ITS 380: Global E-commerce Systems

John Bergstrom

CH11 HW

1.      Contrast eBay’s original business model with its current business model.

In the early days of eBay their main focus was on auctions. With their main focus being auctions eBay had two channels of revenue. The first one consisted of revenue from advertisement. EBay’s advertising revenue model collected fees from advertisers, and the second revenue stream was the transaction fee that eBay incurred. EBay had a high listing cost but a lower sales commission which was very smart since not all goods are necessarily sold, so they are promised revenue from people who list their products on eBay.

 

In contrast to its original business model, eBay are now more focused on products with fixed prices in which the revenue comes from other acquisitions such as PayPal and Star Hub. While still maintaining the two original revenue streams of advertising revenue and transaction and listing fees.

2.      What are the problems that eBay is currently facing? How is eBay trying to solve these problems?

One of the three major challenges that eBay has ahead of them is selling products through mobile devices and other devices such as tablets. Unless they can establish a well-functioning, user-friendly app for their customers, eBay will have a hard time competing against Amazon and other e-commerce giants. Secondly, the legal challenges eBay are having with PayPal are disrupting their revenue stream. Although eBay is not unfamiliar with lawsuits, but defending themselves of allegations of having a monopoly on online payments is a huge deal, and can prove to be a difficult one to solve for the giants. However, with emerging new online payments options I think that these allegations will go away sooner, rather than later. Lastly, eBay has to figure out a way to collect sales tax so they become even more profitable. Amazon did it by tracking the IP address of their customers and then determining what state they live in to collect the sales tax. EBay have a harder time figuring this out since they don’t distribute their products themselves and is largely based on auctions.

3.      Are the solutions eBay is seeking to implement good solutions? Why or why not? Are there any other solutions that eBay should consider?

I think the solutions that eBay are implementing are good solutions. Why? Because these new strategies seems to seek a synergy between the old and the new eBay methods this will offer their customers a more wide range of services offered. It will also assure that eBay are up to date with their strategies in the ever-changing technological landscape. Their new goal is to combine online, offline, and mobile ways of auctioning to provide their customers with fixed-price products. These seem to be relevant and “good” solutions for eBay, and they can hopefully bring success to the firm in the long run.

4.      Who are eBay’s top competitors online, and how will eBay’s strategy help it compete? I would say that Amazon, Google, Bing, and Yahoo are eBay’s biggest competitors. All of these are large established global players and are competing for the same customers in the sense that they all offer a search service for purchasing goods and services. I would say that Amazon is the largest player in the industry, and I think the key for eBay to keep up with Amazon is to successfully establish the triangle matrix of online, offline and mobile. However, with Amazon’s superior distribution system, it is hard for anyone to compete with them as other actors in the e-commerce industry do not possess their superior infrastructure for warehousing and distribution. Moreover, eBay have identified the need to attract mobile device customers and have developed a mobile app so that eBay can be able to compete over mobile customers as well.

Project questions

1.      Visit one for-profit and one nonprofit sponsored social network. Create a presentation to describe and demonstrate the offering at each site. What organizational objectives is each pursuing? How is the for-profit company using community-building technologies as a customer relations management tool?

Land’O Lakes company has a sponsored social network where they offer links to recipes that you can make with Land’O Lakes products as well as other links that provides the user with information about their product, how it’s made, where it’s from, and the people behind it. Land’O Lakes also tries to promote their environmental friendly operations and tries to encourage their customers to be environmentally friendly as well by having events and competitions that promotes the well-being of the environment and sustainability. Their site also provides a link to their Facebook page where direct interaction between the company and their customers can occur.

This in contrast to a non-profit sponsored social network such as Second-Harvest food bank who offers information on their operations, how you can help them get food to people in need, how to sign up as a volunteer, how to get engaged, and inviting their customers to events that promotes their goal of providing food for people in dire need of it. A big difference is that Second Harvest uses its site as sort of a blog to inform their stakeholders and customers on how they are performing. The provide video and pictures followed with informational text as content.

2.      Visit one of the social networks listed in table 11.1 and compare it to Facebook. In what ways is it similar to Facebook, and in what ways is it different? Which do you prefer, and why?

I choose to compare Facebook with Myspace and the difference between them is striking. On the starting page Myspace is cluttered with a lot of pictures, buttons, and options. Meanwhile, Facebook has a clean design with clear options for the user on what to do. You can either log in to your existing account, create a new account, or get information on what Facebook is. Myspace on the other hand, seems to function more like a news portal where you can also connect with people if you create a user. However, Myspace has clear categories on what to browse like music, news, entertainment, or people. Facebook is more directed towards social interaction with people, and if you log in to facebook you will immediately get guidance from Facebook’s platform on what to do and also suggestions on who to add as a friend based on your email address. Myspace also does this, but not to the same extent as Facebook and it less practical than Facebook as well. I think that Facebook has a huge competitive advantage versus Myspace in the fact that their user base is so huge compared to Myspace. Myspace has been on the decline since the early 2000s and Facebook is still in its prime. It is easy to see argue why people should choose Facebook instead of Myspace. I think that Facebook has a lot more cooler tools and functions to offer than Myspace as well. Because now that Facebook is so well established on a global basis it has so many partners, which makes it possible for them to offer discounts, ads, events, and other functions that Myspace can’t match. This also has to do with the fact that Facebook has such a huge user base.