Ebay

Posted for research only.

Introduction

EBay is a company that began when there was no model or mold. Online auctioning at the time was almost as new as many to the internet in the mid to late 90's. The creator of EBay created something that had never been done therefore challenges did arise many that still exist today. Creating this online auctioning concept had many opportunities and many challenges to be discussed in this document. Since the company's beginning it has faced these challenges and appeared to make the most of the opportunities to become the premiere and most successful online auctioning site in the world. Taking advantage of its market entry and enhancing technology features has made EBay a household name in the United States and throughout many other countries in which individual access the internet.

Opportunities

In 1995 Pierre Omidyar created a whole new concept utilizing the internet. He took advantage of a new concept that could link individuals in various parts of the world utilizing a fairly new concept. Being the first to enter this market gave EBay a distinct competitive advantage that it still maintains to this date. As of 2005 EBay has become a generic term for online auctioning. EBay does not utilize the same strategy as your typical ecommerce shop. The difference is that EBay has formed a virtual community that has allowed sellers and consumers throughout the world to connect directly to one another. In a since EBay works as a virtual garage sale in which various sellers bring their products and pay a fee for a space to sell goods. Within EBay there are various relationships among sellers and buyers including person to person and business to person. Sellers vary from power sellers who might sell hundreds of products monthly to those who might list one item for sale. EBay sellers consist of online stores and even large businesses wishing to auction off excess inventory. The competitive advantage that EBay maintains is that this type of channel allows EBay to operate and make billions without physically carrying any inventory so product distribution is a null issue and operating costs are kept to a minimum. In this type of person to person auctioning the sellers carry 100% of the inventory while paying a relatively small fee for the use of the EBay's auctioning interface and another small fee once the auction is over. In addition to various auctioning fees EBay collects revenues from various banner ads and marketing promotions on its site.

Challenges

Like many ebusiness EBay faces problems dealing with security and fraud that are evident in any channel but perhaps more so when dealing online. EBay faces further challenges given the fact that all of the transactions that take place on its site happen among totally independent individuals thus giving the company little to zero control over what individuals do during auctions. Common types of fraud that occur in the online auction forum is the misrepresentation of a product, identity fraud, price manipulation, selling of stolen or counterfeit goods, and simply receiving payment for goods and never delivering. EBay has addressed many of the challenges that will be discussed later in this document. Security in general is huge challenge for EBay given the fact that this company receives and stores very confidential information such as names, social security numbers, and various credit information. Keeping this information secured poses a great task to this company as well as online hackers that work to steal this information and fraud online shoppers.

Another challenge that EBay faces is the methods of which buyers choose to purchase products are limited in comparison with many traditional channels. The individual seller chooses the method in which he or she will receive payment. Throughout its history EBay has evolved its payment options and has even purchased the very popular payment company called Paypal. Using Paypal gives the buyer a very easy method to actually pay for auctions won on the EBay