International Case Study:

eBay Inc.

Management Information Systems (MIS 750)

Group Presentation 1

Prepared by:
Faeza Zainal Abidin (2009367799)
Nurwahida Mohd Yaakub (2009782101)
Siti Noor Hidayuu Kamalrulzaman (2009983613)

Prepared for:
Assoc. Prof. Dr. Mardziah Hashim

Presentation Date:
9 August 2010 Masters of Business Management (BM 770)
Universiti Teknologi MARA
Shah Alam, Malaysia 2010
Agenda

Company Founder
Core Businesses

Business Model

IT Applications

Success Stories

Lesson Learnt
eBay Inc. – Vital Information

• Company Name: eBay Inc.

• Founder: Pierre Morad Omidvar, a French-born Iranian computer programmer

• Year founded: 1995

• Place of Birth: San Jose, California, USA

• Why eBay?: "What I wanted to do was create an

efficient market, where regular people
could compete with big business ...
it was a little bit of an experiment.“
Pierre Omidvar

eBay was an experiment that turned out to be a gold pot!

How?
Excellent business model & leveraging of IT
Agenda

Company Founder

Core Businesses Marketplace

Payments
Business Model

IT Applications

Success Stories

Lesson Learnt
CORE BUSINESSES
Marketplace Marketplace Payments

Marketplace:
• An online marketplace where people can buy and sell things
• B2C & B2B

eBay.com - World’s largest online marketplace

Item Listing Formats:
-Ticketing hub
StubHub.com
(sports, concerts, theater etc.) Auction-Style
Rent.com - House rental listing (US only)
Fixed Price
Half.com - Used books, music, movies, games etc.

- One of the largest online product catalog

Shopping.com - people do product comparisons
eBay -Designed for people to trade locally
Classified (e.g. eBay Classified, Gumtree, Kijiji, LoQUo etc.)
- Strategic alliance with partners – offer great deals
Online Advert.
for users
CORE BUSINESSES
Payments Marketplace Payments

Payments:
• An online payment solution
• Integrated with Marketplace platforms
• Global, real-time payment solution

- enables individual & businesses to send & receive online payments

PayPal - 24 currencies, 190 markets

- offers banking relationship between online US merchants and US

Bill Me Later - consumers
-- Also offers transactional credit at point of sale

Note:
On 19 November 2009. eBay Inc. sold its Communications business segment, Skype.
eBay Inc. continues to operate two primary business segments – Marketplace &
Payments.
Agenda

Company Founder

Core Businesses

Business Model Value

Proposition
Competitive
Advantage
Revenue Marketing
Model Strategies
IT Applications
Market Organizational
Opportunity Development

Success Stories Competitive Management

Environment Team

Lesson Learnt
 Value Revenue Market Competitive
Proposition Model Opportunity Environment

BUSINESS MODEL Competitive Marketing Organizational Management

Value Proposition Advantage Strategies Development Team

 Value Revenue Market Competitive
Proposition Model Opportunity Environment

BUSINESS MODEL Competitive Marketing Organizational Management

Revenue Model Advantage Strategies Development Team

 eBay's generates revenue from a variety of sources such as advertising, listing and
value fees, merchant fees, revenue sharing agreements, contractual service fees and
classified and lead referral fees.

 eBay’s generate two types of net revenues: net transaction revenues and marketing
services and other revenues.

 eBay’s net transaction revenues are derived principally from listing fees and final value
fees (which are fees payable on transactions completed on our Marketplaces trading
platforms), fees paid by merchants for payment processing services and, until the sale
of Skype on November 19, 2009, fees charged to users to connect Skype’s Internet
communications products to traditional fixed-line and mobile telephones.

 Their marketing services revenues are derived principally from the sale of
advertisements, revenue sharing arrangements, classifieds fees and lead referral fees.

 Other revenues are derived principally from interest earned on certain PayPal
customer account balances, interest and fees earned on the Bill Me Later portfolio of
receivables from loans and from contractual arrangements with third parties that
provide services to their users.
 Value Revenue Market Competitive
Proposition Model Opportunity Environment

BUSINESS MODEL Competitive Marketing Organizational Management

Revenue Model (cont’d) Advantage Strategies Development Team

Year Ended Year Ended Percentage

December 31, December 31, Change from
2008 2009 2008-2009
(in thousands) (in thousands) (%)

Net Revenues by Type:

Net transaction revenues
Marketplaces $4,711,057 $4,461,845 (5%)
Payments 2,320,459 2,641,194 14%
Communications 525,803 575,096 9%
Total net transactions revenues 7,557,355 7,678,135 2%
Marketing services and other revenues
Marketplaces 875,694 849,169 (3%)
Payments 83,174 154,751 86%
Communications 25,038 45,307 81%
Total marketing services and other 983,906 1,049,227 7%
revenues
Total net revenues $8,541,261 $8,727,362 2%
 Value Revenue Market Competitive
Proposition Model Opportunity Environment

BUSINESS MODEL Competitive Marketing Organizational Management

Revenue Model (cont’d) Advantage Strategies Development Team

Net Revenues by Segment (in thousands US$)

620,403

7%

2,795,945 Market Places

32% Payments
Communications
61%
5,311,014
 Value Revenue Market Competitive
Proposition Model Opportunity Environment

BUSINESS MODEL Competitive Marketing Organizational Management

Market Opportunity Advantage Strategies Development Team

• Increasing number of fixed price sales • Bargain hunters

over online auction sites • Hobbyist and collectors
• Search engines and price comparison SUBSTITUTE • Professional buyers
moving into online retailing and auctions PRODUCTS
• Traditional auctions
• Traditional retailing
• E-tailing
BUYERS

SUPPLIERS
PORTER’S ANALYSIS

• Casual sellers
• Hobbyist and
collectors
• Power and
corporate sellers
• Market changes
• More competitors
• auctions vs e-tailing
• B2B/B2C/P2P
• New entrants over
the past years (search
engines, etc)
POTENTIAL NEW
ENTRANTS
• Technological barriers of entry do not exists
• Traffic generation is important
• Customers have to be gained from traffic
• Customer base retention is important
INDUSTRY
RIVALRY • Traditional retailers and e-tailers are in similar
markets to online auctions.
 Value Revenue Market Competitive
Proposition Model Opportunity Environment

BUSINESS MODEL Competitive Marketing Organizational Management

Competitive Environment Advantage Strategies Development Team

eBay’s broad-based competitors include the vast majority of

traditional dept and general merchandise as well as emerging online retailers.

eBay’s Competitive Environment

 Value Revenue Market Competitive
Proposition Model Opportunity Environment

BUSINESS MODEL Competitive Marketing Organizational Management

Competitive Environment Advantage Strategies Development Team

eBay’s vs. Yahoo Auction

Maximum 10 Days 14 Days

Duration
Ending Time eBay auctions and the time the auction was Yahoo allows you to set the ending time
created within a one-hour range
Fee Based on the starting or reserve price of an item Not charge any fees for listing auction items to
each time an item is listed the buyer or seller
Commission *up to five percent of the final closing price To the buyer or seller when an item is sold
*fee for reserve auctions
Chances of Buy & More likely Less likely
Sell
When a new A page for the item gets created immediately, A page for item is created immediately. The
item is placed but it can take several hours before the item item is also added to the list of items and is
gets added to the list of items and to searchable searchable immediately
Items Over 6 times more items A lot fewer items
 Value Revenue Market Competitive
Proposition Model Opportunity Environment

BUSINESS MODEL Competitive Marketing Organizational Management

Competitive Environment Advantage Strategies Development Team

eBay’s vs. Yahoo Auction

Charging for Depends on seller (mostly applicable) No

posting
Unusual Thing More likely to find Not have as wide or deep of a selection
Search *Titles or titles & description *Titles or titles & description
*Can limit within category *Can limit within category
Browse items By title / picture / price / bid end time / bid start By title or by picture
time
(if designated as part of the gallery)
Insurance Automatic insurance for sales Not offer insurance
Space for 1st picture FOC, 2nd picture onwards are Provides free space for auction item
pictures chargeable
 Value Revenue Market Competitive
Proposition Model Opportunity Environment

BUSINESS MODEL Competitive Marketing Organizational Management

Competitive Advantages Advantage Strategies Development Team

Market Share Strong Brand Position

• industry pioneer • won numerous awards

• world leading e-commerce company
• more than 90m active users (2010),
200m registered users
• over 2 million visitors daily
• difficult for competitors to get a large share of userbase
• transaction of more than $400b since eBay started
• more effective platform, compared to competitors
• one of the most popular shopping destination on earth
• iPhone app downloaded 7million times at January 2010
• eBay has become a generic term for online auctions

Expertise in Technology Security

• fast and continuous application development • enhanced trustee service – Seller & Buyer Ratings
• sell new applications • online banking protocols
• creating industry standsrds • enhanced back-end
• back-up systems
 Value Revenue Market Competitive
Proposition Model Opportunity Environment

BUSINESS MODEL Competitive Marketing Organizational Management

Competitive Advantages Advantage Strategies Development Team

Strong Value Chain Accessibility

• adjacent Marketplace & services • 24/7 accessibility (no time constraints)

– StubHub, Half.com, Shopping.com, Rent.com etc. • serves 24 currencies in 190 market
• strategic alliance with over 250 companies • eBay mobile apps
– e.g.: AOL, Yahoo, IBM, Compaq & Walt Disney • excellent archive system – easy to search for items

Variety Flexibility

• 10 categories of eBay stores: • can sell almost anything

- eBay Motors, Consumer Electronics, • freedom to choose selling style – auction / “Buy It Now”
Books/Movies/Music, Clothing and Accessories, • customized catalogue system
Sports, Collectibles, Toys, Home and
Garden & Jewelry and Gemstones
• over 2 billion items on listing
 Value Revenue Market Competitive
Proposition Model Opportunity Environment

BUSINESS MODEL Competitive Marketing Organizational Management

Marketing Strategies Advantage Strategies Development Team

EBA EBA BRA GLO

VAR Y Y ND BAL
10 stores IETY • customers asCOa • unique & WE REA
•
part of the interesting • NA
industry pioneer • easily accessible
• 20b listings MM BSI • CH
community • sets eBay apart ME 150 countries
UNI
• customers feel TE
from competitors • accessible
like they’reTY
cared through
about computers and
• business based mobile phones
on TRUST
DIFFERENTIATION STRATEGY
 Value Revenue Market Competitive
Proposition Model Opportunity Environment

BUSINESS MODEL Competitive Marketing Organizational Management

Organizational Development Advantage Strategies Development Team

1998 ●
● eBay goes public in September, listing shares on NASDAQ under the symbol EBAY.

1999 ●
● eBay expands internationally with sites in the United Kingdom, Germany and Australia.

●
● eBay acquires Half.com, a marketplace for used books, movies, music and games.
2000 ●
● eBay opens marketplaces in Austria, Canada, France and Taiwan.

●
● eBay
eBay expands
expands internationally
internationally with
with sites
sites in
in Ireland,
Ireland, Italy,
Italy, Korea,
Korea, New
New Zealand,
Zealand, Singapore
Singapore and
and Switzerland.
Switzerland.
2001 ●
● eBay
eBay enters
enters aa strategic
strategic relationship
relationship with
with leading
leading Latin
Latin American
American online
online trading
trading site
site MercadoLibre
MercadoLibre

2002 ●
● eBay acquires 33% of China's EachNet in 2002 (and completes the acquisition in 2003).

2003 ●
● eBay is listed at #8 on Fortune's list of Fastest Growing Companies.
 Value Revenue Market Competitive
Proposition Model Opportunity Environment

BUSINESS MODEL Competitive Marketing Organizational Management

Organizational Development Advantage Strategies Development Team

2004
●
● eBay Inc. acquired Marktplaats.nl, Baazee, mobile.de
●
● eBay expanded its presence in Asia with sites in Malaysia and the Philippines.

●
● eBay launched Kijiji

2005 ●
●

●
●
eBay acquired LoQUo and Gumtree, Rent.com, Skype, Shopping.com
eBay expanded into Poland.

●
● eBay
eBay acquired
acquired Tradera
Tradera

2006 eBay
eBay takes
takes aa new
new approach
approach to to its
its China
China strategy
strategy with
with the
the announcement
announcement of
of aa joint
joint venture
venture agreement
●
●
agreement
with
with TOM
TOM Online
Online
●
● eBay
eBay Hong
Hong Kong
Kong officially
officially launches.
launches.

●
● eBay Inc. acquires StubHub

2007 ●
●

●
●
Kijiji launches in 200 U.S. cities.
People are talking! Skype introduces High Quality Video.
 Value Revenue Market Competitive
Proposition Model Opportunity Environment

BUSINESS MODEL Competitive Marketing Organizational Management

Organizational Development Advantage Strategies Development Team

●
● Skype
Skype turns
turns 5.
5. With
With 338
338 million
million registered
registered users,
users, Skype
Skype introduces
introduces unlimited
unlimited calling
calling subscriptions,
subscriptions, an
an even
even
greater
greater value
value for
for users
users to
to call
call landline
landline and
and mobile
mobile phones.

2008
phones.
●
● For
For advancing
advancing global
global entrepreneurship,
entrepreneurship, eBay
eBay Inc.
Inc. becomes
becomes the
the first
first Internet
Internet company
company to to be
be awarded
awarded thethe
National
National Medal
Medal of of Technology
Technology & & Innovation,
Innovation, America's
America's highest
highest honor
honor for
for technological
technological and
and scientific
scientific
achievement. 
achievement. 
●
● eBay
eBay acquired
acquired Bill
Bill Me
Me Later,
Later, Den
Den Bla
Bla Avis
Avis and
and BilBasen
BilBasen

●
● eBay Inc. was given a 100% rating from The Human Rights Campaign — America's largest

2009
civil rights organization working to achieve lesbian, gay, bisexual and transgender equality.
●
● eBay acquires Gmarket
●
● eBay Inc. completes the sale of Skype to a group of investors, retaining a 30 percent stake
in the company.

2010 The eBay community raises more than $1 million USD;

●
●

PayPal donations total $4.5 million

 Value Revenue Market Competitive
Proposition Model Opportunity Environment

BUSINESS MODEL Competitive Marketing Organizational Management

Management Team Advantage Strategies Development Team

John Beth Mark Michael Alan Lorrie Bob Scott

Donahoe Axelrod Carges Jacobson Marks. Norringto Swan Thompso
n n
President Senior Chief Senior Senior Senior
Technology President
and Chief Vice Vice Vice Vice President
Officer , eBay
Executive President President President President , PayPal
and
Officer, , Human , Legal , Market- , Finance
Senior
eBay Inc. Resource Affairs, Corporat places and Chief
Vice
s, eBay President, General e Financial
Inc. Global Counsel Communi Officer,
Products, and -cations, eBay Inc.
Market- Secretary, eBay Inc.
places eBay Inc.
Agenda

Company Founder

Core Businesses

Business Model

IT Applications
Success Stories

Lesson Learnt
IT Applications
How does eBay Inc. Leverage IT?
 Programming Search Engine Real-Time
IT Applications Languages Optimizer Processing

Programming Languages Online Based

Applications
Mobile App
Technology
– for Advanced Users

Software Developer Kit

eBay API
(SDK)

• API: application program • Simpler than API, with same

interface functionalities

• Can be incorporated into software • Two versions:

app (easily customized & modified) • Java
• Windows (incl. VB6, VB . NET,
• Functions: C#, C++)
• listing items for sale
• viewing information of listed
items
• getting categories of items for
sale
• retreiving list of items from a
specific seller
• leaving feedback
 Programming Search Engine Real-Time
IT Applications Languages Optimizer Processing

Programming Languages Online Based

Applications
Mobile App
Technology
– for Advanced Users

Linkage with Google “Best Match”

• high visilibity on Google • easier & quicker finds

• allow seller to increase visibility,

thus increasing sales volume

• sorting according to:

• relevance
• detailed seller ratings
• shipping & handling charges
• bid ending time
 Programming Search Engine Real-Time
IT Applications Languages Optimizer Processing

Real-Time Technology Online Based

Applications
Mobile App
Technology
& Online Based Apps.
Feedback • encourages users to provide feedback
Forum ratings & comments on people they
trade with
Trust & Safety Area • ratings visible to others

Customer Service
VeRO
Value Added Tools
Loyalty Programs
• Verified Rights Owner Program
• protects intellectual property
• IP rights owners can request for removal of items
that they claim infringe on their rights
• Protect users from buying counterfeit products

Adjacent Platforms Safe • guidelines for trading & dispute resolution

&Services Harbor • “Policemen on eBay” – take action on
Program wrongdoers (warning, suspend, remove listings
etc.)
 Programming Search Engine Real-Time
IT Applications Languages Optimizer Processing

Real-Time Technology Online Based

Applications
Mobile App
Technology
& Online Based Apps.

Trust & Safety Area

Customer Service

Value Added Tools

Loyalty Programs

Adjacent Platforms
&Services
 Programming Search Engine Real-Time
IT Applications Languages Optimizer Processing

Real-Time Technology Online Based

Applications
Mobile App
Technology
& Online Based Apps.

Trust & Safety Area

Customer Service

Customer • Platform for Q&A

Value Added Tools
Support • Quick responses
• Top eBay sellers receive priority
Loyalty Programs

Adjacent Platforms
&Services
 Programming Search Engine Real-Time
IT Applications Languages Optimizer Processing

Real-Time Technology Online Based

Applications
Mobile App
Technology
& Online Based Apps.

Value
Trust & Safety Area Added Tools
PayPal

Customer Service Facilitates online

exchange of funds
eBay To Turbo
Go Lister
Value Added Tools

Embed eBay listings

Loyalty Programs on seller’s own website Shipping eBay
Labels Blackthorne

Adjacent Platforms
&Services Shipping
ProStores
Calculator Selling
Print postage labels Manager/
Automate selling
Selling Manager
Pro
processes
Easier to calculate
shipping costs
 Programming Search Engine Real-Time
IT Applications Languages Optimizer Processing

Real-Time Technology Online Based

Applications
Mobile App
Technology
& Online Based Apps.

Loyalty
Trust & Safety Area Programs
High monthly sales volume
High level of positive feedback
eBay Buyer
Customer Service Protection Consistent
high ratings

Value Added Tools

Protect buyers fromCoupons & Power

Buyer
Loyalty Programs not receiving items rewards Seller
(US & UK only)

Adjacent Platforms
&Services
Top Top Rated
Buyer Seller

Points / rebate to Faster customer

encourage customer return service response
 Programming Search Engine Real-Time
IT Applications Languages Optimizer Processing

Real-Time Technology Online Based

Applications
Mobile App
Technology

& Online Based Apps.

Value
Trust & Safety Area Added Tools

Customer Service

Value Added Tools

Rent.com StubHub

Loyalty Programs

Adjacent Platforms Shopping.

es
&Services com
Online
advertising
 Programming Search Engine Real-Time
Languages Optimizer Processing

IT Applications Online Based Mobile App

Mobile Technology Applications Technology

• eBay / • eBay / • eBay /

PayPal on PayPal on • eBay for iPad PayPal on
Android BlackBerry iPhone
• eBay Selling
• eBay
Fashion
• eBay Deals
• search, buy, pay & check account status • StubHub
Mobile Apps
anywhere • Half.com
• won’t miss bids
• for other phones, mobile eBay is available
at http://m.ebay.com
Agenda

Company Founder

Core Businesses

Business Model

IT Applications

Success Stories
Lesson Learnt
Success Stories
Newsweek Ranks eBay Inc.
Distinguished . One of the Greenest
Companies in America
com 25
eBay Inc.: The Most Trusted
Cause Marketing Company for Privacy
Forum Halo Award eBay Inc. Scores 100% on
HRC Corporate Equality
Public Counsel Index
Corporate
Achievement Award Great Places to Work
in Ireland (top 50)
Social Innovation
eBay Wins Application of
Award the Year for E-Commerce
National Retail Federation
Names eBay A Top Company Marketing
for Customer Service Excellence Award
eBay President Lorrie Norrington
Listed on Fortune's Most
Powerful Women in Business
Ranking.
Fortune Names eBay
Inc. "A Great Place to
Work"
PayPal Named One of
India’s Best Employers
eBay Inc. Recognized
by the President of the
United States
eBay Inc. Receives
Better Business Bureau
President's Award
Agenda

Company Founder

Core Businesses

Business Model

IT Applications

Success Stories

Lesson Learnt
Lesson Learnt

• Everyone can develop entrepreneurship through eBay websites, due to:

• extensive user education
• reasonable charges
• vast networking opportunity
• With mobile technology, people can conduct businesses on-the-go
• The Internet offers abundant opportunities for business
• Businesses can gain competitive advantages through leveraging of IT
• Internet Marketing business is easy to enter, thus new entrants must apply

differentiation strategy
• Application of integrated Internet technology brings the following benefits:
• business transactions are done in more efficient manner
References

eBay Inc. Annual Report 2009

http://investor.ebayinc.com/

eBay Inc. Official Website

http://www.ebayinc.com/

eBay Website
http://www.ebay.com

eBay – a Concise Analysis

http://www.cs.brandeis.edu/~magnus/ief248a/eBay/index.html

Leveraging IT for a Competitive Advantage – Case of eBay

(Chen, E.T. Issues in Information Systems. Vol. VI, No. 2, 2005)

Strategic Evaluation of eBay

http://www.slideshare.net/lars.schmidl/strategic-evaluation-of-ebay

Wikipedia
http://en.wikipedia.org/wiki/EBay
End of Presentation
Thank You