Reasons why eBay have succeeded as an online auction market place
Kotler and Keller assert that the success of eBay was as result of their capability to create new pricing strategies that enabled the bidders or buyers to establish the values of the products they need 411. The ability of the consumers to predetermine the prices created a feeling of control among the consumers. Consumers also had the capability of bargaining the best prices. Moreover, the website enabled the consumers to reach a wide variety of sellers as well as the products to choose (Kotler and Keller 411).
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On the other hand, the eBay platform enabled sellers to meet a variety of customers at reduced costs. In fact, eBay established a distinctive online business that attracted both the customers and the auctioning firms. The uniqueness of eBay attracted customers from the competitors resulting in most of the competing firms merging or shutting down (Stevens 141).
The online firm has been successful on the online business because of the knowledge of the needs of the customers. Moreover, eBay had a proper knowledge of its customers and targeted their needs that the competitors did not give much attention (Kotler and Keller 411). In fact, the firm was fast to identify the requirement of the people, do business in second-hand quality goods, and earn cost-effective proceeds.
The company became conscious of the fact that there is need for a platform where auctioneers for second-hand products could meet the buyers (Kotler and Keller 411). The company applied its technological competence to create the required platform that enabled free trade between the auctioneers and the buyers.
The firm has been able to build its credibility among the customers. The credibility the firm established during the first years of operation enabled many potential customers build trust on the firm (Stevens 141). Creditability is critical in the cyberspace where sellers meet potential customers virtually and exchange takes place.
The company builds this credibility through having high quality website that increases the capability of customers and sellers to interact (Stevens 141). Moreover, the company also embraced a well-established payment system including the WorldPay as well as PayPal that increased the customers’ confidence on the business. In fact, the reputable money transfer firms turned many non-believing customers to the business (Stevens 141).
Essentially, the success of the online auction was attributed to the simplicity of the user interactivity, the ability to offer wide variety of products, increased degree of trust among the customers, enhanced level of development and adaptability, augmented connection capabilities, improved levels of commitment and the ability to adopt the reputable and reliable payment options (Stevens 141).
The ability of the company to attract large volume of traffic also boosted the customers’ confidence and enabled increased frequency in buying. Moreover, the company developed an easily to use website that enabled increased interactivity. In addition, the company’s website has advanced features that allow easy navigation, increased availability, high-usage interaction and clutter-free (Kotler and Keller 411). All these features contributed to the success of the company.
The company has also been able to acquire similar firms that would have offered competition hampering its growth and development. Through these acquisitions, the company has grown from a simple online firm to a large international online firm operating in many countries.
Evaluating the eBay fee structure
The company attains its financial gains through fees it charges on the auctions. According to the company pricing policy, there is a fee charged for each listing while there is a final value charged on the fixed price. In fact, the seller meets all the charges. Taking an example in the case, there is a percentage charged on the $25 of each action. The percentage reduces depending on the amount sold.
A particular percentage is also charged on the remaining amount. For instance, the company will earn $5.69 in an auction that costs $100 dollars to the buyer. In other words, the seller will be charged 8.75% on the first $25 and 3.5% on the remaining $75. Numerically, (2.19 + 3.5) this equals to $5.69.
The fee structure could be improved by lowering the percentage on the fixed charge and increasing the percentage on the remaining amount. In other words, the pricing structure should be flexible to enable the company remain competitive.
Flexibility in the pricing structure should be made in such a way that it still deter the low-priced items auctioneers while at the same time increases the company competitiveness. The online business is currently becoming more competitive. Therefore, online businesses must ensure flexibility in all their operations to gain the competitive advantage. The pricing structure of eBay should not only be flexible but also enhance efficiency.
The future of eBay
The successes that the company has achieved will enable its growth and expansion as well as remain competitive in the market. There are high possibilities that many competing online firms will emerge. However, the company will use its capabilities in terms of technology, finance and market share to remain at the top (Kotler and Keller 411). Moreover, the company is still capable of acquiring the competing firms that will add value to its customers. The future of the company also lies on the way it addresses the challenges it is facing.
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The way the company addresses the challenges coming from the sectors such as the real estate markets as well as expensive collectibles will determine its future growth and development (Kotler and Keller 411). In addition, the company is facing challenges arising from regulations, honesty in the part of sellers as well as in the internet security. Besides, tackling these challenges, the company has to offer quality services to the sellers and the buyers. The quality services will enhance the confidence of the users of its site.
Forming partnerships with other online businesses such as Wiki together with social networking sites including Facebook and twitter is another opportunity the company can exploit for its future growth and development (Kotler and Keller 411). Partnership with these online companies will ensure increased market share and be found within the market niche of these online firms.
Moreover, the social sites will ensure continuous popularization of the company. The company must also come with innovative and unique ways of doing business in order to remain relevant in the market.
In addition, the company should make considerable investments to expand in new markets found in various developing and developed countries that lack the eBay presence. Further, the fixed-price options should also be a focus of the company. The fixed price options should provide superior prospects and enable the firm to advance into new markets (Kotler and Keller 411).
Kotler, Philip and K. Keller. Marketing Management. Upper Saddle River, NJ: Pearson Education, 2012. Print.
Stevens, Robert. Marketing Management: Text and Cases. London, UK: Routledge, 2012. Print.