Why has eBay succeeded as an online auction marketplace while so many others have failed?
There are many reasons why eBay has succeeded as an online auction and has grown to the biggest marketplace available. To make it short, the primary reason for its success is a really good strategy based, in the first place, on people’s needs and interests, which has not only been initiated once but is regularly maintained.
First of all, eBay connects people who can not be connected in any other way. The auction started its work when vaunted Facebook or Twitter did not even exist yet. Even now, when we already have numerous social networks and means of communication, eBay is irreplaceable. And that is because its CEO, top managers, and employees regularly do something (acquirement of PayPal, teleconferences with consumers, etc.) to maintain this status in the highly competitive Internet environment.
Secondly, eBay provides both sellers and buyers with what they need. The former establish a connection with countless customers and sell goods that can be hard to sell in any other way; the latter can buy what they want for the most favorable price, which they set themselves.
Thirdly, the marketplace offers favorable for the corporation fee structure. It helps to attract high-volume sellers, who can increase eBay’s revenue since they obviously sell more than small consumers and contribute to its success encouraging more sellers and buyers to join eBay.
Fourthly, eBay is very people-oriented. It offers both more or less usual things, among which is the chance to get the feedback or see the reputation of a buyer/seller and more extraordinary opportunities, such as the Voice of the Customer program. Everything is done for the visitors, and it is not surprising that more and more of them join the auction’s billionth audience.
Finally, one more reason for success, from my point of view, is the fact that Pierre Omidayar was one of the first. He managed to come up with the idea of an online auction when nobody knew about Mark Zuckerberg and Facebook. His idea was the first, which is why many other online auctions failed – he set the bar for the competition.
Evaluate eBay’s fee structure. Is it optimal, or could it be improved? Why? How?
The fee structure of eBay consists of an insertion fee and a final value fee, which lets the customers pay less amount of money if they sell more and vice versa. That is how eBay manages to attract high-volume sellers, who can contribute to the company’s success and increase its revenue.
However, such kind of fee structure still has several drawbacks. One of the most significant is that it can scare off smaller consumers since it usually cuts their earnings and profit significantly. Admittedly, smaller consumers sell less than high-volume sellers do, but they still constitute a great part of eBay visitors, and their needs should also be taken into consideration. Otherwise, they can either go to competitors or just sell less than they could have sold. Additionally, such kind of fee structure can also be complicated for many visitors.
However, considering the profit, which the organization gets due to its current fee structure and, first of all, due to high-volume sellers, it can be concluded that the possible risk of losing small consumers is less important. That is why I believe that eBay’s fee structure is optimal.
What’s next for eBay? How does it continue to grow when it needs both buyers and sellers? Where will this growth come from?
If the organization needs more buyers and sellers, that is evident that it has to expand. I think that eBay should start its work in some developing countries since they show a high demand for selling and buying products at favorable prices. As the direction for expansion, BRIC countries can be considered (apart from those that are already included in eBay’s shipping area), and some parts of Africa. Admittedly, that will be quite challenging, as it has already been with China, for example, but it will vastly increase the number of eBay’s visitors and active users. So, I firmly believe that eBay should move to international expansion.
Additionally, although eBay’s fee structure is rather optimal, both small and, large consumers should be satisfied. To do this, it is not necessary to deviate from its current structure radically and lose high-volume sellers because of that. It would be enough to provide small consumers with some bonuses that attract them. A range of bonuses and discounts can also be provided for numerous other reasons, for example, to encourage multiple purchases, and so on. eBay can also invest more in its mobile applications and make the process of shopping more and more convenient for users.
Finally, many people are dissatisfied with the fact that a considerable number of buyers do not pay right away and can ignore messages for several days. Although eBay has a particular policy, which addresses such kind of issues, perhaps, they should implement immediate payments to get it over with once and for all.