eBay SWOT Analysis

ebay-swot-analysisSWOT is an acronym for strengths, weaknesses, opportunities and threats related to organizations. The following table illustrates eBay SWOT analysis:

Strengths

1.      First mover advantage

2.      Sophisticated infrastructure and the global scale of operations

3.      Brand value

4.      Organizational culture of experimentation and entrepreneurship

Weaknesses

1.      Dependence on products and services controlled by competitors

2.      Complexity of business model

3.      Lack of clear business strategy and competitive advantage

4.      Absence of own distribution network

Opportunities

1.      Making a disruptive innovation in online retail industry

2.      Engaging in business diversification

3.      Formation of strategic alliances

4.      Engaging in acquisitions

Threats

1.      Inability to compete with Amazon as online retailer

2.      Breach of security

3.      Crash of the website

4.      Patent infringement and other lawsuits against the company

eBay SWOT analysis

Strengths

  1. First mover advantage has been traditionally a major strength for eBay. Apart from being the first platform in the world for online auctions, eBay has a first mover advantage in a range of areas such as Seller Performance Standards, eTRS, Verified Rights Owner Program and Feedback Forum. Particularly, the first mover advantage in online auctions has enabled the company to become a multi-billion company within a matter of a few years and ensured market leadership of the business.
  1. eBay has a highly sophisticated infrastructure that enables global scale of operations without any disruptions. At any given time it has more than 800 million live listings and in 2015, about 59 per cent of transactions between users on Marketplace and StubHub platforms take took place outside of the US[1]. The presence of such an advanced global infrastructure can play an instrumental role in terms of achieving global market penetration of new products and services in an effective manner.
  1. Interbrand and Forbes estimate eBay brand value as USD 13.9 billion and USD 11.2 billion respectively.[2] eBay’s high brand value is an effective indication of customer loyalty, negotiating power of the business with various stakeholders and to a certain extent long-term growth prospects.
  1. An organizational culture of experimentation is an important strength associated with eBay. Introduced by founder Pierre Omidyar, this culture has enabled eBay to gain operational efficiency in a wide range of business processes and procedures. The company is set to further benefit from experimentation culture in the future with positive implication on the bottom line.

Weaknesses

  1. Some of eBay’s competitors control certain products and services that are important to its success. These include, but not limited to credit card interchange, Internet search, and mobile operating systems. A potential manipulation by competitors in terms of pricing, availability, terms or functioning of these products and services can place eBay in a disadvantaged position. For example, changes introduced in Google’s search engine in 2014 damaged eBay’s search listings to a considerable extent, costing the company the loss of more USD 200 million in revenues.[3]
  1. Complexity of business model is a noteworthy weakness associated with eBay. The President and CEO of the company rightly acknowledges that “the brilliance of eBay’s model is its greatest challenge. It’s a friction free marketplace, which means sellers can sell anything they want, and that makes it complicated”[4]. In other words, eBay does not focus on a specific product categories and this may create difficulties such as users being overwhelmed with the abundance of offers…

eBay Inc. Report contains the full discussion of eBay SWOT analysis. The report also illustrates the application of the major analytical strategic frameworks in business studies such as PESTEL, Porter’s Five Forces, Value Chain analysis and McKinsey 7S Model on eBay. Moreover, the report contains analysis of eBay’s marketing strategy, its leadership and organizational structure and discusses the issues of corporate social responsibility.

ebay-inc-report

[1] Annual Report (2015) eBay Inc.

[2] eBay (2016) Ranking the Brands, Available at: http://www.rankingthebrands.com/Brand-detail.aspx?brandID=90

[3] Froelings, L. (2016) “eBay Plans to Challenge Amazon, Announces Turnaround Strategy” Small Business Trends, Available at: http://smallbiztrends.com/2016/02/ebay-turnaround-challenge-amazon.html

[4] Froelings, L. (2016) “eBay Plans to Challenge Amazon, Announces Turnaround Strategy” Small Business Trends, Available at: http://smallbiztrends.com/2016/02/ebay-turnaround-challenge-amazon.html