eBay Competition Methods: Reasons of Success

Subject: E-Commerce
Pages: 3
Words: 665
Reading time:
3 min

eBay is one of the major success stories of e-commerce. It is an online shopping company that commands more than 90% of the online auction market, and from 1999 to 2004, it has posted at least 40% annual profit growth every year. The company has 31 sites across the world, from Brazil to Germany to China. The success of eBay is mainly due to its unique concept of reaching out to customers sitting with their apartments and that too around the world. In the words of Matt Bannick, “this concept travels pretty well.” In order to be successfully implemented, this concept had to be augmented by sufficiently strong strategies. At eBay, the main challenges were to reach out to different cultures across the globe and also adapting to local conditions without losing the core elements that made it a success in the first place. Gregory Boutte, country manager for eBay France, says, “The eBay playbook explains the success of eBay.” The playbook is a collection of several hundred web pages of the collective wisdom of all of eBay’s worldwide managers.

The playbook is constantly updated and includes a wide range of topics, from online marketing and category management to community outreach. It provides the framework for every eBay country manager. Each function within eBay has its own playbook: product management, web development, internet marketing, and others. eBay thus builds its success based on the collective experience of other country managers. This gives it a huge competitive advantage.

In the case of Germany, the first stop of eBay, it bought a local copycat site first. The personnel was not adequately trained for the job. So, they thought that the site would be governed from San Jose in the US. But this had problems in responding rapidly to local needs. The Germans had a way of listing auctions that were unique and innovative. The company enlisted the services of a German-born Boston consulting group, Philipp Justus. Under his guidance, the web developers at San Jose were coaxed to create such unique features for the German site. Soon, eBay adopted that listing strategy in its US site as well. Thus, we find that the reasons behind the success of eBay have been mainly its ability to pool resources across the world, be open to new ideas and have the boldness to take risks.

To compete with eBay, one must study its weakness and plan strategies that would offer a competitive advantage. One of the problems faced by eBay is that its auctions are still too hard for many of its consumers to navigate. So, I would focus more on classifieds as a growing opportunity. I would offer in my eCommerce website facilities for users to post classifieds for free, limit access by buddy lists and focus listings geographically, which can be linked to Google Earth. Also, I would offer a powerful search engine that can provide valuable search results regarding the products. eBay acquired half of its new buyers and sellers in the United States through paid listings. If I can provide search results for free, it would give me a competitive advantage over eBay.

I would ensure there are attractive products and services at competitive prices at the web store. Next, I would ensure that the web shopping and customer services are friendly, helpful, quick, and easy. I will advertise widely both in traditional media as well as on the web with targeted and personalized banner ads and other web page and email promotions. I will also sometimes periodically offer incentives for shoppers who buy and return through coupons, discounts, special offers, and vouchers for other web services. A customizable personalized web page would attract clients. Website relationship and affinity marketing programs can help build and promote virtual communities of customers, suppliers, etc. Moreover, if the company can ensure data privacy, security of data, and reliability of services, it can easily compete with eBay.