Ebay Inc Case Study

EBAY Inc.

Kunal Sharma

Advanced Entrepreneurship

February 11, 2013

100410018

Word Count: 634

Question 1

a) The buyers of EBay are simply put, the customers of EBay. Buyer's place bids on items they wish to purchase in an online auction setting. In most industries the interaction that occurs when a sale is made is between a business and a consumer, in EBay's case this interaction can take place in different scenarios, such as through consumer-to-consumer and business-to-consumer. The fact is that the buyer of EBay can in fact be anyone in the world, from someone who wants a very specific item to small business buying in bulk online to display at their store window and even larger wholesale suppliers buy in bulk from EBay and supply the product to various businesses in the city or country.

b) EBay is most definitely operating a two sided market it basically serves as a platform to help sellers display their goods to the entire internet using population for a small fee and connects those sellers with buyers worldwide who can bid on any item for free. The platform typically attracts one side by giving away services below cost to attract the less price-sensitive users on the other side. This impacted EBay's business model very favourably as the most attractive part of the venture was that fact that EBay was the middleman and yet it never handled or touched any of the goods as well as generated revenue from parties but exclusively from the sellers, about 45% of the revenues came from the listing fee's and the other 55% came from the percentage EBay took after the item has been sold. This strategy has proven to be profitable due to the fact that almost 25% of the seller's on eBay make a full time living just from online sales.

Question 2

a) In my opinion, EBay did attack a very attractive market, they basically took the role of middleman as there is in any other industry such a retail store for example is the middleman between the consumer and supplier, EBay took on the same role but without any of the work so to speak. EBay does not touch any of the physical goods it sells on their website but they still collect a percentage fee for each item sold through their website. There were several specific factors that made eBay's opportunity so attractive such as the fact that it appealed to an extremely large market and had extremely high gross margins due to the low cost of operations. Another attractive fact about the opportunity was that it would cater to each and every individual's needs by simply having a large number of users consumers can easily find anything they are looking