E-bay Case Study

At least 30 million people will buy and give away well over $20bn in merchandise (in 2003) more than the gross domestic help product of alone precisely 70 of the worlds countries. More than 150,000 entrepreneurs will procure a full-time living selling eitherthing from diet pills and Kate Spade handbags to 30,000 BMWs and hulky industrial lathes. More automobiles, of all things, sell on eBay than even zero(prenominal) 1 US dealer AutoNation. So what does this add up to? This is a whole new way of doing business, says Whitman. Were creating approximatelything that didnt exist before.It wasnt planned, but as users plunged into consumer electronics, cars, and industrial gear, eBay followed. Today, eBay has 27,000 categories, including eight with gross sales of more than 1 billion to each one.eBays business modelValue in eBay is created by proViding a virtual world panoptic market for buyers and sellers and collecting a tax on transactions as they happen. The business model of eBay relies on its nodes being the organisations product-development team, sales and marketing force, merchandise department, and the security department.The organisation, headed by Meg Whitman, was founded in 1995, when Pierre Omidyar launched a staple fibre site called Auction Web. His girlfriend wanted to trade her collection of Pez dispensers, but Omidyar had a broader vision in mind, namely empowering bothday consumers to trade without the consider for large corporations. He even wanted traders to be responsible for building the community and deciding how to build the website. It worked soon he found himself answering e-mails from buyers and sellers during the day and rewriting the sites software at night to incorpo tell their suggestions, which ranged from bushel software bugs to creating new product categories. virtually 100,000 messages from customers are posted per week in which tips are shared, system glitches are pointed out and changes are lobbied for. The COO, Br ian Swette, is quoted as saying, The joke is to keep up with whatbuyers and sellers want. Weve had to constantly change how we run. We start from the principle that if t presents noise, you intermit listen. Currently the technology allows every move of every potential customer to be traced, yielding rich information.Structurally, the business model is realised finished 5,000 employees, roughly half of whom are in customer support and a fifth in technology. A key role in eBay is menage manager, a concept Whitman brought to eBay from her days in marketing giant P&G. Category managers direct the 23 major categories as well as the 35,000 subcategories, from collectibles to sports gear, to jewellery and watches, and even jet-planes.Conventional companies might spend big money on get to know their customers and persuading them to add feed tail end, but for eBay such(prenominal) feedback is lots free and asseverateed without the need for enticement. horizontal so some of the fede rations most effective ways of getting user input do not rely on the Net and do not come free. eBay organises parting of the Customer chemical groups, which involve flying in a new group of about 10 sellers and buyers from around the coun fork out to its San Jose (Californian) every hardly a(prenominal) months to talk of the in depth. Teleconferences are held for features and policies, however small a change involve. Even workshops and classes are held teach people how to make the most of the site. Participants tend to two-base hit their selling activity on after taking a class.The attach to is governed from both outside and The eBay system has a source of automatic insure in the form of buyers and sellers rating each other on each transaction, creating rules and norms. Theres an educational system that offers classes around the country on how to sell on eBay. Both buyers and sellers build up reputations which are valuable, in turn boost further good behaviour in themselves a nd others.When that wasnt quite enough, eBay formed its aver police force to patrol the listings for caper and kick out offenders, the give and Safety Dept, now staffed by several hundred eBay employees worldwide. They do everything from trolling the site for suspicious listings to working with law enforcement agencies to ginger nut crooks. eBay also has developed software that recognises patterns ofbehaviour common to previous fraud cases, such as sellers from Romania who recently started selling large numbers of high-ticket(prenominal) items.eBays managementMeg Whitmans style and past has heavily influenced the management of eBay. When she joined the company in 1998, it was more of a collection of geeks, handpicked by the pony-tailed Omidyar, than a valuable something which underpinned Omidyars recruitment of Meg. Meg, an ex-consultant, filled umpteen of the senior management roles including the head of the US business, head of international operations and vice-president o f consumer marketing with consultants.The result eBay has incur data and mensural driven. If you after partt measure it, you natest control it, Meg says. Whereas in the early days you could cite and feel the way the organisation worked, its current size means it needfully to be measured. Category managers are expected to spend their days measuring rod and acting upon data within their fiefdom.Some measures are standard for e-business and include how many people are visiting the site, how many of those then register to become users, how long each user remains per visit, how long pages take to thin and so on. A measure Meg likes is the take rate, the ratio of revenues to the apprize of goods traded on the site (the higher the better). She measures which days are the busiest, directing when to offer free listings in order to stimu young the supply of auction items. stochasticity on the discussion boards is used to understand whether the community is in supportive or ready to k ill you mood on a scale of 1 to 10. median(prenominal) for eBay is around3.Category managers in eBay, unlike their counterparts in Procter and Gamble, can only indirectly control their products. They have no stock to range once take aims of toothpaste or washing-up liquid run low on the supermarket shelves. They provide tools to buy and sell more effectively. What they can do is endlessly try to eke out small wins in their categories say, a slight jump in scrap-metal listings or new bidders for comic books. To get there, they use marketing and trade schemes such as enhancing the presentation of their users products and liberal them tools to buy and sellbetter.Over and above this unusual existence, the work envir-onment can be tough and ultracompetitive, say ex-eBayers. Changes often come only after PowerPoint slides are exchanged and refined at a low level, eventually presented at a senior level and after the change has been approved in a sign-off procedure which includes eve ry department. An advance in the ways shoes could be searched for took ten months to happen. alive(predicate) that analysis can mean paralysis, Meg commissioned consultants (who else) to benchmark the rate at which change is indeed implemented in eBay.eBay was rated as middling amongst the companies surveyed. Over time eBay has upgraded its ability to ensure the technology does not rule. Until the late 1990s, the site was plagued with outages, including one in 1999 which shut the site down for 22 hours courtesy of software problems and no backup systems. Former Gateway Inc. chieftain Information Officer Maynard Webb, who joined as president of eBays technology unit, pronto took action to upgrade systems. Now the site is down for less than 42 minutes a month, despite much higher traffic.Meg is a leader who buys into the company in more ways than one. Having auctioned some $35,000 worth of furnishings in her ski condo in Colorado to understand the selling experience, she became a treetop seller among the companys employees and ensured that her learning from the experience was listened to by fellow top execs. Meg is also known for listening carefully to her employees and expects her managers to do the same. As the business is as much, if not more, its customers, any false move can cause revolts within the community that is eBay.Most of all eBay tries to stay aware and flexible.Nearly all of its fastest-growing new categories emerged from registering seller activity in the area and quietly giving it a nudge at the right moment. For example, after noticing a few car sales, eBay created a separate site called eBay Motors in 1999, with special features such as vehicle inspections and shipping. Some four years later, eBay expects to gross some $1 billion worth of autos and parts, many of which are sold by professional dealers.The democratic underpinning of eBay, whilst easily embraced by customers, can, however, take some getting used to. New managers can take s ix months to understand the ethos. Some of the terms you learn in business school drive, force, commit dont apply, says causation PepsiCo Inc. exec William C. Cobb, now senior vice-president in charge of eBays international operations. Were over here listening, adapting, enabling.