Executive Summary
Digital business is the process of reinventing business models and transforming an organization’s goods and customer experiences through digital technology. The key trends in digital business are cyber security and the democratization of AI. Based on this, eBay has been active in ensuring that it becomes secure from a cyber-attack. The corporation is also using AI to perform its operations effectively. Therefore, being a digital business gives eBay the advantage to expand its operations across the globe.
Blockchain, hidden revenue generation, and ad-supported models are examples of emerging digital business models. A hidden revenue generation model is when an organization does not charge users for the services offered. For example, Google uses this technique to attract more people. The blockchain business model is decentralized, promotes peer-to-peer transactions, and aids in creating a trustworthy network. EBay is currently using the ad-supported model to achieve its objectives.
Collaborative relationships and strategic alliances are some of the strategies used by organizations to improve their performance. It involves two or more people working together to achieve mutual goals. On the other hand, a strategic alliance is a collaboration between two or more companies that allows each to achieve particular strategic goals that neither would achieve on their own. For example, eBay engages in strategic alliances with other organizations to improve its service delivery.
E-commerce is buying and selling products through the internet. The main principles of e-commerce focus on digital contact channels, building digital transparency, self-service, and measuring customer service. EBay, like an e-commerce business, is using these principles to improve its operations on the internet. For instance, they use feedback from customers to measure their customer service. Thus, e-commerce principles help an organization achieve its objectives in a digital business.
Introduction
Today, every business requires digital technology to perform its operations effectively. Digital technology helps contemporary businesses to achieve the intended efficiency. EBay is one of the e-commerce businesses that depend on technology to function. It is a multinational corporation based in the US that promotes consumer-to-consumer and business-to-consumer sales. EBay exist to promote economic opportunity for individuals, entrepreneur, businesses and organizations of all sizes. The corporation was established in 1995 by Pierre Omidyar and became a success story. Since its inception, the organization has grown tremendously by expanding its market base across the globe. The corporation has effectively attracted buyers and sellers across the globe due to its excellent services. In addition, the corporation has an interactive platform owing to the adoption of technologies such as AI.
EBay has effectively expanded as a multinational company and now operates in countries outside the US. Currently, it links millions of buyers and sellers in more than 190 markets across the globe. This means that eBay operates in more than 190 countries. In addition, the corporation has more than 154 million active buyers and 19 million active sellers globally. The cornerstone of its growth and customer loyalty over the past 25 years has been innovation and technological advancement. For instance, in 2020, the corporation reported revenue of more than $10 billion, an 18.93% increase from 2019. One of the reasons for this performance is the formation of strategic alliances with leading corporations across the globe. Therefore, eBay is using digital technology to meet the needs of its customers across the globe.
Overview of Key Trends and Advantages
Definition of Digital Business
Digital business is a business that mainly depends on technology to achieve value for its target customers. In other words, it is the process of reimagining business models and transforming an organization’s products and customer experiences through digital technology (VendrellHerrero et al., 2018). It also entails inventing products and connecting people to objects, insights, and experiences to create new value. The business is made up of digital-based brands that transform their operations using technology. As a result, digital business depends on technology to improve operations and perform effectively.
Advantages of Digital Business
A digital business can easily expand to the international market because of globalization. While some organizations may find international expansion difficult, worldwide expansion becomes much easier for a digital business because of the internet domain, which allows anyone in the world to access the business (Schallmo & Daniel, 2018). In addition, a corporation that does not have a physical presence can also integrate new staff from anywhere globally. For example, the company does not need to set up a physical office to operate in a given region. Since capital for running an office and warehouse is one of the barriers for most organizations going global, a digital business can operate without these resources (Buchanan & McCalman, 2018). As a result, a digital business can have clients across the globe depending on the product they provide.
Another advantage of digital business is improved employee satisfaction, which eventually promote productivity. Employees who work from home tend to be happier because they are close to the family and can attend to some of their needs (Schallmo & Daniel, 2018). Furthermore, working from home saves employees from the stress of working in offices. It can be stressful for an employee to work where their employers can come and check the progress. As a result, remote working enables individuals to work at their own pace without fear of being watched by their supervisors and managers (Ancarani & Di Mauro, 2018). Therefore, a satisfied employee is more likely to work hard to achieve the set goals.
Key Trends in Digital Business
One of the trends in digital business is refocusing on cybersecurity. In a world where everything is on the internet, ensuring that data remains safe is one of the biggest challenges of cyber security. Digital businesses across the globe are constantly facing the threat of cyber-attack (Harari, 2018). Hackers often increase their effort and change strategy to breach networks and systems. Based on this, digital organizations are refocusing on the most basic and important steps to increase security. As part of risk management, organizations now have chief information security officers to achieve cyber security hygiene.
The other trend in virtual business is the democratization of artificial intelligence. This process can accelerate digital transformation in an organization. Democratization AI increases accessibility to every business and everyone within that organization (Harari, 2018). When people access the AI system, more innovations are bound to emerge. This trend involves using AI tools to identify trends, make decisions, forecast, learn and improve. Every organization, from tech-savvy start-ups to large ones, is currently trying to integrate AI into its systems and operations. Therefore, the adoption of AI is increasing to promote efficiency.
Application to Using Digital Business with Advantages and Key Trends Applied
EBay uses AI to transform its operations and improve service delivery to its clients. The corporation deployed computer-vision technology in its system to transform online shopping (EBay, 2021). It launched an image-scanning tool on its app, beginning with trading cards that sellers can scan with their smartphones to auto-populate and improve listings. During the pandemic, the corporation has effectively used computer vision detection and classification models on items such as hand sanitizers to determine listings with inflated prices and products that make false health claims (EBay, 2021). Therefore, the corporation is using AI to improve its operations.
New and Emerging Digital Business Models
Emerging Digital Business Models
The emerging digital business models are the blockchain business model, Hidden revenue generation model, and Ad-supported model. A hidden revenue generation model is where an organization makes money, and the people that use it are unaware (Cuofano, 2021). A good example of corporations using this model is Google and Facebook. An ad-supported model is where a business publishes free content that drives many users to their site. Google uses this type of model to attract more users. The blockchain business model is distributed and enhance peer-to-peer operations and assist in creating a trusted system. As a result, most corporations adopt this type of model to improve their efficiency.
Discussion of The Emerging Digital Business Model
The ad-supported model is becoming attractive to digital businesses across the globe. In this model, an organization bring commercial information to internet users. However, security and ethical issues have become the main issues affecting online advertising (Cuofano, 2021). A cyber-attacker can create different forms of fraud to obtain money for advertisers. Ethics is also an issue that can affect the reputation of the advertisers because of the types of content being advertised. Most businesses focus more on the money they obtain and do not bother to investigate their advertising businesses (Nwaiwu, 2018). Therefore, it has been a challenge for most businesses to choose between money and morality.
The blockchain business model is decentralized and peer-to-peer transactions within a trusted and reliable network. The immutable record of data is a feature that makes this model secure from attackers. The security of data in the blocks is achieved through cryptography (Cuofano, 2021). This means that the model is automated and secure to transfer data from one user to another effectively. Although the model is secure, privacy is a problem, and users must be trustable. The users can see all the transactions of another (Cuofano, 2021). The model was designed to enhance transparency between users within the block. As a result, it helps an organization effectively protect its data and build a positive relationship with customers.
A hidden revenue generation model is used by organizations that do not charge users for the services offered. The model is founded on the idea of keeping an organization’s consumers and income separate (Cuofano, 2021). In this manner, the company focuses on the products or services it provides to its clients to gain the greatest benefits from their engagement. However, cyber security in this model is daunting because of the high traffic of users. The users must be informed constantly on how to protect their data (Cuofano, 2021). In addition, the model must ensure that clients’ data are safeguarded based on ethics. Therefore, this model majors more on the relationship between businesses and customers.
EBay is using an ad-supported model to increase seller listing of products. In 2017, the corporation shifted from a third-party advertising strategy to a first-party done on their platform. As a result, the company and its sellers can use first-party marketing, such as promoted listings, to attract more customers to their greatest items. This non-cannibalistic style of advertising directs more traffic to certain listings or special events selected by the seller or brand while keeping the customer on the eBay platform (EBay, 2021). In addition, EBay’s promoted listings service is unique in the business in that it is based on a Cost Per Sale approach, which means the seller only pays for the ad if it results in a sale.
The Impact of New Collaborative Relationships and Strategic Alliances
Collaborative relationships involve two or more people working together to achieve mutual goals. Collaboration has emerged as a favored method of dealing with diverse individuals or organizations with opposing viewpoints (Richardson et al., 2019). It compels each party to assess what is required and what resources will be required and immediately establishes a collaborative relationship where both parties are incentivized to fulfil all milestones and deadlines. Organizations normally use it to expand their operation to new markets. For example, an organization can collaborate with another one to promote its products (Richardson et al., 2019). As a result, cooperation is a difficult process that sometimes requires people to learn to listen and communicate in ways they would not typically do.
A strategic alliance in business is a partnership between two or more organizations that allows each to attain certain strategic goals that none could achieve on their own (Gundolf et al., 2018). It is an agreement between two independent business companies to pool resources to achieve a common purpose. The strategic partners maintain their autonomy and unique identities, share the partnership’s benefits and governance, and continue to participate until it is ended. Strategic alliances are frequently created in the global marketplace by businesses situated in different parts of the world (Gundolf et al., 2018). The main drive of these alliances is to create a win-win situation. Therefore, all the partners in a strategic alliance stand to gain.
Advantages and Disadvantages
There are various advantages and disadvantages of new collaborative relationships. This relationship helps enhance business performance. When organizations work together, they can share information that can boost performance (Richardson et al., 2019). Collaboration leads to idea generation and the development of new approaches to achieve key tasks. It also helps improve the efficiency of operations because each party comes with their strengths. However, a collaborative relationship can lead to slow decision-making because many parties are involved in the process (Richardson et al., 2019). The relationship can also result in conflict due to disagreements among the parties. Therefore, it is important to understand its advantages and disadvantages when entering this relationship.
Strategic alliances also have advantages and disadvantages that businesses might experience. The alliance is an efficient way for digital businesses to expand globally and enter new markets (Gundolf et al., 2018). It enables a business to increase its sales and expand by forming alliances with other organizations. In addition, when two organizations come together, they create innovative products which help to increase their productivity. Strategic alliances with leading organizations improve the image of an organization in the market. However, the risk of conflict increases when two organizations of different cultures come together to work on a project (Gundolf et al., 2018). Although strategic alliance can benefit the organization, it also has some disadvantages.
EBay has continuously used strategic alliances to improve its operations in the market. The latest strategic alliance is between eBay and bidadoo, which improves performance. The alliance will combine EBay’s proven platform and worldwide reach with bidadoo’s unique capabilities and experience (Hayes, 2021). eBay and bidadoo will address customers’ demands through this alliance by utilizing technology, data, and expertise to create industry-leading, end-to-end solutions and value. bidadoo delivers specific expertise in the Heavy Equipment sector and the ability to provide customers with a high level of confidence and certainty. Thus, both parties involved in the alliance stand a chance to benefit.
The corporation also partnered with ChannelAdvisor to increase its performance. ChannelAdvisor is a leading provider of cloud-based e-commerce solutions that allow retailers and branded businesses to increase their sales (Business Wire, 2017). The strategic alliance between the two organizations enables them jointly adopt initiatives to enhance growth. In this alliance, the two organizations are supposed to engage in beneficial approaches to all. Based on this, strategic alliances are usually formed with a common objective. The partners are supposed to work together to help attain the goals (Business Wire, 2017). The strategic alliance help the parties improve their performance in operation.
How eBay Can Use E-Commerce Principles
E-commerce is a business model that enables an organization and individual to purchase and sell products through the internet. To put it differently, it is the act of buying and selling items via electronic devices such as mobile applications as well as the internet (Singh et al., 2018). It is a huge part of the economy, and it is crucial for companies that sell items online. Compared to traditional retail, e-commerce allows businesses to reach a bigger number of customers. Due to the high number of individuals who shop online, e-commerce is the fastest-growing retail market (Cai et al., 2018). As the number of online users increases, the model experience more traffic, which is integral for its performance. Therefore, e-commerce is a new model being adopted by organizations across the globe.
The first principle of e-commerce is to focus on digital contact channels. Online communication is an important tool in the effective performance of a digital business. In a digital domain, digital channels generate better outcomes (Kelsey, 2018). A digital business should major in using features such as live chats and chatbots. Many corporations use live chat to allow their customer-facing workforce to communicate with customers or prospects in a direct and timely manner. On the other hand, a chatbot uses text messages to imitate human-like discussions with users (Kelsey, 2018). With these technologies, a digital business can communicate with a client.
The second principle of e-commerce is building digital transparency. The world has become far more transparent as a result of digitalization. This is a positive thing in customer service that digital businesses should adopt (Kelsey, 2018). It is now much easy to keep customers informed. Transparency is providing customers with complete access to their order history and progress. It also entails keeping them informed if a problem takes longer than expected to resolve. This removes ambiguity, makes delays more manageable, and prevents unnecessary help calls (Kelsey, 2018). Because digitization has made a plethora of tools available, it stands to reason that they should be used to improve customer service encounters.
The third principle is to allow self-service rather than rush to serve them. It is important to allow customers to navigate the website page without offering help unless they need one. Before purchasing a product, most individuals perform online research (Kelsey, 2018). As a result, customers usually go for self-service options to solve their problems before asking for any help. Instead of communicating with customers, they prefer to solve problems for themselves online, whether through a FAQ page or other means available. With this strategy, a customer can explore and learn more about the company (Kelsey, 2018). Thus, this principle is crucial because it allows customers to take their time before purchasing a product.
The fourth principle for a digital business is to measure customer service. One of the best aspects of online business is significantly more measurable than the conventional business model (Kelsey, 2018). Because all online actions leave digital fingerprints, it is possible to understand client behaviors and actions better. Customer feedback can also help an organization better measure the quality of its customer service. For feedback to be valuable, it should be offered when the encounters are still fresh in the customers’ minds (Kelsey, 2018). Customers will also be more eager to provide feedback if it does not necessitate any additional effort. Therefore, customer feedback enables an organization to understand the strengths and weaknesses in their customer service.
EBay uses various e-commerce principles to make its online operations effective. The corporation has a customized contact section that promotes digital communication with clients across the globe. The contact us part is divided into various areas, and a client has to choose the area they want to seek help from (EBay, 2021). The corporation also uses the principle of self-service, where buyers and sellers are allowed to navigate the webpage. The clients are free to check any information, including the stories, and decide whether they want to transact through the platform or not. In addition, eBay makes all the information available to interested parties on the website (EBay, 2021). The main aim is to promote transparency, which is integral in building positive relationships.
Conclusion
The success of EBay is linked with the benefits that come with digital business, strategic alliances, adoption of e-commerce principles. The corporation provides a platform where buyers and sellers meet to exchange products. Currently, the corporation links millions of buyers and sellers in various markets across the globe. The expansion was due to its attribute of being a digital business. It reported a revenue of $10 billion in 2020 business of its effective customer service. Its success can be linked with adopting an ad-supported model to increase seller listing of products. The corporation shifted from a third-party advertising strategy to a first-party done on their platform. This enabled the corporation to generate more income from advertisers. The success of the organization is due to the adoption of e-commerce principles. EBay has also experienced the benefits of forming strategic alliances. The corporation has formed strategic alliances with various organizations to improve its operations.
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