eBay Inc.

: Managing Success in a Dynamic Online Marketplace

It began as a trading site for nerds, the newly jobless, home-bound housewives, and boredretirees
to sell sub prime goods: collectibles and attic trash. But eBay(www.ebay.com) quickly grew into
a teeming marketplace of 30 million, with its own laws and norms, such asa feedback system in
which buyers and sellers rate each other on each transaction. When
that wasnt quite enough, eBay formed its own police force to patrol the listings for fraud
and kick out offenders. The company even had something akin to a bank: Its PayPalpayment-
processing unit allows buyers to make electronic payments to eBay sellers who
cant afford a merchant credit card account. eBay is creating a second, virtual economy,says
W.Brian Arthur, an economist at think tank Santa Fe Institute. Its
opening up a whole
new medium of exchange.

eBays powerful vortex is drawing diverse products and players into its profitable
economy, driving its sellers into the heart of traditional retailing, a $2 trillion market. Among
eBays 12 million daily listin
gs are products from giants such as Sears Roebuck, Home Depot,Walt Disney, and even IBM.
More than a quarter of the offerings are listed at fixed prices.
The result, says Bernard H.Tenenbaum, president of a retail buyout firm, is Theyre coming
right fro
m the mainstream of the retail business.
So what started out as a pure consumer auction market-place is now also becominga big time
business-to-consumer and even business-to-business bazaar that is earning
record profits for eBays stockholders. And as
the eBay economy expands, CEO MegWhitman and her team may find that managing it could
get a lot tougher, especially because
eBays millions of passionate and clamorous users demand a voice in all major decisions.This
process is clear in one of eBays mos
t cherished institutions: the Voice of the Customerprogram. Every couple of months, the
executives of eBay bring in as many as a dozen sellersand buyers, especially its high-
selling Power Sellers, to ask them questions about how they
work and what else eBay needs to do. And at least twice a week, it holds hour-
longteleconferences to poll users on almost every new feature or policy, no matter how
small.The result is that users feel like owners, and they take the initiative to expand theeBay
economy

often beyond managements wildest dreams. Stung by an aerospace

downturn, for instance, machine-tool shop ReliableTools Inc., tried listing a few items on eBay
in late 1998. Some were huge, hulking chunks of metal, such as a $7,000 2,300-poundmilling ma

chine. Yet they sold like ice cream in August. Since then, says Reliables auctionmanger,
Richard Smith, the companys eBay business has turned into a monster. Now theIrwin dale
(California) shops $1 million in monthly eBay sales constitutes 75 percen
t of itsoverall business. Pioneers such as Reliable prompted eBay to set up an industrial products
marketplace in January thats on track to top $500 million in gross sales this year.
 Then there is eBay Motors. When eBay manager Simon Rothman first recognized amarket for
cars on eBay in early 1999, he quickly realized that such high-ticket items wouldrequire a
different strategy than simply opening a new category. To jump-start its supply of cars and
customers, eBay immediately bought a collector-car auction company, KruseInternational for
$150 million in stock, an later did a deal to include listings from onlineclassifieds site,
AutoTrader.com, Rothman also arranged insurance and warranty plans, anescrow service, and
shipping and inspection services.This approach worked wonders. Sales of cars and car parts at
a $5 billion-plus annual
clip are eBays single largest market. That has catapulted eBay in from of no.1 U.S. autodealer
AutoNation in number of used cars sold. eBay is by far one of my bette
r sources for
buyers, says Bradley Bonifacius, Internet sales director at Dean Stallings Ford in Oak ridge,
Tennessee.And for now, the big corporations, which still account for fewer than 5 percent of
eBays gross sales, seem to be bringing in more cust
omers than they steal. Motorola Inc., forexample, helped kick off a new wholesale business for
eBay last year, selling excess andreturned cell phones in large lots. Thanks to the initiative of
established companies such as
Motorola, eBays wholesale busi
ness jumped nine fold, to $23 million, in the first quarter.As businesses on eBay grow larger,
they spur the creation of even more businesses.A new army of merchants, for example, is making
a business out of selling on eBay for otherpeople. From almost none a couple of years ago, these
so-called Trading Assistants nownumber nearly 23,000. This kind of organic growth makes it
exceedingly tough to predict
how far the eBay economy can go. Whitman professes not to know. We dont actuallycontrol
this, she admits. We have a unique partner

millions of people.

SUMMARY
eBay begun as a trading site for jobless, home-bound, bored people to sell their sub-primegoods.
But soon it grew into a 3 million user site with its own laws and norms with afeedback system
and its own regulations to delist fraud users. It became a virtual economy.The transactions were
made by Paypal as a good alternative to credit cards. eBay offeredretail products. It is $2 trillion
market. Nowadays, eBay is not only for subprime products butgiants like IBM and Walt Disney
are also offering products which means it has become abusiness to customer market and in some
cases a business to business market. eBay takes
feedback of customers and organized the voice of the customer program
and took theadvice of the users every month for every single matter regarding the website and
itspolicies. eBay sold many tools, cars, motorboats of huge prices and as a result the same
yearthe gross sales grossed $500 mn. Then came the eBay motors site. Manager Simon
Rothambought a company Kruse international for motor dealings and also arranged
insurance,warranty, escrow service, shipping and inspection. The strategy worked very well.
People just expanded the site beyond imagination. In a few months a new group of people
poppedout called trading assistants who helped people sell/buy products. It has become tough
tohow far can an economy like eBay can go with the help of millions of people.Questions1.
Why has eBay become such a successful and diverse online marketplace? Visit theeBay website
to help you answer, and check out their many trading categories,specially sites, international
sites, and other features.Answer:eBay has got everything ranging from motor boats to bizarre
stuffs like prank joke toys.If somebody wants anything he/she can get it from eBay as long it is
legal. Visiting thesite you will find that it has the most wide categories from fashion wear to
electronics. Italso provides feedback system, protects the customer from any kind of fraud
transactionand guides you though the site if you are a new customer.It has different sites for
different countries. It forms communities. Specialty sites eBaypulse, provides information about
popular search items, tracks most watched items.

Moreover, it has discussion boards, groups, chat rooms, review and guides. It alsoprovides
WAPS, JAVA, Mobile shopping and SMS alerts etc.Question 22.

Why do you think eBay has become the largest online/off-line seller of used cars,and the largest
online seller of certain other products, like computers andphotographic equipment?Answer:The
products like computers and photographic equipments are sometimes very muchexpensive if
bought from showrooms. The same products are available on eBay new orsecond hand very
cheap. Also there is free shipping and fixing for these products whichfrees the seller from
additional burden and also the seller gets the right price because of
the online bidding process. About cars, the second hand cars generally dont provide a
nykind of insurance, warranty and inspection services. Due to these advantage eBaybecame the
largest online/off-line seller of used cars and the largest online seller of certain other products
like computers and photographic equipments.Question 3:3.

Is
eBays move from a pure consumer
-to-consumer auction marketplace to invitinglarge and small businesses to sell to consumers and
other businesses, sometimes atfixed prices, a good long-term strategy? Why or why
not?Answers:According to the current trend, the trade of products has not been disturbed by
turningthe website into a business to customer or business to business market. Bidding processon
the website has been eBay
s
has been the chief focus. But if some businesses areintroducing fixed price pr
oducts it doesnt give much competition to other traders in
long term because the competition will only be survived by those who will offer
attractive prices and if fixed price doesnt attract customer it is only going to die in the long term.

eBay itself is an economy and the market forces will efficiently regulate theforces

Links:
.
1.Ebay outsourcing strategy-
https://books.google.co.in/books?id=s2ugfZEUS4EC&pg=PA531&lpg=PA531&dq=ebay+case+
study+on+supply+chain&source=bl&ots=CcPCtKc4NZ&sig=5EGsi07xFzkAQ3SGCmH2IukIR
-
4&hl=en&sa=X&ved=0ahUKEwj0xvj10dvWAhUJs48KHazdBDcQ6AEIUzAI#v=onepage&q=
ebay%20case%20study%20on%20supply%20chain&f=false
2. Ebay is the worlds online marketplace
http://www.iosrjournals.org/iosr-jbm/papers/ies-mcrc-volume-2/17.pdf
3.Case study
https://books.google.co.in/books?id=g2SJ6v3nzRsC&pg=PA518&lpg=PA518&dq=ebay+case+s
tudy+on+supply+chain&source=bl&ots=HcfIyMZvve&sig=sLzVvmJk_1bSUAo66VQN6jOA9
5I&hl=en&sa=X&ved=0ahUKEwieyoa719vWAhUJQ48KHZ0lBQc4ChDoAQguMAE#v=onep
age&q=ebay%20case%20study%20on%20supply%20chain&f=false
4.