Swot Anaylsis Ebay

7/22/2019 Swot Anaylsis Ebay

1/13

SWOT Analysis

Strengths Weaknesses

1. Worlds largest internet marketplace

2. Business model

3. Economies of scale

4. Payment system

5. Brand reputation

6. Zero inventory held by company

1. Inability to measure illegal activity on

site

2. Lack of in depth descriptions of products

3. Technology malfunctions

4. High fees

Opportunities Threats

1. Growing number of mobile shoppers

2.

Become a retailer3. Increase services and product portfolio

through acquisition

4. Increasing User of the Internet

5. Expand the eBay Community

1. Online security

2.

Increasing Number of Online Stores3. Increasing Number of Online Trading

Sites

Strengths

1. Worlds largest internet marketplace. eBay has more than 150 million live listings and

more than 105 million active users globally in 37 countries. That makes eBay the largest

marketplace online, having a great power over other online retailers.

2. Business model.eBay only acts as a middleman between sellers and buyers, who bid and

sell items in eBays marketplace. Being a pioneer in online auctions, eBay had no

competition and currently has only few strong direct competitors in Malaysia such as

Zalora, Mudah.my and Lelong.com.my

3. Economies of scale.In the beginning, eBay had to invest heavily to gain IT and customer

relationship management (CRM) knowledge and skills, but since then, used its skills to

serve over 100 million users and to create the largest online marketplace with little

additional costs.

4. Payment system.eBay uses PayPal, its own payment system, to proceed nearly all of the

payments going from eBays marketplace. From eBays perspective, such tight

integration has the benefits of more fees collected (PayPal takes transaction fees from the


2/13

businesses) and tighter control over buyers shopping experience. From buyers

perspective, PayPal provides easy to use online payment method.

5. Brand reputation.A recognizable brand name is important to the success of a company.

eBay has made sure to use color and unique writing to show their brand name off. eBay

is also a trustworthy brand, known all over the world.

6. Zero Inventory Held by the Company. eBay does not have stores or warehouses. They

do not hold any of their own inventories. This is strength for the company because it

keeps costs down and does not put any threat of having to liquidate the company. eBay

has kept it simple by simply being a place for people to trade items.

Weaknesses

1. Inability to Measure Illegal Activity on Site. eBay has taken many precautions to

prevent illegal activity on their site. They estimate that only 1 percent of transactions on

their site involve fraud. The customers however disagree to some extent. Some say that

there are as much as 10 percent fraudulent transactions. EBay has no real way to

measure the extent of illegality on their site.

2. Lack of In-Depth Descriptions for Products. The lack of description in products could

be a factor in the amount of counterfeit and wrongly identified products that are sold to

customers.

3. Technology malfunctions. eBay must take measures to keep malfunctions as low aspossible to retain happy customers and to keep hackers out of personal PayPal and eBay

accounts.

4. High fees. eBay fees for the sellers has risen significantly over the years. The firm

receives fees on listed goods, sold goods, some adornment fees and PayPal transaction

fees. The sellers often make zero profit on their low price products sold on eBay due to

its high fees.

Opportunities

1. Growing number of mobile shoppers.eBay has a strong payments system PayPal that

is widely accepted and used by many online retailers and online shoppers as it is

convenient and easy to use. The growing number of mobile shoppers represents a huge

growth opportunity for PayPal as its one of the few payment systems that meets the

requirements for convenient shopping and payment processing on the go.


3/13

2. Become a retailer.eBay has an access to hugest online marketplace in the world and is

well placed to take an advantage of that by becoming a retailer. The company has its IT

and CRM systems in place already and could easily stake out a market share from other

online retailers.

3. Increase services portfolio through acquisition.The company has successfully

acquired many companies to extend its services offering and should continue adding new

services through mergers and acquisitions.

4. Increasing User of the Internet.The internet is being used more and more each day.

eBay can take this opportunity to expand and penetrate new markets.

5. Expand the eBay Community. For continued customer satisfaction eBay can increase

its community feel. With new resources and sites tailored specifically to their community

memberseBay will continue to be the most highly respected internet auction site by its

members.

Threats

1. Online security.PayPal stores online shoppers personal information, such as bank

account details, which is a target for online thefts. The more online customers PayPal has,

the more attractive as a target for identity thefts it becomes.

2. Increasing Number of Online Stores. Online shopping is becoming more and more

common. Stores such as Zalora, Lelong.com.my and Mudah.my have developed siteswhere people can shop from the comfort of their own home. This poses a large threat to

eBay. They are now not only competing with other online auction sites but also online

retailers.

3. Increasing Number of Online Trading Sites When an industry is attractive new

competitors will always try to enter and steal some of the market share. eBay already has

many competitors surrounding them including Zalora, Lelong.com.my and Mudah.my.

Some boast that they are an alternative to eBay while others just try to be better than

eBay. To sustain a competitive advantage above their competitorseBay must continue

to grow and advance in the online auction industry. Strategies must be determined and

defenses formed.


4/13

Strategy-Formulation Analytical Framework

Input Stage:

Internal Factor Evaluation (IFE) Matrix

Key Internal Factor

Weight RatingWeighted

Score

Strengths

1 Worlds largest internet marketplace 0.20 4 0.80

2 Business Model 0.10 3 0.30

3 Economies of Scale 0.14 4 0.56

4 Payment system 0.20 4 0.80

5 Brand reputation 0.06 3 0.18

6 Zero inventory held by company 0.08 3 0.24

Weaknesses

1Inability to measure illegal activity

on site

0.10 1 0.10

2Lack of in depth description ofproducts

0.10 1 0.10

3 Technology malfunction 0.05 1 0.05

4 High fees 0.05 1 0.05

Total Weighted Score 1.00 3.12

IFE results analysis


5/13

External Factor Evaluation (EFE) Matrix

Key Internal Factor

Weight RatingWeighted

Score

Opportunities

1 Growing number of mobile shoppers 0.20 4 0.80

2 Become retailer 0.10 3 0.30

3Increase service and product portfolio

through acquisition0.14 4 0.56

4 Increasing Use of the internet 0.20 4 0.80

5 Expand the ebay Community 0.06 3 0.18

Threats

1 Online security 0.10 1 0.10

2 Increasing Number of Online Stores 0.10 1 0.10

3Increasing Number Of Online

Trading Sites0.05 1 0.05

Total Weighted Score 1.00 3.12

EFE results analysis


6/13

Competitive Profile Matrix (CPM)

Critical Success

FactorsWeight

Ebay Mudah.My Lelong.Com.My

Rating Score Rating Score Rating Score

Advertising 0.05 3 0.10 2 0.10 1 0.05

Market Penetration 0.06 4 0.24 4 0.24 2 0.12

Customer Service 0.08 4 0.32 3 0.24 2 0.16

Brand Awareness 0.10 4 0.40 4 0.40 2 0.20

User friendly website 0.05 4 0.20 3 0.15 2 0.10

Revenue Growth 0.15 3 0.45 4 0.60 2 0.30

Financial Condition 0.15 3 0.45 2 0.30 2 0.30

Customer Loyalty 0.05 4 0.20 3 0.15 3 0.15

Market Share 0.10 4 0.40 3 0.30 1 0.10

Product Quality 0.08 4 0.32 4 0.32 4 0.32

Information about user 0.05 4 0.20 4 0.20 3 0.15

Price Competitiveness 0.08 3 0.24 3 0.24 3 0.24

Total 1 3.44 3.32 2.19


7/13

SWOT Matrix

Strengths (S)S1 World largest Internet

market place

S2 No strong direct competitorsS3 Create the largest online

marketplace with little

additional costs.S4 Use its own payment system

S5 eBay is a trustworthy brand

S6 Zero inventory held by thecompany

Weaknesses (W)W1 No real way to measure

the extent of illegality on

their site.W2 Lack in-depth description

for products.

W3 Technology malfunctionsto keep hackers out of

personal PayPal and eBay

accounts.W4 eBay fees for the sellers

have risen significantly

over the year.

Opportunities (O)

O1 Growing number ofmobile shoppers.O2 eBay has an opportunity

to become a retailer

O3 Increase services portfoliothrough acquisitions.

O4 Increasing user of the

internet.O5 eBay could expand the

community with new

resources and sites.

SO Strategies

1. Build on brand loyalty.(S5, O1,O5)

2. Attract more customers with

better user security features.

(S1,O3, O4)3. Establish for mobile

platforms and payment.

(S4, O3)4. Maintain simplicity of

interaction with the online

communitys capability.

(S3, O5)

WO Strategies

1. Increasing awareness ofcustomers productportfolio and services

(W2, O1, O4)2. Lower product fees to user.

(W4, O4)System for online

verification of products.

(W1, W3, O3)

Threats (T)

T1 PayPal stores onlineshoppers information is

a target for online theft.

T2 Increasing number ofOnline Stores.

T3 Increasing number of

Online Trading Sites

ST Strategies

1. Gains competitiveadvantage among

competitors. (S2, T1, T2)

2. Use partnership to providebetter and easier product to

consumer. (S1, T2,T3)3. Use online security option

for verification and

authentication. (S4, T1)

Advertise the bargaincapabilities of ebay website.

(S5, T2, T3)

WT Strategies

1. Authentication ofconsumer identity.

(W1, T1)2. Aggressive advertising.

(W2, T2,T3).

INTERNAL

FACTORS

EXTERNAL

FACTORS


8/13

SPACE Matrix

Internal Strength Position External Strength Position

Financial Strength (FS) Environmental Stability (ES)

Return on Investment (ROI)

Leverage

LiquidityWorking Capital

Cash Flow

Financial Strength (FS)

Average

6

2

65

6

= 25/5

= 5

Rate of Inflation

Technological Changes

Price Elasticity of DemandCompetitive Pressure

Barriers to Entry Into Market

Environmental Stability (ES)

Average

-1

-4

-3-5

-6

= 19/5

= -3.8

Competitive Advantage (CA) Industry Strength (IS)

Market Share

Product Quality

Customer LoyaltyTechnological know-howControl over supplier and

Distributors

Competitive Advantage

(CA) Average

-1

-2

-2-3-5

= -13/5

= -2.6

Growth Potential

Financial Stability

Rivalry Among CompetitorsResources UtilizationProfit Potential

Industry Strength (IS)

Average

5

4

446

= 23/5

= 4.6

Directional Vector Coordinates: X-axis = -2.6 + 4.6 = 2

Y-axis = 5 + (-3.8) = 1.2


9/13

FS

Conservative Aggressive

-6 -5 -4 -3 -2 -1 1 2 3 4 5

Defensive Competitive

ebays should pursue Aggressive Strategies

-1

-6

-5

-4

-3

-2

ES

CA IS

1

5

4

3

2(+2, + 1.2)


10/13

Quantitative Strategic Planning Matrix

Strategic Alternatives

Key Factors Weight

1

Establish for

Mobile Platforms &

Payment

2

Enhance Security

features

AS TAS AS TAS

Opportunities

1. Growing number of mobile shoppers 0.25 4 1.00 3 0.75

2. Become retailer 0.10 4 0.40 2 0.20

3. Increase service and product portfoliothrough acquisition 0.05 4 0.20 2 0.10

4. Increasing Use of the internet 0.05 4 0.20 2 0.10

5. Expand the ebay Community 0.02 2 0.10 3 0.15

Threats

1.

Online security 0.10 - -

2. Increasing Number of Online Stores 0.10 4 0.40 3 0.30

3. Increasing Number Of Online TradingSites 0.09 4 0.36 1 0.09

Sum of Weights 1.00

Strengths

1. Worlds largest internet marketplace 0.20 1 0.20 3 0.60

2. Business Model 0.10 - -

3. Economies of Scale 0.14 1 0.14 3 0.42

4. Payment system 0.20 2 0.40 3 0.60

5. Brand reputation 0.06 4 0.24 2 0.12


11/13

6. Zero inventory held by company 0.08 4 0.32 2 0.16

Weaknesses

1. Inability to measure illegal activity on site 0.10 2 0.20 3 0.30

2. Lack of in depth description of products 0.05 3 0.15 2 0.10

3. Technology malfunction 0.05 2 0.10 3 0.15

4. High fees 0.02 - -

Sum of Weights 1.00

Sum of Total Attractiveness Score 4.97 3.13


12/13

Grand Strategy Matrix


13/13

Financial Highlights

Comparison from2010 -2012 2010 2011 2012

2013 or 5 yraverage

Profitability

ROA 10.34% 4.72% 8.78% 8.2%

ROE 56.13% 58.48% 25.4%

Operating Profit Margin 5.1% 3.6% 4.4% 4.19%

Net Profit Market -0.1% 0.0% 0.3% 3.41%

Liquidity

Current Ratio 1.52 1.33 1.39 1.30

Quick Ratio 1.18 0.95 1.03 1.00

Inventory Capital

Leverage

Debt/Assets - - - -

Debt/Equity (5 year average) - - - 1.46

Long term D/E (5 year average) - - - 1.48

Activity

Inventory Turnover 12.3 11.4 11.1 11.2

Fixed Asset Turnover 29.4 28.6 29.7 27.4

Total Asset Turnover 2.5 2.7 2.7 2.60

Average Collection Period

Shareholder's Return

P/E Ratio 60.6 87.7 82.6 52.49

Dividend Payout Ratio

Documents

Swot Anaylsis Ebay