EBay and Target market profile
EBay is an online auction industry that was founded in 1995 and has since grown dramatically. Similar to its competitors, it does not produce any tangible or physical goods. The firm’s model of business is to make income from facilitating information movement through the internet. It provides the services of connecting independent buyers, suppliers and sellers together. It makes cash through charging sellers fees and commissions. Its mission is to offer a global trading platform where nearly everyone can trade nearly anything (mis.kent.edu, 2010). The achievement of this mission would only be probable through the help of automated information systems. It yearns to provide the community with a platform that is user-friendly on the internet where its customers can trade anything with each other. EBay’s deliberate aim is not how to become a leader in the online auctions business globally because it is at present a global leader in this specific industry. Though, the question that eBay is currently asking itself is how to improve and maintain its leadership aptitude in the business of online auction. EBay is asking itself what customer services it can expand to continue drawing more customers and to further compete with its close competitors. Another side of this question has been addressed to what inventions the company can introduce to exploit the use of the renewed technologies that are currently presented with the Internet. This firm has been greatly successful since it was started.
The porter’s model of competitive forces defines competitive forces that endanger an organization. These forces include new market entrants, customers and suppliers, alternate services and goods and traditional competitors. Ebay is of no exception to these forces. Its traditional competitors include Craigslist, Google, Overstock, Amazon, and Yahoo! and additional main engines for search such as mamma.com and ask.com. Such competitors are eBay’s constant threat. This high competition has been due to the fact that entry into an online auction website has been very easy and free. Alternate goods and services are also delivered by stores like Target and Wal-Mart. These stores have, therefore, become a threat to eBay since they have goods of lower prices and, therefore, in my opinions, most customers would rather buy from these stores than online. Due to customers’ easy ability to switch to competitor’s services or products, they are of high importance and power in any online auction firm. In eBay, since all business transactions take place online, customers have instant access to all available goods and their prices.
EBay has effective and efficient support and primary activities on its business value chain. The primary activities entail connecting sellers and suppliers to the right buyers with the assistance of information systems. These systems have helped it in improving these primary activities by making searches for items, goods and services narrow and easy. They have also made shopping and listing easier for its customers by providing a great number of categories and subcategories. The information systems also have users to compare similar items and their recommendations before selling or buying. Acquisition of such technological strategies such as Pay Pal and half.com has also helped upgrade eBay’s support and principal activities. This is because costs of processes have decreased and with PayPal, eBay has become the controller of its financial transactions since goods and services can now be paid online. With the introduction of half.com, eBay has gained a larger market share by entering directly, in competition against firms like Amazon, into the media industry.
The organization’s support activities entail its organizational procurement, human resources, technology and infrastructure. EBay has employed over 8000 permanent workers and has its operations in more than thirty-two countries. This has helped in providing diversity in the firm’s workforce and improved creativity and ideas. Due to this employee’s diversity, the company’s mission can only be effectively achieved through use of information systems.
Challenges facing EBay
This company just like any other in this online auction industry is facing challenges. Some of its minor problems include the stoppage by its main competitor, Yahoo! into the market of Asia. It has also been recently auctioned out of the market in Japan. Another minor challenge facing eBay is the Chinese introduction of a new online competitor, Taobao. However, there are trivial problems facing eBay. These include hindrances in enforcing their rules beyond their jurisdiction in the international community. This challenge involves the prevention of sellers from selling illegal goods as drugs and weapons. “The largest threat to eBay is the honesty and integrity of its auctions”(Laudon & Laudon, 2006).Another major challenge for eBay is information misrepresentation by unserious buyers or sellers and fraudulent activities. The complaint by many customers about the firm’s customer service system is another major challenge for eBay. The customers require access to a human customer representative, which has posed a challenge due to the diversity of their customers.
Solutions to challenges facing EBay
However, like other businesses that are looking to expand, eBay has strained to solve these challenges. It has assigned a hundred million dollars to enhance and promote its operations in China. This is to help give them an added competitive advantage above the Chinese firm, Taobao. To solve the challenge of customer service, the firm had to increase the cost of commissions and fees applied to sellers. This step caused a negative response in the business value chain. This policy had therefore to be abandoned. To enable timely response and troubleshooting, the firm requires a telecommunication system that monitors usage statistics and transactions (Chen & L, 2009).The two common challenges are, therefore, fraudulent activities and customer service improvement.
How eBay could improve its eBusiness
Another solution to be taken by eBay would be the “discrimination” against user registrations in certain regions based on the reports of fraudulent activities in these areas. These regions include Nigeria and Russia where activities of fraud are common. This solution would decrease the cases of fraudulent activities and thus a slight decrease in customer service complaints. However, this solution would have a negative image on eBay due to discrimination and loss of potential income they could otherwise have gathered from these regions.
A third solution would involve the company to purchase advanced automated systems that are more interactive and human. This would help to identify the problems of discontented customers and to address them better. This system would also provide them with much better services. However, although the solution is more interactive, it is costly. It would also only solve the problem of customer service but not that of fraudulent and untrustworthy customers. The first solution would therefore be more appropriate.
The research and analysis of eBay illustrate several ways in which information systems have helped it to compete and the exclusive interdependence between the organizational environments, business processes and information systems. EBay was able to successfully benefit from the opportunities created by internet. It capitalized in online trading where persons could sell and buy to each other (mis.kent.edu, 2010). This tactical system made eBay become one of the biggest and first internet retailers. EBay functions in a continually and rapidly changing customer environment and therefore they have continued to develop, build and maintain renewed information systems (EBay, 2011). These systems have led EBay Company to widely involve successfully in e-business (mis.kent.edu, 2010).
Chen, M., & L, Y. (2009, May 26). Information System Management of eBay. Retrieved from cs.uwaterloo.ca: https://cs.uwaterloo.ca/trg/cs330/a2/grp4-CS330presentation.pdf
EBay. (2011, October 25). Information Systems,Organizations and strategy. Retrieved from web.ist.utl.pt: http://web.ist.utl.pt/ist13085/fcsh/sio/slides/Laudon-11e/Laudon-Cap3.pdf
Laudon, K., & Laudon, J. P. (2006). Essentials of Business Information Systems:Can EBay Keep It Up. Upper Saddle River: NJ:prentice Hall.
mis.kent.edu. (2010, April 14). Part I: eBay’s Strategic Process. Retrieved from kent.edu: http://mis.kent.edu/Users/weinroth/public/July%208%20EBayProgressReport.htm