEO of eBay?
• What does a SWOT analysis show regarding eBay’s position?
• How can eBay position itself for future success?
Secondary Questions
• What is eBay’s history?
• What is happening in eBay’s external environment?
• How is eBay performing today and what does the future look
like?
• Who are eBay’s competitors and how is their performance in
comparison?
• Does eBay still adhere to the strategies and values on which it
was founded? (Note: incl. company culture)
• Does the eBay brand create a sense of trust, security, and
community?
• Should John Donahoe be the CEO of eBay?
• What does a SWOT analysis show regarding eBay’s position?
• How can eBay position itself for future success?
Management Timeline
1997-2008:
Omidyar recruits
top talent to serve
on eBay’s board
including Scott
Cook and Fred D.
Anderson
1996: Founder
Pierre Omidyar
and Jeff Skoll
run operation
alone
1997: Meg
Whitman hired
as CEO
2008: John
Donahoe becomes
CEO
Whitman vs. Donahoe
Meg Whitman
Took eBay from 30 employees
with $86 million revenue to
15,000 employees with $5.9
billion revenue.
Experience includes general manager at
Hasbro, brand manager at P&G, CEO of
FTD, president of Stride Rite, and SVP
of marketing at Walt Disney.
BA Economics from Princeton,
MBA from Harvard.
Approval rating of 75% at time
of retirement
John Donahoe
Started at eBay in 2005 as
president of Marketplaces SBU
• % of eBay’s revenue generated from
Marketplace fell from 72% to 56% during
that time
Experience includes consulting
firm Bain & Co.
Focus in Marketplaces SBU has been
growth through acquistion of other retail
sites, getting away from simple auction.
• StubHub, eBay express, online
advertising
Approval rating at 22%
Secondary Questions
• What is eBay’s history?
• What is happening in eBay’s external environment?
• How is eBay performing today and what does the future look
like?
• Who are eBay’s competitors and how is their performance in
comparison?
• Does eBay still adhere to the strategies and values on which it
was founded? (Note: incl. company culture)
• Does the eBay brand create a sense of trust, security, and
community?
• Should John Donahoe be the CEO of eBay?
• What does a SWOT analysis show regarding eBay’s position?
• How can eBay position itself for future success?
SWOT Analysis for Dell
Strengths
• Well established brand.
•Large number of user accounts.
•PayPal acquisition to support ebay.com.
•Ability to collect huge amounts of data on buyers
and sellers.
Opportunities
• Find a new revenue stream with online advertising
with Skype.
• Growth in total online retail means more potential
users of PayPal.
•Other competitors, Overstock.com and uBid.com are
struggling, possible acquisition targets.
•Personalize eBay websites for various countries.
Weaknesses
• New CEO John Donahoe.
•Company culture becoming stale, employees not
fully engaged.
• Skype acquistion.
• Fee structure has alienated some sellers.
•Limitations on feedback hurt ability to create sense
of trust and community.
•Moving away from online auction, into direct retail.
•No attempt to address issues and costs in shipping.
Threats
• Sellers moving to other auction sites, taking the
variety of items they supplied to the competition.
•Possible shift in online shoppers preferences from
auction-based to traditional online retailing.
•Scammers and security issues may drive customers
to the competition.
Secondary Questions
• What is eBay’s history?
• What is happening in eBay’s external environment?
• How is eBay performing today and what does the future look
like?
• Who are eBay’s competitors and how is their performance in
comparison?
• Does eBay still adhere to the strategies and values on which it
was founded? (Note: incl. company culture)
• Does the eBay brand create a sense of trust, security, and
community?
• Should John Donahoe be the CEO of eBay?
• What does a SWOT analysis show regarding eBay’s position?
• How can eBay position itself for future success?
Recommendations
1. Fire John Donahoe, leverage strong board of directors to
find a replacement that can lead eBay into the future.
2. Focus on restoring the eBay brand name. Make eBay.com
a 100% auction site. Use Shopping.com and other
possible acquisition targets to compete in traditional
online retail space.
3. Revamp fee structure to be friendly to both small and large
sellers. Tier the structure based on monthly or annual
trade volumes.
Recommendations
4. Look into acquiring either or both Overstock.com and
uBid.com
5. Introduce “Merchant Rewards” program
• Allow merchants to earn rewards points per
transaction.
• Rewards can include shipping credits/codes, free
boxes, packing supplies.