The evolution and development of internet has given a new form to businesses. The birth of internet has led the discovery of e-commerce and e-business with unique business models ever introduced. One such business eBay which is a well known brand in nearly every nation as an online auction site offering person to person trading platform over the internet. The report will examine use of internet and effect on eBay, business model and strategies, internet technologies, internal and external analysis of business and issues relating to internet. The paper aims to explain how eBay has utilized internet to drive its strengths and gain dominating position in e-marketplace for several reasons (DOZIER, 2008).
eBay, founded in 1995 in California United States has marked its success story in dot-com bubble growing into a multi billion dollar company in over 30 nations. It provides online site that allows individuals and businesses to engage into buying and selling of variety of goods and services. The platform was initially developed as auction site and later expanded into many other categories like online classified advertisements, online ticket trading, online money transfers. It charges users on invoice basis and listing of items. eBay is ranked highest in the online auction site with over 22 million users and 8000 product categories (Analyzing eBay Inc).
1.1 E-business environment and business transaction types in eBay
- Largest internet marketplace
- Unique business model that has no direct competitor
- Economies of scale
- Own and secured payment system
- Brand recognition
- Stagnant growth
- Fee gets higher with more listings and sales
- Online fraud and theft
- Downtime and outages hampers smooth transactions
- Mobile shoppers
- Increase in product and service portfolio
- Brand expansion into untapped regions of the world
- Low cost local retailers
- Online security
- Competition from Amazon and other sites
- Exchange rates
Political/legal - The political and legal factors includes risk of data security and fraudulent activities with illegal products. Another problem area is that many users do not pay taxes while performing the transaction. This has raised concern for government in tax collection (Chaffey, 2009).
Economic - Increasing consumer spending, employment rates, growth in developing nations will eventually benefit eBay with increasing number of transactions.
Social - population in nearly every nation is contributing to more use to internet. Ecommerce sites can benefit through use of increasing social networking sites, but on the other hand many nations are also banning use of internet site due to ethical and religious factors as a concern that sites are damaging their cultural and social beliefs.
Technological - new technological developments with Smartphone allowing more users to engage in mobile and web shopping (Dave, 2008).
Environmental - increasing concerns towards eco packaging have impacted brands to modify their packaging and storing styles.
The transactions in eBay are performed online whether it is order placing or selling of products and services. Sellers and business lists their products on website where buyers can view and opt for purchase. The transaction can be prepaid through debit/credit card or postpaid with cash on deliver system. Once the order has been placed, seller is informed about it and it sends the order through logistic services as provided by eBay. Once the delivery the confirmed by the buyer, eBay transfers the amount to sellers account (Gerjets, 2012).
1.2 Benefits and barriers to eBay
Businesses in every sector are affected by merits and demerits inherent to it or as emerged within the business. It is thus the ability of the business to get affected ton utilizes it as another opportunity and benefit form it. Below are explained some of the merits and demerits of doing business online
Customer Base - Not long ago it is the frost tension of nay business owner to acquire and grow it customer base. The introduction of online marketing and advertising channels has changed the practices. eBay earns the merits of global customers who connect through a single platform perform transaction sitting far away form each other (Hanson and Kalyanam, 2007).
24 Hour Shopping Facility - eBay and similar other online shopping sites have inherent advantage to remain open 24 hours and seven days of the week. It allows customers to see, compare and sell and buy products while also benefiting the owner to earn when not in office.
World as a Platform - It is the ability of internet that people have adopted it like anything. Within 20 years of establishment, eBay is now present in 30 countries localizing its business operations (Martinez, 2013).
Cost Effective - Website building does not involve huge cost as compared with brick and mortar.
Copy - The above benefits of low start up cost and given the benefits of internet, the competition in online marketplace has increased all over the world. Many small websites are copying business model of eBay and offering service to local customers (Rowley, 2002).
Laws - Internet business is also subject to laws and regulation of the country and requires businesses to adhere and comply with taxation and financial disclosures.
Online Fraud - Consumers are still wary of online shopping because of fraud through payment systems (Sen, 2005).
1.3 Security and legislative issues facing by eBay
Considering the eBay' reach and established operations in multiple countries, it is essential for it to understand legal and security issues to provide safe environments for businesses and customers and also ensure safety for own operations.
The technological basis of eBay is a three tier structure known as web client or server middleware. The client tier is web browser that performs form processing and middle tier is web server that performs transaction processing. The web server links with third tier which is data base processing (Thelen, 2008). The issues directly linked with ecommerce sites are domain names and trademarks. Apart from this, there are also issues with consumer protection in regard with personal information and financial information, electronic transaction, site development and advertising, taxation, privacy, copyrights. The global presence of eBay makes it even more prone to these issues as it has to connect with local service providers for business needs (Wilson, 2001).
Moreover the security concerns pose major threat for eBay operations. Online hackers use personal and financial information form the site and conduct fraudulent activities which sometimes becomes very difficult to trace the hacker. Also sellers and businesses send damaged and duplicate products to buyers once they have collected the payment amount.
These activities damage the reputation and affect the business operations globally. Even if it is a small fraud, it raises concerns for users around the world to think before making a final transaction (Winzar, 2003).
1.4 Modes of communication available to eBay and their applications
The communication tools provide by eBay are email, telephone support and online chat support so that customer can connect with the local managers for any query. eBay has local office in very nation that has majority of employees appointed in customer support department to handle and solve any query regarding it be for use of platform, transaction, payment, fraud or any other complaint. Customers preferably use telephone support system to ask how to register and use the website. Sellers and business entities use support for listing the products on website and handle orders.
The email communication system is used to inform about the activities on user account, order details and shipment information. The email remains as a copy of proof for any transaction done in case of any fraud (Watson, 2010). Furthermore, Online communication tools are used to a great extent in order to communicate with customers or employees of firm. These communication model is segregated into three category that cater need of management in an effectual manner. Under first category several means such as online chat, text messages and video calling that aid to resolve queries that are being faced by employees. It facilitate to ensure one to one or indirect contact with workforce in order to increase their attention towards work. Further, second class include Google Drive, Skydrive and Dropbox that facilitate to transfer data among related parties of firm. In addition to this third, segment of online communication tools consists of social media thereby company can be able to cater need of customers in an effectual manner.
On the other hand, Fixed and portable communication is the another effective means of communication wherein management make use of wireless phones and mobiles as well as tablets. It facilitate to communicate with employees, customers that aid to create competitive edge of the firm at the marketplace. These devices are very easy to handle and manage all business practices in an effectual manner. In addition to this, online communication tools prove to be effective to share files and approach customers effectively.
2.1 Internet technologies and importance in eBay success
Internet alone has given birth to many technologies that has contributed to the combined benefit. eBay also could not have had marked its success story in the absence of these technologies that have supported to reach to global market and provide service to global users. There are registered users on eBay platform that are doing successful business for many businesses but have not met and know each other in person. It is with the help of these technologies that have connected them and allow a platform to perform buy and sell transaction.
Search Engine - Google search engine, the simplest and widely used all over the world allows users and business to search for anything they could imagine. There are any other search engines available that allows for information search on World Wide Web. Information is presented through web pages, images, etc (Guildben, 2014).
Web Hosting - eBay stores information of nearly 100 million users that requires service of data base centers.
Online Payment Systems - eBay has its own payment system PayPal that allows users to pay for their order through a secured network.
Connectivity - Internet connectivity through telecommunication providers has made it easy for individuals to engage in selling.
2.2 Features of HTML in eBay
HyperText Markup Language (HTML) is used as standard language tool to develop web pages of eBay. HTML is written in the form of codes and tags which when read by web browsers compose it into visible web pages. The web browser does not display the codes and tags entered by the developer. HTML elements in the form of codes and tags serve building blocks of eBay pages. It moreover allows objects and images to be embedded and create interactive forms.
eBay around the world uses various browsers such as chrome, Firefox, safari, opera and internet explorer to scroll through the website. HTML structure is developed with time allowing developer to integrate more features in website for easy use. It thus allows users to navigate, scroll, view content and images and move through different section of the pages. The various features like context menus, audio, video, canvas, data grid, command and menu defines many actions on the web pages and help to make it more user friendly (Drennan and McColl-Kennedy, 2003). Furthermore, HTML is the effective means of communication for eBay that facilitate to cater need of company. It is because HTML prove to be effective for company to create attractive web page that contain all relevant information related to products and services. The elements of HTML are; web workers, application cache and video elements. Along with that, Geo location and canvas are two important element of HTML. Under this, company can be able to place video regarding use of services or products that facilitate to attract large number of buyers. Furthermore, web workers make it possible for firm to bring change sin the website without affecting performance of site. It facilitate to sort out the problems with short span of time and create web site attractive in order to create competitive edge of the firm at the marketplace. On the other hand, Canvas is another effective means to work on graphics and images that aid to save time as well as cost. Moreover, GPS system and RFID as well as Wi-Fi are used to make web page more attractive and provide detail information regarding organization.
2.3 Functions of client servers and browsers, and role of search engine in eBay
Client/server is program relationship in which one program is the client requests a service or resource from another program who is the server. It functions to distribute the labor between centralized server and individual computers that are running the software. The sever process provide the services and client process is consumer to maintain difference between function in terms of hardware and software.
Server hardware - The server computer on client/service network provide services of both hardware and software. It is a dedicated computer at eBay site that serves thousands of customers around the world at one point of time. The hardware has fast processor, more storage and memory space (Kono, Paulus and Rajak, 2002).
Server software - It is the user's computer that is integrated with operating system of Microsoft, Linux or Unix which are designed to facilitate resource sharing with server hardware. The server at eBay allows users to share files and print with the help of internet services.
Search Engine - The web based tool allow users to find information about eBay on world wide networking. The various functions of search engines such as web spider or crawler search out information about websites through their internet addresses and content stored on their pages. This allows users to see availability of eBay at their location and products listed on it (Phau and Poon, 2000).
Browsers - Browsers serves as medium to bring information sources to the users. Web browsers load eBay website and its various pages in online session. It loads the content of the pages and help users to see.
2.4 Intranets and extranets within business communication in eBay
Intranets and extranet offer various forms of communications to businesses. Intranet is used as restricted computer network that is fully controlled by the eBay offices. It serves as private network for the company while connecting employees from all around the world. eBay has its own physical infrastructure as separated from the internet. The internet access is provided by the company for only internet use of employee while restricting many of sites for security reasons. It provides secure storage and restricting access to authorized users only. The use of intranet benefits eBay in terms of efficiency and speedy workflows (Hamid, 2008).
Extranet is use to connect multiple intranets to facilitate cooperation among different business for various purpose. eBay connect with many companies for its business purpose like logistics partners, internet providers, web hosting service providers for information sharing. These companies also connect with customers in a controlled setting. Extranet functions to allow businesses to access network services for information and file sharing with another company. The world of internet is expanded in such a way that it is not possible that a single provider is equipped with all the services. Since, there are many service provider specialized in multiple products and services that fulfill the requirement of secure business operation of eBay (Bandyopadhyay, 2001).
3.1 E-business models that can be used to generate revenue for in eBay
Own Site to Sellers - eBay has huge number of registered sellers who are individuals and small business entities. It has services that allow users to set up their own shops and list their products for sale. It can allow sellers to use various ecommerce templates that serves as own site for sellers. The business entities have their own domain names and admin panel to manage and control it. These way sellers on eBay will their own identity which will under full control of organisation. The website development is not a tough task but acquiring and growing customer base is still far more difficult than other thing. The ecommerce templates provided through eBay will benefit users to get customers easily without having to cost extra in marketing through search engine optimization (Chaffey, 2009). Under this model, the marketing and advertising part can be provided as additional service. Additionally, eBay can also provide sellers with service of PayPal for prepaid transaction and secure way of money transfer.
Advertising - eBay can also sell its space for advertising to other business. It can earn through publishing content of other businesses and service providers similarly the way newspaper and magazine do. EBay has thousands of product categories and web pages and given its brand reputation it can easily attract businesses for advertising.
The E-business models are explained as follows
B2B- It is the most important model wherein transaction take place among two organization. It facilitate to provide great support for supply chain management of business and ensure long term deal with companies.
B2C- It is another model of E-business wherein internet is used to purchase and sales products from company to customers. It facilitate to save time as well as cost both parties that aid to increase overall rate of return of corporation.
C2C- It IS the most effective model of eBay wherein customers can sales and purchase products over the internet. For this purpose e-auction is being used in order to make selling process very smooth. It creates brand equity of eBay at the marketplace and also increases number of customers towards the same.
C2B- Customer to business is the most effective model by which company can get feedback regarding products and services. It facilitate to bring improvement in the present work scenario that aid to increase overall rate of return of organization.
3.2 Analyse each model in terms of its capacity to generate revenue in eBay
The first model that offers own websites to sellers on eBay support the growth of customer base that are looking to build their own website but hesitant due to marketing and advertising strategies. in any business, building a brick and mortar or online website and storing or listing of products or services is no great thing. the effort requires to target the customer and convince them to generate inertest in their products and services and finally make a purchase. there are huge number of online shopping website available all over the world who are fighting with one common problem and i.e. to reach as many customers (Dave, 2008). given the scale and size if eBay business, it can easily attract many sellers to use its portal. the model can also be sold through existing sellers. eBay can earn through this model in following ways
Domain Name Selling - acting as a mediator between the provider and seller. can enter into business partnership with domain providers and sell to users at discounted prices.
Ecommerce Templates - here the organisation requires to build several templates with the help of its tech team and offer for sale to users.
Paypal - eBay can earn through commission charged on every completed transaction (Gerjets, 2012).
Marketing And Advertising - sellers will usually require SEO services to allow visibility of websites on search engines. moreover eBay can also sell its space to sellers for advertising.
The advertising model is the simplest form of e-business adopting by websites to increase additional revenue. eBay will benefit in two ways - first in term of revenue on per click basis and secondly it increase the visibility on search engines and get more orders while also increasing its client and customer base.
3.3 Future developments in e-business models in eBay
Every business model undergoes valuable change over the time with the continuously changing technologies. moreover, the increasing demands and preferences for customer require business organization to adapt as quickly for safe and long stay in the market. the above two models will also undergo significant changes for various reasons
Initially the model should be launched in few markets limiting it to one to two regions that have the highest seller base of eBay (Hanson and Kalyanam, 2007). it is thus for the purpose of testing the viability of project. once eBay receive positive customer response, it can then launch in other markets. once the model establish its place and appreciate by its user base, it can then implement new changes and input new services to offer.
For future development purpose, eBay can establishes itself into domain name selling and web hosting services. it is because till then it will have huge baser base which will be contributing to increasing revenues. eBay has to pay significant amount to partners for exchange of above services. if eBay have its own establishment into this area which can be said as backward integration it can retain all revenue and save on cost which can again be transferred to customers in the form of discounts (Martinez, 2013). Furthermore, future development can take place with regards to bargaining by which customers can ensure about two way communication process that aid to create publicity for the firm. It enables company to offer product at lower price and give higher level of satisfaction among buyers. On the other hand, improvement can take place customer to business model wherein company can re-purchase products and services that are being offered by corporation. Furthermore, customer to customer model can also be improved by adding more feature over internet that facilitate to increase participants and ensure smooth auction process. On the other hand, business to business model need to be improved by addressing specific need of customers. Similarly innovation can take place for cutting extra time and cost that facilitate management to quick purchase and sales the goods in bulk. Moreover, for business to customer model, organizations need to offer variety of services along with variety addition of features over the site. It assist customers to access good quality of products and services at lower cost that contribute towards increasing overall rate of return.
4.1 Key elements of good web design structure in eBay
The elements of eBay website that has contributed to grow its user base are as follows
Good visual design - the design elements of eBay website such as logo, template, layout, colors attracts anyone to navigate through. it moreover uses a simple structure and more use of white colors at the base that makes product show clearly.
Content - The content on eBay site covers relevant information about the website, address, terms and conditions, information about the use if website, detailed description about the products and services. all these information are present in easy language that can be understood by any literate who knows English language (Rowley, 2002)
Navigation - The arrows and buttons that helps visitors to get to the information they require are called navigation tools. eBay has simple and uncluttered navigation where users can easily scroll and mover through pages.
Credibility - eBay site consists of information about important resources that makes it a trusted site for visitors. It has verified links, contact info of the local office, easy languages which makes it user friendly and increases its creditably among users.
Responsive - The increasing user base of Smartphone requires website to build their website in such a way that mobile users can also use it in the same way as PC users. It thus requires their website to be develop in responsive mode which makes it easy for mobile and tab users to adjust its size and allows easy scrolling (Sen, 2005).
4.2 Impact of well designed website in eBay
From the very beginning eBay has invested in developing its site in the way that more and more visitors are attracted to it and translates into registered user base.
Brand identity - The design of eBay website is consistent across all locations. Users from anywhere have the same visual design, navigation tools, logo's, business cards and social profile that similar from nay view point (Wilson, 2001).
User base - The simple design and attractive images of products at eBay compels user to stay and navigate more through the pages. When users stay more on pages, the site have low bounce rate that increases its ranking on search engine.
Differentiated model - The unique design of eBay website differentiate it from other online website and competitors (Winzar, 2003).
Evaluation of Website can done by the help of comments that are posted by customers that facilitate firm to bring modifications accordingly. It can also be known by the help of present performance of web site so that management can make necessary changes in order to meet expectations of buyer sin an effectual manner. In addition to this, eBay can come forward to take feedback from customers with regards to performance of website. It enables corporation to represent image of firm at the marketplace so that they can be able to increase number of customers. For example, if eBay has attractive website where customers can easily search for desired data then customer will tend to use that sites for purchasing products and services. Other wise it decreases sales turnover of the firm and increase cost of production. Therefore evaluated process focuses on making site well decision so as to give higher level of satisfaction among buyers.
4.3 Issues concerning website usability in eBay
Content - eBay site is loaded with too much cluttered content that many a times users find it difficult to navigate through. More specifically there are too many boxes and details in order management page which many customer find confusing and call to customer service for help (Drennan and McColl-Kennedy, 2003).
Speed - The number of products listed on the website and their images took too much time to load and when consumers are buying through online website they usually do not wait for the site to load and prefer to close it and move on another site.
Flash and add-ons - There are plug ins on website that also took time to load. eBay can use new technology to integrate in website and solve this issue (Kono, Paulus and Rajak, 2002).
Furthermore, issue can be related to server problem and addition of irrelevant content that create barrier of customers to reach at the main page of the site. Owing to this, purchasing process is hampered to a great extent that leads to create dissatisfaction among buyers. On the other hand issue can be related to images wherein problems are faced while in display of image. Incomplete information are also troublesome to access the services provided by the firm. Furthermore, copyrights issue is also the great barrier by which problem related to authentication is faced. Owing to this, customer cannot trust on organization and may seek the provided information as fake. In addition to this, pop-up messages is another barriers by which customers cannot be able to find the data for which they are looking. It has negative impact on their purchasing process.
The above report help to understand internal and external environment of eBay and how it operates through it. There is a mix of benefits and barriers for operating a online marketplace but it is the ability of eBay that even it has generated benefit from it. Further, there are legal issues concerning the business but the organisation has also security features that handle it all. The report also explains many technologies that helps develop the whole business structure and led smooth execution of business activities.
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