Bus 411 - Porter’s Five Forces Model of Ebay

BUS 411 Business Policy Seminar

Week 2 Assignment  

Name

Post University

Porter’s Five Forces Model of eBay

Five forces analysis

      The five forces analysis conducted by me indicates that eBay faces medium to high competition from its peers. Competition for eBay comes from both, online as well as offline businesses which sell similar products. Hence, eBay as well as its competitors find it extremely challenging to increase prices or even compete on the price front. The entry barrier in the industry has continued to come down in the recent times. This means that every existing player has to face more competition. Apart from new entrants, some technology giants like Apple and Alibaba have also started disrupting the market with their payment platforms. Going forward, I see that only those who can sustain the price/technology war will survive and consolidate. Till then, the margins will remain thin and hard to come by. (eBay Through The Lens Of Porter's Five ForceseBay Through The Lens Of Porter's Five Forces, 2015)

Analysis of the industry

     The biggest challenge that eBay needs to address is gaps regarding consumer experience. While other bigshots like Amazon, WalMart have been continuously working on improving online as well as offline consumer experience, there have been complaints about eBay’s delivery and post sales service processes. These complaints have two fold effects- first, the consumer feels disloyal to the company and second, the word of mouth goes against the company. (European SMBs “continually frustrated by poor shipping and delivery service problems,” says eBay’s European Chie, 2016)

      The second challenge for the company is to enhance its information system which is used for performing various data analytics activities that are used in targeting the right set of consumers. E-commerce has now become more than the process of setting up a virtual showroom and expect the consumers to land there by sheer luck. Targeted marketing communication campaigns are required to stand out amidst the cluttered and hyper-competitive market. This can be done only when the information system of the company is fully functional and better than its competitors. eBay needs a lot of work in order to differentiate on this front. (eBay provides inaccurate aadvice on blocking international order, 2016)