strategic-management

10
eBay Inc. — 2009
Lori Radulovich
Baldwin-Wallace College
EBAY
eBay.com
In August 2009, eBay Inc. formed a partnership with General Motors enabling hundreds of
GM dealers in California to help consumers negotiate purchase of new GM cars and trucks
through the eBay online marketplace. Nearly all of California’s 250 GM dealers took part
in the program so consumers could visit Web pages like gm.ebay.com and chevy.ebay.com
to browse new 2008 and 2009 GM vehicles, ask dealers questions, and figure out financing.
This program marked a shift for San Jose, California-based eBay, since most of the
vehicles sold on eBay Motors—a site that sells various types of vehicles and auto parts—
had historically been used.
For the second quarter of 2009, eBay’s profit fell 29 percent and revenue declined
4 percent as the company continued its turnaround strategy in a harsh climate for consumer
spending. These weak results were, however, better than analysts expected. For that
quarter, eBay reported nice growth in both their PayPal and Skype business segments,
which offset decline in their Marketplaces business segment. EBay also that quarter
announced they would spin off and make an initial public offering of their Skype business
segment in the beginning of year 2010.
History
How did the idea of selling practically anything to anyone, anytime, anywhere start?
Surprisingly, it all began with Pez candy! One evening in September 1995, Pierre Omidyar,
the founder of eBay, and his wife were discussing their desire to contact other Pez collectors.
To solve the problem, Omidyar created an online auction in the form of a sole proprietorship
business. As a result, eBay was created over the Labor Day weekend by Pierre, a computer
programmer, who devised a code that enabled and ran the eBay auction Web site from his
home computer. Later in May 1996, eBay was incorporated in California and became public
on September 24, 1998. The first eBay auction was also conducted on Labor Day. As of
2008, eBay has a 14 percent share of global e-commerce with 86.3 million active users.
EBay, the first virtual online business community, empowers entrepreneurial individuals
to become e-commerce business owners. EBay.com offers a sense of community to
buyers and sellers that is sustained by communication and high transaction rates on a wide
selection of goods/services (eBay.com, 2006). EBay’s popularity is due to the value
offered to its users. EBay provides a “faster, easier, safer online commerce experience”
(eBay, 2006, p. 7). EBay’s global networked community of buyers and sellers interact 24/7
in a secure and trusted global marketplace. E-commerce is supported by eBay’s proprietary
Skype VoIP technology, which allows free telephone calls using a broadband Internet connection
to any telephone number. Skype is available in 28 languages in over 225 countries
(eBay, 2006). EBay’s e-commerce platform also provides full support for the buying
process (registration, bidding, management of outbids, item listing, and transaction close),
community bulletins, chat, a proprietary product search engine, purchase protection programs,
customer support, value added services for auction users, a personal home page that
includes tailored information, and fully automated merchant services. EBay’s success is
sustained through communication and trust (eBay 2006).