Chapter 11 Assignment
Case Study Questions
1) Contrast eBay's original business model with its current business model.
- The first business model that was implemented by eBay was auctioning. But the way that consumers wanted and began to buy good was leaning towards a fixed rate rather than racing in an auction. That was when eBay changed to the basic model of e-commerce. This looks a lot like Amazon’s model. This consisted of the Advertising Model which included fees on investments and transactional revenue model which incurred high listing cost and low sales commission. They began looking into business through mobile devices as well. They also started making revenue from other sources such as, PayPal, Star Hub and Gumtree. In turn, they began to modernize their platform.
2) What are the problems that eBay is currently facing? How is eBay trying to solve these problems?
- eBay’s main problem is the threat of seller and buyer fraud. This was a big deal in the rise of eBay, and they have started implementing new AI technology to help deal with this issue as technology continues to evolve. Another issue was having fair conduct during the auctions. This also created extra fees for eBay which was taking away from the profits that they would be making. The main problem for eBay is revenue growth, as it is for a lot of businesses. To fix these issues, eBay created a comment section on their platform to get a lot of customer feedback which helped the business. They implemented fraud proof systems which made payments safer for consumers which led them to buy more from the site.
3) Are the solutions eBay is seeking to implement good solutions? Why or why not? Are there any other solutions that eBay should consider?
- eBay is really focusing on its artificial intelligence and search engine optimization to help with reaching better market analytics. One thing talked about was SalesPredict. Something they are doing to try to attract customers is offering certain services to more cities with better delivery execution, such as eBay Now. This is designed to compete with Amazon Prime. I think what they are doing is a start to improve and go in the right direction to compete against their competitors.
4) Who are eBay's top competitors online, and how will eBay's strategy help it compete?
- There are a lot of different businesses that eBay needs to compete with. I would say that their biggest competitors are Amazon, Walmart and Alibaba. Secondary competitors are Target and sites like Craigslist. They have implemented a similar model to Amazon which I think will help them. They have expanded out by acquiring PayPal which helps with their revenue growth. The big thing I think helps them is the business on their mobile platform. They have a “progressive app” that will help them stand out.
2) Examine the use of auctions by businesses. Go to any online auction of your choosing and look for outlet auctions or auctions directly from merchants. Research at least three products for sale. What stage in the product life cycle do these products fall into? Are there quantity purchasing requirements? What was the opening bid price? What are the bid increments? What is the auction duration? Analyze why these firms have used the auction channel to sell these goods and prepare a short report on your findings.
- Online auctions are sales transactions that result from a competitive bidding process conducted over the Internet. Whether the sales take place between individuals, between consumers and merchants, or between businesses, online auctions have enjoyed rapid growth with the spread of Internet access. The auction site that I visited was Deal Dash. This is a penny auction site. One product I was tracking on was an Lg Gram 13.3 laptop. It has a “Buy It Now” price at around $900 but when I was watching it was at $8.26. 2 other products I was looking at were a $100 American Airlines gift card and a Reign Commodus Automatic Silver Men’s Watch. The gift card started at $4.96 when I saw it and the men’s watch, which has an original price of $659.99, was at $3.59. So, this site goes up by 1 penny every 10 seconds or until the last bidder gets the prize. All of these products start at $0.00. People might want to use the auction channel to sell items because it is the best way to sell things at demand and market price. People typically wont overpay on these sights, they want to get a deal, or they wont buy it.
4) Visit one of the social networks listed in Table 11.1 and compare it to Face book. In what ways is it similar to Facebook, and in what ways is it different? Which do you prefer, and why?
- The social network I am comparing is MySpace. When Myspace first started it was a lot like how Facebook is. You had a profile page, you had friends and you had your information like a bio. Facebook was continually evolving and changing and adapting which ultimately led people to cross over to Facebook and leave MySpace. Facebook learned from MySpace and made changes to make it better and left it in the dust. That was when MySpace first started. Now, MySpace is a site owned by Justin Timberlake and features a music-oriented social network with over 14 million artists. So, now they don’t serve the same purpose as it used to. Facebook makes a lot of its revenue through advertisements where MySpace doesn’t.