Q1: eBay is one of the only major Internet "pure plays" to consistently make a profit from its inception. What is eBay's business model? Why has it been so successful?
eBay uses a brokerage business model where they facilitate transactions between two separate parties, the buyer and the seller. This is a successful business model because it provides a simple and convenient way for the buyers to purchase items they may not be able to find in stores. It also allows for sellers to get rid of unwanted items and possibly make a profit on them. The simplicity of the model also hinders eBay’s success. There is no interference within every transaction but choose to provide a platform for buying and selling of items.
Q2: Other major web sites, like Amazon.com and Yahoo!, have entered the auction marketplace with far less success than eBay. How has eBay been able to maintain its dominant position?
I think the excitement on an auction is a factor that keeps consumers returning to eBay. Also eBay’s strong reputation and the fact that it is well known not only draws new customers but ensures that past customers keep returning also. eBay is also the first to enter the auction marketplace and there for loyalty comes into play as people will choose to stay with what they are comfortable with rather than opting to explore a new option The wide variety of products available on eBay attracts a wider audience than that of amazon.com which also contributes to eBay’s success levels.
Q3: What method does eBay use to reduce the potential for fraud among traders on its site? What kinds of fraud, if any, are eBay users most susceptible?
The element of trust between eBay the sellers and the buyers is very large but eBay do put some measures in place in attempt to reduce the risks of fraud. These include:
A feedback rating- both buyer and seller have a feedback rating which uses the feedback given by other buyers/sellers to create a rating for a certain user. This allows others to determine how trustworthy the buyer/seller has been in the past.
Payment Methods- eBay only allows certain payment methods which are less suceptable to fraud. PayPal is the preferred payment method due to the fact that it has buyer protection for up to $20,000
Source- www.ebay.com.
The main type of fraud that users are vulnerable to include- Purchasing the product and never receiving it or the product being faulty or not what the product was described to be. E.g a fake or cheaper version. Or from a sellers perspective, never receiving payment for the product sold.
Q4: eBay makes every effort to conceptualize its users as a community (as opposed to, say "customers" or "clients"). What is the purpose of this conceptual twist and does eBay gain something by doing it?
The eBay community has advantages for not only eBay but also sellers and buyers. It enables an element of trust to be gained between all users which can potentially reduce the risks of fraud on the site. By allowing all users to contact each other and develop a community feel, users will feel more comfortable and safer using this site and therefore continue to use it. It can also make the trade a social experience between the two, similar to that of a real store.
Q5: eBay has long been a marketplace for used goods and collectibles. Today, it is increasingly a place where major businesses come to auction their wares. Why would a brand name vendor set-up shop on eBay?
A brand name vendor would set up an eBay shop because of the high level of consumers choosing to participate in online shopping. The vendor may only have limited locations of physical distribution and therefore buy selling products online can reach a wider audience. Selling on eBay may be a cheaper, simpler and more convenient option then setting up their own website. It also gives the vendor an idea of how much consumers are willing to pay for a particular product.
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