In the battle of e-commerce with Amazon, eBay has to determine whether it should maintain the existing business model or transform its model and expand into new areas.
By analyzing eBay with Porter’s Five Forces Model, I conclude that the most effective way for eBay would be to maintain the existing business model through strengthening its brand identity. The following analysis will provide reasons on why brand identity should be strengthened and how it can be used to improve eBay’s business.
Threat of Entry
This is an Internet driven service industry, which does not provide for many barriers to entry. The main barriers come from government regulation. The government will not permit some ...view middle of the document...
EBay does not have a traditional method of selling, but instead provides a service that brings the buyers and sellers together. Sellers want protection for their items. They want to get their money quickly and will choose sites that have good reputations of providing smooth and quick payments for items. EBay can thus improve its brand reputation by strengthening its payment systems.
Threat of Buyers
Same to suppliers, eBay cannot function without buyers. However, due to the many competitors, the most effective way for eBay to attract customers will be to increase its brand reputation. This can be done by elevating customers’ trust standards with an improved feedback system, enhancing the user experience with optimized search or incentivizing seller activity by lowering listings or final-value fees.
Threat of Substitutes
Since the core business for eBay is auction, I will focus on that. There are not many substitutes to auctioning online. One option would be to go back to trading at an auction house; this will cause both buyers and sellers much extra efforts and costs, which are not worth at all (especially for some small items). The other option would be to sell the items directly instead of placing them...