By C. Flores
Once the front runner of the e-commerce industry, eBay is facing many challenges in sustaining the level of growth it needs to stay at the top of its market. Through the company’s success and the industry’s low barriers to entry, major players soon consisted of competitors for eBay such as Yahoo!, Google, Amazon, and Craigslist. Over the years eBay has pursued numerous acquisitions that have been successful in providing opportunities to compete on a global scale. However, they have yet to capture the technology that will allow them to effectively intertwine the various acquisitions to push the company back in the lead of its industry.
As competitors entered the market eBay sought many acquisitions that have contributed to its steadfast growth and geographic reach (145). They successfully diversified its product line beyond its initial online auction website. Some of the acquisitions include Half.com where they first entered the fixed price marketplace. In 2002 eBay enhanced its payment options for buyers and sellers through the acquisition of PayPal which generated $2.4 billion in revenues in 2008. Other acquisitions that have kept eBay competitive include Rent.com, Shopping.com, and 28 percent ownership of Craigslist.
Through the various acquisitions eBay remained dominant in the market, yet they failed at innovating the best technology to effectively incorporate their product line. Additionally, eBay missed an excellent opportunity to penetrate a fast growing China market when they failed at purchasing Eachnet.com. Their focus seemed to remain on the acquisition itself without any consideration and research devoted to understanding the local market they were entering and the consumer wants of that particular market. Another missed opportunity that eBay suffered from was their lack of investment in security and fighting fraud early on which could have eliminated millions spent on litigation and risking consumer confidence, the ultimate revenue generator. By the time they committed to the purchase of Fraud Sciences Ltd. to help fight fraud in 2008, many competitors existed in the market and consumer loyalty was difficult to sustain without advanced technology in this industry. Missed opportunities crippled eBay’s leadership position and as more competitors entered the market it became increasing difficult for eBay to restore its status in the market.
To gain the competitive edge in the e-commerce industry eBay must strengthen its technology capabilities. Perhaps they should consider a relationship with Microsoft who failed at an attempt to acquire Yahoo!. Microsoft’s history of cutting edge technology and leading performance in the last three decades will add value to the eBay brand. In today’s economy eBay must develop strategies that act on trends in the market in the most fast and cost effective way. A partnership with a world-leading corporation in innovation and technology like Microsoft may be the solution on the horizon for eBay.
Nightingale, Florence, and Vara Vasanthi. Case 10. eBay Inc.: Bidding for the Future By Kazi Ahmed, Phillip Feller, Tara Ferrin, Jeffrey Fletcher, Fidel Rodriguez, Juliet Taylor, and Robin Chapman. Strategic Management Competitiveness & Globalization. 9th Edition. Mason, OH: South-Western Cengage Learning, 2011. Print.