eBay Value Chain Analysis
Value chain analysis is a strategic analytical tool that that is used to identify business activities important to create value and competitive advantage to the business. The figure below illustrates the essence of eBay value chain analysis.
Primary Activities
Inbound logistics
eBay inbound logistics refers to ways in which the company acquires and stores raw material to be used for the business. This includes but not limited to the purchase of servers, other hardware products and a wide range of technological items along with office suppliers and other items. Due to the massive scope and scale of eBay business operations, the economies of scale can be specified as the major source of value in inbound logistics primary activities. Moreover, fostering strategic relationships with suppliers is another key source of value in eBay’s inbound logistics.
Operations
eBay operations revolve around technology-enabled commerce.
The full range of eBay technologies and services are divided into the following three platforms:
- Marketplace refers to an online marketplace available at www.ebay.com. This platform has more than 800 million listings at any given time[1]
- StubHub represents a platform to purchase tickets to the games, concerts and theatre shows and to sell tickets.
- Classifieds platforms include a collection of brands such as Mobile.de, Kijiji, Gumtree, Marktplaats, eBay Classifieds and others. Ebay classifieds are offered in more than 1500 cities globally.
The full range of eBay business operations include the following processes:
- Seller registering on eBay website
- Buyers bidding for a specific product offered by the seller
- A successful bid by a specific Buyer (or purchasing via ‘Buy It Now’)
- Buyer paying to the bank via PayPal or other payment methods
- Bank notifying eBay about Buyer’s purchase
- eBay notifying Seller about the payment by Buyer
- The delivery (shipment) of the product by the Seller to the Buyer
- Notification by the Buyer to eBay about the delivery of the product
- eBay passing seller accounts to the Bank
- Seller getting paid by the Bank
Outbound logistics
eBay outbound logistics refers to the practices of delivering products and services to the end-users. Thanks to the nature of its business model, eBay does not have to deal with wholesalers and distributors and retailers. It is the responsibility of eBay sellers to ship products to customers, but the company has to regulate and monitor the system in a consistent manner.
Unlike its major competitor Amazon, eBay does not have its own shipping and logistics system and the company is dependent on external logistics vendors to ship items from sellers to buyers. Early in 2016 eBay has announced a close cooperation with Uber Rush as an innovative and efficient shipment services provider.[2]
Marketing and sales
Sales and marketing expense decreased by USD175 million, or 7%, in 2015 compared to 2014. Sales and marketing expense as a percentage of net revenues were 26% and 28% in 2015 and 2014, respectively.[3] Until its separation from eBay in 2015, PayPal a leading global payment system was a solid source of competitive advantage for eBay in terms of sales transactions. Currently, solid sources of value for eBay include an effective utilization of social media marketing and viral marketing and a sophisticated online sales system.
Service
eBay has a US customer service phone number that anyone can call to 24/7 to address their questions and concerns about eBay services. Moreover, the company encourages its sellers to offer superior customer services to buyers in order to maintain the positive reputation of the brand. It has to be noted that the provision of efficient customer services does not currently belong to the list of eBay’s competitive advantages. Specifically, eBay is often criticized for the absence of live chat, direct email and unity across international sites[4] among other issues…
eBay Inc. Report contains a detailed discussion of eBay Value Chain Analysis. The report also illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces and McKinsey 7S Model on eBay. Moreover, the report contains analysis of eBay marketing strategy, leadership and organizational structure and discusses the issues of corporate social responsibility.
[1] Annual Report (2015) eBay Inc.
[2] Rao, L. (2016) “Here’s How eBay Plans to Take On Amazon” Fortune, Available at: http://fortune.com/2016/02/10/ebay-amazon/
[3] Annual Report (2015) eBay Inc.
[4] Hsiao, A. (2016) “How Do I Contact eBay Customer Service Directly?” The Balance, Available at: https://www.thebalance.com/how-do-i-contact-ebay-customer-service-directly-1140146