ebay - Chase 1 Nick Chase GEB 4890 February 10, 2011 EBay...

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Chase 1 Nick Chase GEB 4890 February 10, 2011 EBay Case Analysis 1. Five Forces a. Threat of new entrants into the online shopping industry – Moderate i. To enter the industry a fairly low start up cost is needed which increases threat of new entrants. You do not need to keep an inventory such as eBay. ii. Opportunity to make a lot of money with an increasing market size. iii. EBay’s brand image is so strong that it will discourage other company’s from entering the industry which decrease threat of new entrants. b. Threat of substitutes (brick and mortar auctions, retailers, garage sales, pawn shops, estate sales) – moderate i. Substitutes have limited variety compared to eBay, Amazon, and Overstock. EBay has a large variety of products which fall into 50,000 categories. ii. Online shopping is more convenient and less time consuming then going to a brick and mortar stores. iii. EBay, Amazon, and Overstock tend to have lower prices because they are able to reduce transaction costs. iv. There is a lack of trust between some of the buyers and sellers on eBay which may lead customers and sellers to move somewhere else. v. Customers like to touch and see what they are purchasing and want to be able to take it home with that day, where as on eBay, Amazon, and Overstock the customer can only see pictures and has to wait for their item to be shipped. vi. Online web cites are open 24 hours a day and 7 days a week where as most brick and mortar stores are not. c. Threat of suppliers (sellers)– moderate to low i. Sellers that sell very few items have very low power, if one of these sellers wanted to leave it would not hurt eBay. However if eBay continues to change its policies and fees they are going to continue to lose sellers to Amazon.
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Chase 2 ii. Power sellers are a much greater asset to eBay; these sellers sell at least 12,000 items or $12,000 a year. If these sellers were to get together and wanted EBay to change something or they would leave I think it would be hard for eBay to say. iii. There are a lot of Web browsers available however from a cost perspective they are important. d. Threat of buyers – low to moderate i. Bargain hunters which make up 52 percent of eBay’s active users tend to make up the majority of the eBay’s sales. ii. Hobbyist/collector buyers tend to make few purchases and are only looking for specific goods. iii. Against larger companies individuals tend to have a low negotiating power. e. Threat of competitors – high i. Competitors all have the same basic items. ii. It is easy for consumers to switch from eBay, to Amazon, to Overstock. There are no fees associated with purchasing items and it is also free to create your own account on these cites. iii.
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ebay - Chase 1 Nick Chase GEB 4890 February 10, 2011 EBay...

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