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EBay Marketing Case Study

Paper Type: Free Essay Subject: Marketing
Wordcount: 2191 words Published: 18th Sep 2017

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Teresa A. Cochran
EBay has established itself as one of the largest and most popular online trading sites on the internet. Developed in 1995 by computer programmer, Pierre Omidyar, eBay has grown tremendously, creating what may have described as the perfect market. EBay not only pioneered emerging technology but revolutionized a new business model with person to person online sales without interference of outside regulation. The online auction industry itself has grown tremendously since the 1990s, with thousands of Americans supporting themselves solely by selling merchandise online as one of the original internet trading platforms. EBay gained notoriety by having reasonable prices and for having hard to find items. It allows sales both locally and on an international level, with a diverse and energetic group of members and independent companies. Today, eBay connects a global community of buyers and sellers via an exceptional platform that connects people who, otherwise would not be connected (Kotler & Keller, 2012). By creating a business model that relied on connections, the eBay platform offers millions of unique items for sale or trade each day. EBay’s growth and momentum has continued as individuals and small businesses discovered that eBay was an efficient way to reach new customers and other businesses (Kotler & Keller, 2012).

EBay offers many different products in a large number of categories ranging from clothing to cars, and the bidding format puts the consumer in charge of the trade. But why has eBay grown into a billion-dollar global enterprise while other similar sites have failed? Since its inception, eBay is one been of the pioneers in internet e-commerce and has been successful in creating an online community of buyers and sellers of practically anything imaginable.

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This case study will analyze several factors in the development and ultimate success in addition to mechanisms by which eBay interacts with the market. An analysis into these strategies reveal that the growth of eBay’s online auction platform can be attributed to growth in the e-commerce market, an innovative approach to social interactions, emerging market trends, strong sense of community, and the core values of the organization have all contributed to the success of the company. EBay’s positioning statement is “The world’s Online Marketplace”, which is significant for the company’s view of its identity. The core values at eBay were to develop a culture of trust and fun. Among the factors that have been credited for eBay’s success have ranged from the use of website to increased customer feedback, buyer protection, range of items, competitive prices and also the ability to reach a global market.

EBay’s successful evolution has been based on their ability to reduce risk to the buyer, minimize disinformation, and enforcing rights to property. By developing relationships between buyers and sellers in a trade many of the issues around mistrust, uncertainty, and cooperation are resolved and seek to guarantee both parties a successful exchange. This exchange satisfies both by parties by allowing the buyer to control the maximum price they are willing to pay and the seller can benefit from increased profit margin and the efficiencies gained by utilizing an online platform. Buyers can view items by seller, location, condition or time remaining in the auction. As evidenced by the number of site visits per day, eBay appears to be an efficient way for individuals and more recently businesses to sell merchandise (Kotler & Keller, 2012).

The organization also regulates transactions its seller profile and feedback forums. This form of rating and comment is linked to the seller’s performance. Feedback has been attributed as a major important factor for achievement of success. The members of the eBay community have the ability to leave feedback or rate items bought on eBay This type of feedback encourages both buyers and sellers to feel like and integral part of the organization. EBay’s online personal trading community relies on the mutual trust and respect. This creates a connection between both parties; therefore there is a mutual dependency in all transactions that underpins the culture of the eBay community. Business relationships between buyers and sellers are pivotal in the maintenance of the business structure. These relationships involve issues regarding compliance with formal or informal regulations. As previously noted, the business model utilized by eBay is one that is based on mutual trust. The company offers users buyer protection on purchases made via PayPal. Therefore, by member’s use of the PayPal payment system, each member can be confident that their transaction is protected against deceit or being duped in any fashion.

Evaluation of eBay fee schedule

EBay’s business process creates a business model, which does not require the carrying of inventory, but rather has its share of the profit margin from every transaction that it does (Mishra, 2010). This type of fee structure in most commonly referred to as second degree price discrimination. This practice refers to the charging of an insertion fee for each item listed and is designed to attract vendors with higher sales volumes. In addition to the listing fee, the vendors are charged a percentage based on the final dollar amount of the auction or buy it now listing. EBay also caters to buyers who purchase goods in higher volumes. This strategy attracts a small business owner who would like to purchase merchandise in bulk but does not have the resources to buy from larger wholesale distributes.

The discussion of whether or not the fee schedule is optimal depends on the vendor’s status in the marketplace. In response to feedback from sellers, EBay has made significant revisions to the fee schedule in response to increased competition in ecommerce. EBay has launched a new fee structure and incentives for sellers in an effort to remain the most competitive commerce platform (Rao, 2013). The simplification of the pricing structure allows vendors to list items for free therefore both individuals and eBay store owners can increase their profit margin. The listing fees for the occasional seller are very different from those of power seller in that there is a difference in the number of free listings. Small volume sellers can list up to fifty listings monthly while power sellers can list up to twenty five hundred. This fee structure is optimal for smaller volume sellers. These changes in the fee structure will benefit larger power sellers by discounting fees charged to maintain their online store. In the older fee structure, there were no free listings for stores (Rao, 2013). Other revisions to the fee schedule include basing the final value fee on the items price at the completion of the transaction. As with any other business traditional or ecommerce, an evaluation and adjustment must be done routinely to their pricing structure to ensure that it is beneficial to both the vendor and the buyer. EBay must continue to evolve to remain competitive in a very diverse segment of the consumers who will be participating in the online marketplace via new outlets such as Facebook Marketplace. This fee structure is been made more optimal for buyers and sellers but will be a vulnerability as more consumers utilize platforms that do not charge a transaction fee such as Facebook and Craigslist.

What’s next for eBay?

Online auctions have become an increasingly popular and efficient ecommerce method of facilitating the participation of Internet users in trading activities through flexible pricing processes, convenient access and the availability of a large variety of products (Cui, Lai, & Liu, 2008). The advancement of eBay commercial center has developed into a worldwide commercial center since its dispatch in 1995. Current market patterns demonstrate that far from the underlying concentration of individual to individual deals so as to be more aggressive with other online retailers. A significant number of the efficiencies that added to the underlying development of eBay, access to data, diminishing geographic impediments to online business are the consequence of the development of the web.

EBay is currently still growing as an online auction marketplace, with operations in the United States, Europe, African and even Asian countries. There is such an enormous interest for web based business in this quickly creating world. eBay has a great deal of preferences if the drive proceeds with, this movement could quicken given eBay’s emphasis on online installment frameworks, for example, PayPal, the ascent of web-based social networking and its consideration on creating markets. This will help them to maximize their chances to market and make other investments that will enhance the marketplace and help the sellers grow their businesses (Kotler & Keller, 2012). When completing an evaluation for what’s next for eBay, innovation and continued expansion into undeveloped markets must consider. Demand for products to be available online is growing at a rapid pace.

Another aspect central to continue success is to evaluate the technology utilized and focus on innovation in order to remain competitive in the fast paced online auction market. EBay sales dipped when GOOGLE changed its algorithm and eBay was no longer on the top of the search results when people were shopping online (Rao, 2015). With web based business growing rapidly, eBay can utilize online networking as a platform to increase sales. Social media sites like Facebook Twitter and Instagram can be utilized as promoting diverts to attract more clients for eBay. Auctions can also be cross-promoted on local sites such as Craigslist. Web-based social networking enables online shoppers to support the development of an online business.

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EBay could build its customer base by addition and expansion current of partnerships and investments around the globe as well as focus on the maintenance of current connections between the buyers and sellers. Additionally, eBay must focus on maintaining a fee structure that is optimal for all parties, buyers, and sellers. Fees should be as low as possible to the vendors in order to reduce the final price to the buyer. The company should improve technology as one of the key components of the existing business model, making it easier to think of new way to do development of alternative ways to reconfigure existing resources (Kimble & Bourdon, 2013). In conclusion, with the high number of goods and services that can be exchanged without geographical constraints, eBay is well positioned to maintain is growth rate and achieve even greater sales volume.


Cui, X., Lai, V. S., & Liu, C. K. (2008). Research on Consumer Behaviour in Online Auctions: Insights from a Critical Literature Review. Electronic Markets, 18(4). http://dx.doi.org/10.1080/10196780802420752

Kimble, C., & Bourdon, I. (2013). The link among information technology, business models, and strategic breakthroughs: examples from amazon, dell, and eBay. Global Business and Organizational Excellence, 33(1), 58-68. http://dx.doi.org/10.1002/joe.21523

Kotler, P., & Keller, K. L. (2012). Marketing management (14th ed.). Retrieved from https://online.vitalsource.com/#/books/9781323291016

Mishra, M. K. (2010, December). Why is eBay the Most Successful Online Auction? Global Journal of Management and Business Research, 10(9), 62-65. http://dx.doi.org/GJMBR-B Classification (FOR) 350213

Rao, L. (2013, March 19, 2013). To Compete With Amazon, eBay Debuts Free Listings And Simpler Fee Structures For Sellers [Blog post]. Retrieved from https://techcrunch.com/2013/03/19/to-compete-with-amazon-ebay-debuts-free-listings-and-simpler-fee-structures-for-sellers/

Rao, L. (2015, July 20, 2015). For eBay, a new chapter begins. Fortune Tech. Retrieved from fourtune.com/2015/07/19/ebay-independence


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