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Stub Hub- Ticket Scalping and online sales Case Study


Executive Summary

Stub hub was formed by Eric Baker and Jeff Fluhr way back in 2000. The aim was to provide a platform for online marketing services for sports and recreation individuals. The two founders of the company were former students at Stanford Business School in the United States.

The company head office is in San Francisco. It operates through selling and buying products and services, which is conducted over the electronic system on the internet. The main products that the firm deals in are the sale of sports, theater and concert tickets in the country. The company was later acquired by eBay, which is also an online marketplace for tickets and other assorted goods and services in the country.

The company has been very successful over the years and now competes favorably with other established online marketing organizations in the world. This is achieved through a clear cut mechanism that puts the company on a global scale of successive companies. The company uses automated online transaction processing with an intensive call center that offers customer services to their every client.

The company uses a concept called e-commerce that seeks to satisfy their customers through the sale of products over the internet or a monitored computer network. The World Wide Web has been instrumental in enhancing online services. This is through sale and buying of goods and services over the internet where delivery is made door to door.

The company has been very successful in the trade of online ticket sales. In this case, the company has partnered with entertainment and sport organizers who wish to have their tickets sold in fraudulent free system with reduced delay on the tickets. Stub hub has partnered with media organizations such as AOL and sporting news in the country to sell their tickets over a large customer base.

Another contract with entertainment bigwigs such as Madonna, Dixie Chicks, Justin Timberlake, Coldplay, and Jessica Simpson among others has increased the company’s sales. In this case, these stars have a large customer base that attends their concerts. With these partnerships, the company can offer standardized ticket sales at a competitive price.

This helps to stem out fraud like in the manual system of selling the ticket at the event entrance. The payment for these event tickets is safe and thus forms the basis for accountability and customer services. The company’s management has devised a mechanism where they are able to integrate the transaction with FedEx. The system is guaranteed or no fraud and no late delivery. This is very crucial in safeguarding the seller’s credit card from any deduction that is fraudulent.

The company also buys tickets from customers when they have bought them in large numbers. The customers offer the tickets to the company for resale at a competitive price. Thus, many customers who buy seasonal tickets can resell them to the Stub hub for resale to other customers.

This is critical in avoiding empty seats in the stands during a sporting event. This paper analyses the Stub hub corporation, which is a subsidiary company of eBay. The company deals in sale, buying, and trading of event tickets to entertainment and sports event across the country. The operations of the company have been on the rise since its incorporation. The company has been able to record a profit increase of over 100% in its first year of operation.

Background

A huge fan of the rock band Kiss by the name Roger wanted to relive some old memories of his favorite band, which had scheduled an event in the city. Roger decided to attend the event and thus he went to a ticket store to acquire a ticket to watch the band perform on stage.

He camped out waiting for the store to open, and he was among the first people in the queue. When his turn to be served finally arrived, he was shocked to find out that the tickets had been sold out. Another customer suggested to him that he should visit Stub hub, which is an online ticket sales store. Stub hub was incorporated in the year 2000 by Eric Baker and Jeff Fluhr. The two gentlemen were former students at the Stanford Business School.

The two founders identified a gap in the market of ticket sales following a personal experience from one of the founders for the company. Baker had a difficulty in purchasing an event ticket. After queuing for long waiting to be served, he missed out after the first few people had been served. He thought of an idea to set up secondary ticket buying and selling that could be facilitated through online marketing.

Online marketing was a new venture, and thus it presented an opportune moment for the company to commence business. The company was created with an effort to increase transparency in selling and buying of tickets with an increased security when paying and reduced queue and possible delay in the delivery of the ticket. The company enjoyed monopoly as no other company was offering the same services.

Thus, it created a precedent in which other future online marketing could follow. The company had three alternatives to sell their tickets to willing customers. The first one was through selling their ticket to a local broker. The second alternative was through scalp tickets outside the event. The third alternative was through a classified advertisement. After much discussion between the two founders of the company, they looked at the best opportunity that could capitalize on the three alternatives.

This was meant to create a secure and safe mechanism that could be attractive to customers. The move proved very helpful in setting a solid framework for the company through which it could buy and sell tickets to willing buyers. It also guaranteed safety and timely delivery. The operation helped to save time on the way people used to queue at the ticket store waiting to buy a ticket (Bajaj & Nag, 2005).

Statement of the problem

The ticketing industry is an extensive industry that has a lot of untapped resources and opportunities. This made the two founders of Stub hub focus in this industry. The industry has a potential of creating over 60 billion yearly where very few industries have ventured to tap on this great potential. Baker, one of the founders of Stub hub was faced with a personal challenge when he went to purchase a ticket to attend an entertainment event.

He got in the queue very early so that he could be among the first few people in the queue. When his turn to be served came, he was shocked to find out that all the tickets had been sold out, and he could not attend the event. Thus, he was very disappointed with the ticket sales on the local market and hatched out a plan to start an online company that could cater for selling, buying and trading event tickets in the country. This idea was the final outcry to start Stub hub way back in 2000 in San Francisco, the United States.

Situation analysis

The Stub hub marketing environment needs to be well analyzed and understood. This will help the management understand how the company can improve its overall structure to achieve its set goals and objectives on a wider perspective.

The company’s SWOT analysis is of great importance. In this case, it brings to the fore aspects that have led the company to posting huge profit margins year-in-year-out. The company management has had tremendous support from the organizational employee who work and perform to satisfy their customer and thus win the loyalty of the customer.

In recent years, the company has been able to form a subsidiary with the online market industry largest eBay. This was aimed at improving the capability and diversifying its operation to other large market. SWOT is an abbreviation that stands for strength, weakness, opportunity and threat that an organization faces within the environment in which it operates.

In order for an organization to be successful, it needs to understand its SWOT analysis as this will help to improve the current operations of the firm. A business should have a secure future. This can be achieved by investing in projects that will continue to sustain the business even in times of low sales and declining markets. A good manager needs to plan well for the organization whereas its finances will push the organization to a great height and compete favorably with its competitors (Williams, 2009).

Stub hub exists in a sporting and entertainment industry. It offers online ticket business where it buys and sales tickets to various customers across America. The sporting and entertainment sector hold an event all year round. Thus, it offers a very good chance for businesses that operate within this domain to have this competitive advantage.

Strengths to a business organization refer to the operations that an organization can hold onto in case of any shake up that the company may experience. This ensures that the company continues to remain relevant to its course. The strengths of a business enterprise are dictated by the business framework of an organization. This includes having a solid financial system coupled with integrated structures that offer a promising future.

The Stub hub strengths can be attributed to having a strong financial breakthrough after its sale to the large corporation eBay. Essentially, eBay has a wide range of network and immense structural capability compared to Stub hub in its initial stages. The strengths of the organizations have put great emphasis on the customer services. This ensures their customers are well catered for, and their finances are safe. This also ensures that customers get the services effectively after payment.

In this case, the company ensures prompt delivery of the product. The company ensures door to door service delivery of any ticket a customer may have purchased online. In this case, the customer signs out the delivery sheet on acquiring the required good. The services of the company are very fast, and thus delays in the system are very minimal. The founder of the company started it with an intention to serve the various customers who were being frustrated by ticket stores.

The company completely did its best to stabilize the ticket sales and the fluctuating prices. Furthermore, delays in the system were minimized by the initial founders of the company as they looked for loopholes that could cause delays in the delivery of tickets to various customers. Thus, the company has been very successful in ensuring timely delivery of tickets to each buyer or seller.

The company has entered into a contract with big entertainment event organizers to set up a way through which the sale of tickets has been increased. In this case, the company has tickets readily available over the company website where secure payment methods are guaranteed with a promise to attend the event on time with minimal delay by the system (Wong, 2013).

The way customers used to queue to purchase and get hold of the last ticket by the event organizers was reduced. Thus, they could log into their computers and purchase tickets online within a very short time. They have a secure payment mechanism, which is interconnected to debit the customer accounts once the customer got hold of the ticket. Customers were attracted by this initiative by an online company to offer the sale of ticket to sports and entertainment event.

Proper analysis of the company marketing and operation environment shows a strong trading base with a large customer base. This ensures that the profit of the company continues to rise after every year. The organization’s ability to carry out its services all year round and this translates to the large profit margin. This is due to its operation in a sporting and entertainment sector which is not affected by other business environment and seasons (Wong, 2013).

The two founders of the company started the business as an entrepreneur with the use of information and knowledge acquired in the business school. Thus, they have been able to manage the company with proper skills that are required for a successive business. Good business management skills are required for any organization as they dictate how the organizations will grow and expand.

Having a large manageable customer base is good for any business. In this case, customers increase sales so as to break even and stabilize the price of various ticket offered in the market. Stub hub has been very successful in attracting new customers and maintaining old ones. This is achieved through an integrated system that ensures that customers get a fair service for their money. It also ensures that no time delays are experienced in the system, and customers can order for tickets when they want to attend another event.

SWOT analysis of Stub hub in regard to its marketing environment of its major weakness, opportunity and threat to its existence. Its weakness is very negligible as the management has worked on its strengths so as to reduce its weakness. The only weakness that exists in the company is its continued existence, which may be affected by the economic crisis. An economic crisis would render the company’s operation due to low sales and a threat to the entertainment industry.

The financial payment to the company may suffer an economic decline if fraud occurs and this will discourage customers from using the services of the company. Its opportunities in the market are well established as it has a competitive advantage over most of its competitors. Its safe payment mechanism has put the company among the most efficient organizations to offer free fraud schedule to its customers.

The customers feel safe and secure as they transact with the company staff. It is through this that the firm’s popularity continues to increase. The company has grown to surpass some firms that have been operating for quite some time as new customers continue to use its services. The customer base of the company continues to rise every year which has translated into high profits at the end of the year.

It is through this course that the online marketer giant eBay decided to buy out this company in a move to enjoy a piece of this cake. On the other hand, Stub hub could operate a single entity and continue to use the large infrastructure of eBay in its operations as it seeks to expand its business to other countries around the world (Williams, 2009). The company has maximized on some weakness in the system to come up with a fraud-free system, which is safe and secure for all customers.

The ticket prices have been stabilized with this system, and thus many customers want to enjoy their money with a fair service being offered. The company’s indulgence in buying tickets and reselling them has worked well for many customers. This is especially for those who cannot attend an event they had already bought the ticket to attend. It makes sure that tickets for a given event are completely sold out, and people attend the event to avoid empty benches on the terraces.

After the sell-out, Baker decided to start another company in Europe. The new establishment in Europe goes by the name Viagogo. Stub hub threats in the market include other firms that deal in the same industry as they offer fierce competition. The future of the firm is bright as the industry it operates in is still under utilized, and there is room for growth.

Analysis of alternatives

When analyzing the business environment of the company, the business has laid a solid foundation that makes it stand unique over other organizations in the same sector. Although the company has not been in operation for so long, it competes with a large organization that have been in operation for quite some time.

This success can be attributed to the unique services that the organization offers to its customer and thus most customers can relate well to its products. The organization’s payment schedule is so secure, and thus instances of fraud ever occurring in the system are minimized. Therefore, many customers feel safe to transact their business using the company facilities across the country.

Customer satisfaction is an important tool that the organization has put into proper use. Therefore, it has been able to serve million of people as demonstrated in its report of serving the 15 million customers and rewarding the customer with a gift. Stub hub has been able to tap into a lot of resources from eBay. Although it continues to be owned by the company, it operates its business independently by utilizing the company’s resources.

Thus, its growth curve continues to rise every year. The 300 million buyout of the company has helped the online market to expand its business and invest in customer friendly systems. This ensures that their customers are well served by the call center at its headquarters. Many customers that frequent sporting and entertainment events have been over the years associated themselves with the services of the online marketer Stub hub (Peragine, 2009).

Recommendations

With the company having grown to such extent, it is very important for the management team to devise new means of offering better services to customers. In this case, the business world continues to change thus diversification of operations is crucial. Devising new methods and mechanisms that could increase customer satisfaction should be emphasized in the business. Notably, many customers will need services with the growing interest in the sports and entertainment sector.

The company has emphasized on securing the payment transaction where the customers feel safe of his or her money being used to purchase the ticket of choice. The customer can invest in signing new business partners in the entertainment and sport industry so as to offer their ticket sales through the devolved system and the large resource network the company boasts of combined with the structural capability of eBay (Fekete, 2010).

Following the company’s partnership with established music stars in the country, there needs to be more partnership with other event organizer as its infrastructure has been improved since it can handle more clients. The firm needs to carry out an intensive customer survey so as to gather enough information in regard to the client satisfaction.

Improved systems help the company to serve many clients at a time. This will improve the customer relations office as it will serve many clients. Increased sales for the company will be helpful in increasing the investment operation of the company to other countries outside the United States. Following its sell out to eBay, the company should now focus on expansion to tap into the potential presented in the under utilized industry.

Implementation

The future of Stub hub seems promising and holds a lot of potential. However, the management of the company needs to devise new means to tap into a large number of customers to ensure the sales of the company continues to increase.

There are new competitors joining the market and multinational companies are setting base in the United States. Thus, the firm needs to expand past the American market to exploit the opportunity in the under utilized industry. The company needs to carry out customer surveys to determine what more services and preference they need to be addressed by the company.

Prior to price stabilization by the company following its understanding of weakness that occur in the market, the firm has managed to tap in more competitive advantage over its rivals. Market survey recommendations need to be utilized so as to offer insight into the operations of the firm through increasing its competitive advantage. The company is making great strides in its operations. For instance, its ability to acquire the infrastructure of eBay to expand its business as it continues to exist as a sole entity is commendable.

References

Bajaj, K. K., & Nag, D. (2005). E-commerce: The cutting edge of business. New Delhi: Tata McGraw-Hill Pub.

Fekete, J. (2010). Making the big game: Tales of an accidental spectator. Minneapolis, MN: Publish Green.

Peragine, J. N. (2009). eBay income advanced: How to take your eBay business to the next level–for Powersellers and beyond. Ocala, Fla: Atlantic Pub. Group.

Williams, C. (2009). Management. Mason, OH: South-Western Cengage Learning.

Wong, G. M. (2013). The comprehensive guide to careers in sports. Burlington, MA: Jones & Bartlett Learning.

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IvyPanda. (2020, January 12). Stub Hub- Ticket Scalping and online sales. Retrieved from https://ivypanda.com/essays/stub-hub-ticket-scalping-and-online-sales/

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"Stub Hub- Ticket Scalping and online sales." IvyPanda, 12 Jan. 2020, ivypanda.com/essays/stub-hub-ticket-scalping-and-online-sales/.

1. IvyPanda. "Stub Hub- Ticket Scalping and online sales." January 12, 2020. https://ivypanda.com/essays/stub-hub-ticket-scalping-and-online-sales/.


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IvyPanda. "Stub Hub- Ticket Scalping and online sales." January 12, 2020. https://ivypanda.com/essays/stub-hub-ticket-scalping-and-online-sales/.

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IvyPanda. 2020. "Stub Hub- Ticket Scalping and online sales." January 12, 2020. https://ivypanda.com/essays/stub-hub-ticket-scalping-and-online-sales/.

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IvyPanda. (2020) 'Stub Hub- Ticket Scalping and online sales'. 12 January.

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