As the number of online retailers grows, eBay struggles to preserve its customers and to stay relevant and competitive in the contemporary marketplace. The company chose to pursue a mass marketing strategy, attempting to tailor to both individual sellers and large corporations. Meanwhile, eBay is also losing its distinct brand identity and customer loyalty. The present memo recommends the following actions for the company to survive in the e-commerce business: market segmentation, diversification of complementary services, and community-centered marketing.
We will write a custom Proposal on EBay and E-Commerce Business Strategies specifically for you
301 certified writers online
Initially, eBay was designed as an online selling platform for small sellers, typically individuals buying and selling collectible items. The company was thus built around the sense of a close-knit community, human interaction, and customer engagement (Frei and Farrar 2). In 2001, however, the company decided to extend its services to large companies by allowing them to sell discounted items on eBay (Frei and Farrar 5).
While this strategy resulted in an immediate short-term growth, eBay’s marketplace business has been experiencing a steady decline in recent years, as the largest contribution to the company’s revenue came from PayPal, now an independent company (Rosoff par. 3). EBay’s small sellers, dissatisfied with the growing presence of large corporations, turn to other online platforms (Thomas par. 7-8). At the same time, the company is unable to provide the same high quality of services as its competitors, such as Amazon (Soper par. 22). As the company lost sight of its customers, eBay’s very survival is now threatened.
Nevertheless, it does not mean that the company cannot maintain both groups of sellers – rather, it implies that eBay should recognize the two distinct segments of its suppliers and approach them differently. Thus, the company should pursue a market segmentation strategy that allows it to satisfy the needs of both small sellers and corporations (Wedel and Kamakura 4). As far as individual sellers are concerned, eBay needs to revive its community-centered approach to marketing. The company should provide more favorable conditions to small sellers: for instance, create a separate part on its website dedicated exclusively to small sellers and allow buyers to filter their search results based on the seller. At the same time, eBay should diversify its complementary services, such as payment and delivery.
The outlined strategy will help the company achieve the following goals. A market segmentation strategy would allow eBay to maintain both groups of suppliers while also addressing their specific needs and concerns. It is especially important for the small sellers who would be able to compete on eBay thanks to the favorable conditions created for them, which is their main concern (Frei and Farrar 6).
Community-centered marketing will allow the company to capitalize on its reputation as a customer marketplace, as well as make sure that it is not losing customers to other platforms such as Etsy and Bonanza (Thomas par. 7-8). Abandoning the small seller segment would not be a strategically viable solution as the company would lose its competitive advantage and brand identity (Hassan 104). Diversification and improvement of payment and delivery services will ensure the reliability and predictability of purchases made on eBay. Currently, the company misses out on the holiday shopping as its customers are not sure whether they will get their purchase on time (Soper par. 9).
Thus, the company needs to take the following steps. The IT department needs to incorporate the small-seller division and filters into the website. The external relations department has to contact potential partners to research payment and delivery options. The marketing department needs to create a new marketing strategy built around a sense of community and belonging.
Frei, Frances X., and Hanna Rodriguez-Farrar. eBay (A): The Customer Marketplace. Boston, MA: Harvard Business School, 2005. Print.
Hassan, Seyed M., Amir Jahanshahi Sistani and Satya R. Raju. “Top Online Shopping E-companies and their Strength and Weakness (SWOT).” Research Journal of Recent Sciences 3.9 (2014): 102-107. Print.
Rosoff, Matt. eBay Just Lost the Part of Its Company That Was Driving All Its Growth. 2015. Web.
Soper, Spencer. Amazon Woos eBay’s Once-Loyal Merchants with Sales Growth. 2015. Web.
Thomas, Owen. Insurgent Startups Are Attacking eBay from All Sides. 2013. Web.
Wedel, Michel, and Wagner A. Kamakura. Market Segmentation: Conceptual and Methodological Foundations, New York, NY: Springer, 2012. Print.