E-bay Case Study

At least 30 million people will buy and sell well over $20bn in merchandise (in 2003) more(prenominal) than the gross domestic product of all but 70 of the worlds countries. More than 150,000 entrepreneurs will earn a full-time living selling everything from diet pills and Kate delve handbags to 30,000 BMWs and hulking industrial lathes. More automobiles, of all things, sell on eBay than even no. 1 US dealer AutoNation. So what does this add up to? This is a whole new way of doing logical argument, says Whitman. Were creating something that didnt exist before.It wasnt planned, but as users plunged into consumer electronics, cars, and industrial gear, eBay fol belittleded. Today, eBay has 27,000 categories, including eight with gross sales of more than 1 billion separately.eBays business postureValue in eBay is created by proViding a virtual worldwide market for buyers and sellers and collecting a tax on transactions as they happen. The business model of eBay relies on its gue sts being the organisations product-development team, sales and marketing force, merchandising department, and the security department.The organisation, creative thinkered by Meg Whitman, was founded in 1995, when Pierre Omidyar launched a basic billet called Auction Web. His daughter valued to trade her collection of Pez dispensers, but Omidyar had a broader vision in mind, namely empowering everyday consumers to trade without the need for large corporations. He even wanted traders to be responsible for building the community and deciding how to build the web rate. It worked soon he found himself answering e-mails from buyers and sellers during the day and rewriting the sites softw are at darkness to incorporate their suggestions, which ranged from fiXing software bugs to creating new product categories.Some 100,000 messages from customers are posted per week in which tips are shared, system glitches are pointed out and deepens are lobbied for. The COO, Brian Swette, is quote d as saying, The trick 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 here(predicate)s noise, you better listen. Currently the engineering science allows every move of every potential customer to be traced, yielding rich information.Structurally, the business model is realised through 5,000 employees, roughly half of whom are in customer support and a 5th in technology. A key role in eBay is category manager, a concept Whitman brought to eBay from her days in marketing giant P&G. Category managers forecast 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 getting to know their customers and persuading them to hand over feedback, but for eBay such feedback is often free and offered without the need for enticement. Even so some of the partys most effective ship ca nal of getting user input do not rely on the Net and do not come free. eBay organises Voice of the Customer groups, which involve flying in a new group of about 10 sellers and buyers from around the country to its San Jose (Californian) every few months to discuss 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 double their selling activeness on after taking a class.The company is governed from both outside and The eBay system has a source of automatic control 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 encouraging further unspoiled demeanor in themselves and others.When that wasnt quite enough, eBay formed its o wn police force to patrol the listings for fraud and kick out offenders, the Trust 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 catch 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 big-ticket items.eBays oversightMeg 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 blue-chip something which underpinned Omidyars recruitment of Meg. Meg, an ex-consultant, filled many of the senior management roles including the head of the US business, head of international operations and vice-president of consumer marketing with consultants.The result eBay has become data and metric dri ven. If you cant measure it, you cant control it, Meg says. Whereas in the early days you could meet and feel the way the organisation worked, its current size means it needs to be measured. Category managers are expected to spend their days measuring and performing 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 load and so on. A measure Meg likes is the take rate, the ratio of revenues to the value of goods traded on the site (the high the better). She measures which days are the busiest, directing when to offer free listings in order to stimulate the supply of auction items. Noise on the discussion boards is used to visit whether the community is in supportive or ready to kill you mood on a scale of 1 to 10. Normal for eBay is around3.Category managers in eBay, unlike their counter move in Proc ter and Gamble, can only indirectly control their products. They have no stock to reorder once levels 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 merchandising schemes such as enhancing the presentation of their users products and giving them tools to buy and sellbetter.Over and above this odd 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 every department. An advance in the ways shoes could be searched for took ten months to happen. Aware that analysis can mean paralysis, Meg c ommissioned consultants (who else) to benchmark the rate at which change is indeed employ in eBay.eBay was rated as average 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. Chief Information Officer Maynard Webb, who joined as president of eBays technology unit, quickly took action to upgrade systems. Now the site is down for less than 42 minutes a month, despite much higher traffic.Meg is a attracter 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 regard the selling experience, she became a authorize 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 list ening 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 six months to understand the ethos. Some of the terms you learn in business school drive, force, commit dont apply, says former PepsiCo Inc. exec William C. Co bb, now senior vice-president in charge of eBays international operations. Were over here listening, adapting, enabling.