eBay is one of the global commerce leaders that provides services that connect millions of buyers and sellers from around the world. It is the second-largest e-commerce and shopping website in the world with a market share of 3.46%. It has gained a lot of popularity in the market in the past years. It is also on the top 10% list of best companies to work for in the world by Forbes. Thus this makes us keen to know the Business Model of eBay.
Before we start with its business model let us know about eBay as a company.
eBay is a multinational e-commerce company which is situated in San Jose, California, U.S. It was started in the year 1995 by Pierre Omidyar. It deals with consumer-to-consumer and business-to-consumer transactions through its online services. It has a brand value of around 60 billion dollars. It has been operating in about 180 countries, as of 2021.
The companies website provides services like an online auction and shopping for people and businesses all around the world. The company doesn’t charge its buyers to use the website, but they charge the sellers for the listing of their products after their limited free listings are over.
It provides economic opportunities for individuals, entrepreneurs, businesses, and organizations of all sizes. The company platforms include the online marketplace, off-platform businesses in Japan, Turkey, and South Korea as well as eBay’s suite of mobile apps.
Let us now start with the business model of eBay.
Business Model of eBay
It is important for every business to have its business plans updated regularly. This helps the company to move along with the trends and see the possible challenges ahead. The business model of eBay consists of 8 main key units which are as follows:
- Value proposition
- Market opportunities
- Competitive advantage and
- Revenue model
Let us now start with its business model by looking at eBay’s value proposition.
1. Value proposition of eBay
Value proposition for buyers
- It has brought a variety of community features for the buyers.
- They also provide them with new deals and fashion vault programs.
- It provides the customers with a wide range of products from different buyers.
- It also provides it with a facility to compare the different products with different sellers.
Value proposition for sellers
- It provides sellers with a large audience all over the world.
- It helps the sellers to find buyers who are interested in out-of-season items or vintage items.
- They are provided with an efficient and economic way to process all the buyer’s payments.
2. Revenue model of eBay
This is a fee paid by the sellers to eBay after they exceed their monthly 50 free listings. The amount of fees is determined by the type of product the which the seller wants to sell.
The transfer fees are free for us citizens if they have a PayPal account or a bank account. If they use a debit card or credit card then they are charged 2.9% of their fees.
eBay takes 10% of the total months of their every listing which has a maximum of 250.
It provides a different method of advertising services that are useful for their sellers to market their products more efficiently.
3. Market opportunities for eBay
They were the first movers in the online auction market. This is currently one of the fast-growing markets in the world.
eBay should focus on the people who are not willing to purchase items online. They should make them believe that online shopping is safe and you get good quality deals.
4. Competitors for eBay
Amazon is an online marketplace where people can buy and sell their products online. It has a market capitalization of 1.777 trillion dollars. And due to its strong financials and dominance in the market, it makes a tough competition for eBay.
It is a retail multinational company based in the US. it supplies a wide range of products for its customers online and offline. It had made a revenue of 519 billion dollars in 2020. It has been marketing its stores at a large range with a large share of the market this company is a big competitor for eBay.
5. eBay Marketing Strategy
eBay reacts to the market challenges coming out for them to create new opportunities, to stay at the top in a competitive environment. Its overall aim is to increase the gross sellings and the net revenue of the company. They aim to:
- Acquisition – it increases the number of newly registered users on the eBay platform.
- Activation – increasing the number of registered users that become active bidders, buyers, or sellers on the eBay marketplace.
- Activity – it aims to increase the volume and value of transactions that are conducted by each active user on the platform.
It uses different strategies depending on the priority of different locations. It focuses on different approaches to improve performance in that area.
- category growth was achieved by increasing the number and size of categories within the platform, for example, Art, Books, Antiques, and Business and Industrial.
- formats for interaction. eBay Stores are developed to help sellers with a wider range of products to showcase them in a more traditional retail format including the traditional ‘Buy-It-Now’ fixed-price format.
As we have seen the business model of eBay we have known that it has grown tremendously in the market by implementing innovative strategies and by being the first mover in the market. It provides different value propositions for buyers and sellers. This keeps both buyers and sellers connected and engaged. It generates its revenues from different sources like transaction fees, transfer fees, advertising, etc. It has different opportunities in the market like it can be the first mover in new technologies or any other idea, or get into confidence with the non-wiling customers. Some of its competitors in the market on a large scale are Amazon and Walmart.
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