1. eBay By: Dan McLindon Kyle McDaniel Jeremy Smiley Tom Anderson
Ray Moorman 1

2. How can eBay continue to grow as an online retailer?
Key Question for eBay
How can eBay continue to grow as an online retailer? 2

3. Secondary Questions What is eBay’s history?
What is happening in eBay’s external environment?
How is eBay performing today and what does the future look like?
Who are eBay’s competitors and how is their performance in comparison?
Does eBay still adhere to the strategies and values on which it was founded? (Note: incl. company culture)
Does the eBay brand create a sense of trust, security, and community?
Should John Donahoe be the CEO of eBay?
What does a SWOT analysis show regarding eBay’s position?
How can eBay position itself for future success?

4. eBay Company Overview Founded
1995 by Pierre Omidyar as an online auction site to bring buyers and sellers together.
Vision
“Create a place where people could do business just like the old days – when everyone got to know each other personally, and we all felt we were dealing on a one-to-one basis with individuals we could trust.”
Strategic Business Units
1. Marketplaces – online auction and direct retail sites
2. Payments – PayPal
3. Communications - Skype
Organization Size
15,000 employees, revenues of
$5.9 billion in 2008

5. eBay Key Acquisitions
Company
Year
Anticipated Result
Actual Result
PayPal
2002
Allow eBay users to make credit card payments.
Success within eBay marketplace as well as adoption by other online retailers (57 million registered active accounts ins 2008).
Rent.com
1st quarter 2005
Natural extension of online real estate mkt.
N/A
Shopping.com
2nd quarter 2005
Bolster traditional online retailer presence.
50 million visitors per month, world’s 3rd largest internet shopping site.
Skype
2006
Create synergies with Marketplace SBU, enabling buyers and sellers to communicate better.
2007 had to take a $900 million writedown on value, synergies not realized. CEO indicates potential sale.
StubHub
2007
Synergies with existing ticket business.
Successful expansion into adjacent mkt.
Conclusion: eBay’s strategy of growth by acquisition in core and adjacent markets has been hit or miss. Major success was PayPal, which was more of a horizontal integration than an adjacent market.

6. Secondary Questions What is eBay’s history?
What is happening in eBay’s external environment?
How is eBay performing today and what does the future look like?
Who are eBay’s competitors and how is their performance in comparison?
Does eBay still adhere to the strategies and values on which it was founded? (Note: incl. company culture)
Does the eBay brand create a sense of trust, security, and community?
Should John Donahoe be the CEO of eBay?
What does a SWOT analysis show regarding eBay’s position?
How can eBay position itself for future success?

7. Threats/Opportunities
PEST Analysis for eBay
Category
Issue
Threats/Opportunities
Ranking
(1-5)
Political
Economic
2008 Economic downturn
Threat – lower retail spending.
Opportunity – new sellers looking to supplement income, buyers looking for better deals. 3 4
Social
Growth in popularity of social networking sites
Opportunity – possiblity to align with sites for advertising and to gain new users.
Development of mobile society, beginning of the “Connected Era”
Opportunity – enables buyers and sellers to constantly monitor status of ongoing auctions. 5
Technological
Search capabilities
Opportunity - developments in search make it easier for users to find items they are looking for.
Global expansion of Internet
Opportunity – 1.4 billion Internet users, ½ will buy something online.

8. Industry Overview (Supply)
Porter’s five forces:
Threat of
substitute products
High
Bargaining power
of suppliers
Medium
Rivalry among
existing competitors
High
Bargaining power
of buyers
High
Threat of
new entrants
High

9. Porter’s Five Forces Factor Analysis Impact
Threat of substitute products
Consumers can choose to go to brick and mortar stores or trade without the use of a website.
Bargaining power of suppliers
Can go to a number of competitors to sell their goods. Low switching costs to use .
eBay must work with Sellers to keep them as active suppliers to buyers on the site.
Bargaining power of buyers
Online consumers can find what they are looking for on a number of sites, unless good is very rare.
eBay needs to find a way to entice buyers to site and keep them coming back, like variety and free shipping.
Competitive rivalry
Amazon coming on strong with well established brand and customer service focus. Traditional retailers also moving online with varying degrees of success. Little to no switching costs.
eBay will have to find a way to differentiate itself, either by variety, cost, or ease of website use. Will likely need all three.
Threat of new entrants
Many retailers moving online. Minimal costs to setup a website and configure a payment engine.
eBay well positioned in market with large number of users. Key will be to keep existing and attract new.

10. Secondary Questions What is eBay’s history?
What is happening in eBay’s external environment?
How is eBay performing today and what does the future look like?
Who are eBay’s competitors and how is their performance in comparison?
Does eBay still adhere to the strategies and values on which it was founded? (Note: incl. company culture)
Does the eBay brand create a sense of trust, security, and community?
Should John Donahoe be the CEO of eBay?
What does a SWOT analysis show regarding eBay’s position?
How can eBay position itself for future success?

11. Registered & Active eBay Users
Reg users continues to grow but Active users has flattened out

12. Core Business: Online Auctions
# of online Auctions declining during same time frame as users are increasing

13. eBay’s Business Model – 3 Operating Segments

14. Net Revenues By Segment

15. Forrester Research: 2012 Prediction of Internet Sales
B2B predicted to be 10x larger than retail sales

16. Worldwide Internet Users in 2008
220m of NA was from US.

17. Secondary Questions What is eBay’s history?
What is happening in eBay’s external environment?
How is eBay performing today and what does the future look like?
Who are eBay’s competitors and how is their performance in comparison?
Does eBay still adhere to the strategies and values on which it was founded? (Note: incl. company culture)
Does the eBay brand create a sense of trust, security, and community?
Should John Donahoe be the CEO of eBay?
What does a SWOT analysis show regarding eBay’s position?
How can eBay position itself for future success?

18. Secondary Questions What is eBay’s history?
What is happening in eBay’s external environment?
How is eBay performing today and what does the future look like?
Who are eBay’s competitors and how is their performance in comparison?
Does eBay still adhere to the strategies and values on which it was founded? (Note: incl. company culture)
Does the eBay brand create a sense of trust, security, and community?
Should John Donahoe be the CEO of eBay?
What does a SWOT analysis show regarding eBay’s position?
How can eBay position itself for future success?

19. Internal Analysis – Core Values
An honest, open environment can bring out the best in people
Everyone has something to contribute
People are basically good
Recognize and respect everyone as a unique individual
Treat others the way that you want to be treated
Conclusion: eBay’s recent changes to their fee structure and feedback forum go against the company’s core values.

20. Secondary Questions What is eBay’s history?
What is happening in eBay’s external environment?
How is eBay performing today and what does the future look like?
Who are eBay’s competitors and how is their performance in comparison?
Does eBay still adhere to the strategies and values on which it was founded? (Note: incl. company culture)
Does the eBay brand create a sense of trust, security, and community?
Should John Donahoe be the CEO of eBay?
What does a SWOT analysis show regarding eBay’s position?
How can eBay position itself for future success?

21. Secondary Questions What is eBay’s history?
What is happening in eBay’s external environment?
How is eBay performing today and what does the future look like?
Who are eBay’s competitors and how is their performance in comparison?
Does eBay still adhere to the strategies and values on which it was founded? (Note: incl. company culture)
Does the eBay brand create a sense of trust, security, and community?
Should John Donahoe be the CEO of eBay?
What does a SWOT analysis show regarding eBay’s position?
How can eBay position itself for future success?

22. Management Timeline
1996: Founder Pierre Omidyar and Jeff Skoll run operation alone
1997: Meg Whitman hired as CEO
: Omidyar recruits top talent to serve on eBay’s board including Scott Cook and Fred D. Anderson
2008: John Donahoe becomes CEO

23. Whitman vs. Donahoe Meg Whitman John Donahoe
Took eBay from 30 employees with $86 million revenue to 15,000 employees with $5.9 billion revenue.
Experience includes general manager at Hasbro, brand manager at P&G, CEO of FTD, president of Stride Rite, and SVP of marketing at Walt Disney.
BA Economics from Princeton, MBA from Harvard.
Approval rating of 75% at time of retirement
Started at eBay in 2005 as president of Marketplaces SBU
% of eBay’s revenue generated from Marketplace fell from 72% to 56% during that time
Experience includes consulting firm Bain & Co.
Focus in Marketplaces SBU has been growth through acquistion of other retail sites, getting away from simple auction.
StubHub, eBay express, online advertising
Approval rating at 22%

24. Secondary Questions What is eBay’s history?
What is happening in eBay’s external environment?
How is eBay performing today and what does the future look like?
Who are eBay’s competitors and how is their performance in comparison?
Does eBay still adhere to the strategies and values on which it was founded? (Note: incl. company culture)
Does the eBay brand create a sense of trust, security, and community?
Should John Donahoe be the CEO of eBay?
What does a SWOT analysis show regarding eBay’s position?
How can eBay position itself for future success?

25. SWOT Analysis for Dell Strengths Weaknesses Opportunities Threats
Well established brand.
Large number of user accounts.
PayPal acquisition to support ebay.com.
Ability to collect huge amounts of data on buyers and sellers.
Weaknesses
New CEO John Donahoe.
Company culture becoming stale, employees not fully engaged.
Skype acquistion.
Fee structure has alienated some sellers.
Limitations on feedback hurt ability to create sense of trust and community.
Moving away from online auction, into direct retail.
No attempt to address issues and costs in shipping.
Opportunities
Find a new revenue stream with online advertising with Skype.
Growth in total online retail means more potential users of PayPal.
Other competitors, Overstock.com and uBid.com are struggling, possible acquisition targets.
Personalize eBay websites for various countries.
Threats
Sellers moving to other auction sites, taking the variety of items they supplied to the competition.
Possible shift in online shoppers preferences from auction-based to traditional online retailing.
Scammers and security issues may drive customers to the competition.

26. Secondary Questions What is eBay’s history?
What is happening in eBay’s external environment?
How is eBay performing today and what does the future look like?
Who are eBay’s competitors and how is their performance in comparison?
Does eBay still adhere to the strategies and values on which it was founded? (Note: incl. company culture)
Does the eBay brand create a sense of trust, security, and community?
Should John Donahoe be the CEO of eBay?
What does a SWOT analysis show regarding eBay’s position?
How can eBay position itself for future success?

27. Recommendations
1. Fire John Donahoe, leverage strong board of directors to find a replacement that can lead eBay into the future. 2. Focus on restoring the eBay brand name. Make eBay.com a 100% auction site. Use Shopping.com and other possible acquisition targets to compete in traditional online retail space. 3. Revamp fee structure to be friendly to both small and large sellers. Tier the structure based on monthly or annual trade volumes.

28. Recommendations
4. Look into acquiring either or both Overstock.com and uBid.com
Introduce “Merchant Rewards” program
Allow merchants to earn rewards points per transaction.
Rewards can include shipping credits/codes, free boxes, packing supplies.