eBay, Inc. and Amazon.com

    1. eBay is an auction-based online sale of products and services where customers have to outbid one another. The key drivers of profitability in eBay’s business model are payment systems and marketplace options. The company cooperates with PayPal services, which contributes to its overall performance and profitability. Moreover, new payment methods are being offered. Compared to Amazon, eBay proposes its customers to use the Marketplace platform. Few years ago, eBay Marketplace used insertion fees for the starting bid on a certain product, but after selling an item, it charged the final value fee. Today, a customer may get at least 20 free listings. However, they still use the final value fee based on a simpler method: 10% of the final price. For long-term sellers, eBay offers membership bundles which provide dealers with150 to 2,500 free postings per month, a lower insertion charge, and significantly streamlined procedures. However, definite expenses vary between 4% and 9% depending on the item’s classification. In addition, better places in search results may be offered (Casadeseus-Masanel, & Thaker, 2012).
    2. Amazon was established in 1995, similar to eBay. Since then, the companies have been competing with each other, thus constantly developing. The key drivers of profitability in Amazon’s business model are investments, technology, and service innovation. Since 1999, Amazon has invested much money in new technology, operating facilities, and various categories of products expansion. However, it was a long-term investment, which was not bringing any profit for almost five years. Certainly, it has later demonstrated its value through Amazon’s sound development in its differentiated business portfolio. The early investment in the innovation took into account the framework to implement the elements and services: for example, Amazon installments, Amazon checkout, EC2, AWS, and others. In fact, those who are always willing to explore and learn allowed Amazon to advance in business. Moreover, the organization expends its income on quality co-creation in service improvement. Service innovation may include an administrative aspect that depends on a certain innovation or a strategy. For example, Amazon’s item audit framework, satisfaction, exchange, and new arrangements or types of operation enhance business productivity in both operation and expense areas (Casadeseus-Masanel, & Thaker, 2012).

    Considering the retail strategies of Amazon and eBay, eBay began its business in closeout while Amazon started as a book retailer. While eBay’s business achieved its top in 1999, Amazon effectively connected with eBay’s business qualities in closeout through Amazon Auction by 2000. Later, Amazon differentiated its operation with the help of zShops to accomplish its first business development step: to move from the retail business to e-commerce.

    1. Amazon managed to reduce barriers to entry in the third-party seller market by lowering prices on the range of products on the website. It is evident that an online store is exceptionally appealing for a customer, which is why numerous organizations need to join the new market. These organizations need to consider the aspect of convenience to an online customer, low value, and items assortment. Furthermore, if the organization needs to win against the contender, it must consider the IT aspect, ongoing researches, and different future possibilities. In contrast to the cost of retail establishments, Amazon’s clients now enjoy 40%-half markdown rate. As far as the barriers to entry in the market are concerned, the critical business choices for Amazon’s business model were connected to the diversification of its strategy. The company provides retail services not only for the book industry but also for the music and video businesses. Furthermore, Amazon proposes cloud computing software, and it also has a consumer electronics business (Kindle), which advances the company on the new level in the market. Amazon’s diversification of its strategy is profitable and makes the company unique and competitive (Casadeseus-Masanel, & Thaker, 2012).
    2. I would recommend eBay to rebuild its strategies in order to ensure constant demand and satisfy its target market as well as generate high profit. Moreover, it is necessary to improve security in order to fight against fraudulent activities through the verification or authentication processes. eBay needs to build a stable brand instead of quickly expanding. eBay’s clients understood that it was becoming a corporate entity because the company made such changes as removing negative feedback and changing fee structure. From this perspective, the company should earn full brand recognition in order to attract new users to its platform. Thus, eBay should present itself through advertisement demonstrating new features or options of the website, for instance, buy it now. Therefore, it is reasonable to stop expansion and use more advertising systems. In particular, the Internet provides many person-to-person communication services that may significantly improve business. For example, Facebook can truly influence eBay if its users discuss the company. It is a viable method of promotion since eBay merely needs people to discuss its progress. Finally, developing brand awareness through non-business exercises, for example, philanthropies, or sponsorship, eBay can considerably increase the value of the organization.
    3. Five key concepts from the case study eBay, Inc. and Amazon.com (A):

    1) Marketplace is a system where different sellers or companies compete in order to sell a product.

    2) Fixed-price sales: the final price that cannot be changed.

    3) Third-party distributor is a company that connects sellers and buyers and makes a profit from offers.

    4) Auction is a public sale of different products in order to sell these items for the highest bid.

    5) Acquisition is a process of gaining new property or real estate.


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1 comment
  • daniel lee
    daniel lee Interesting post, just keep on sharing! I can hardly imagine a marketplace which could outcompete these giants, especially eBay. Regarding the last one, here is https://ebay.pissedconsumer.com/customer-service.html ebay phone number , may be will be...  more
    Jul 30