SWOT analysis of eBay
This SWOT analysis of eBay aims to provide the readers with a comprehensive insight into the strengths and the weaknesses of eBay. It also aims to examine the opportunities the company should explore and the threats it needs to keep an eye on. eBay Inc. is an American multinational e-commerce company based in California, the USA. It was founded in 1995 by Pierre Omidyar.
Strengths of eBay
eBay is one of the most successful stories of the dot-com bubble. In fact, the two giants that mostly dominated the world of e-commerce until recently are eBay and Amazon. eBay is a fantastic online auction and shopping website and has operations in many countries around the world. Its business model of acting as a middleman between sellers and buyers is fantastic and minimises its operational costs.
As of July 2019, eBay has 180 million global active buyers and 1.2 billion live listings (eBay Inc., 2019). Both consumers and businesses can use it to buy and sell a great variety of goods and services. Buyers can use it free, while sellers are charged some fees. It is noteworthy to mention that the prices charged by the sellers on eBay are often far cheaper than those offered on most other online platforms.
eBay is one of the best global brands with a total brand value of $13,017 million as of 2018. Interbrand, a global brand consultancy company, placed eBay at #38 in its annual ranking of Best Global Brands for the year 2018 (Interbrand, 2019). eBay’s financial position is very good as well. For instance, its revenue for the quarter ended March 31, 2019 was $2.6 billion (eBay Inc., 2019).
Weaknesses of eBay
While there are millions of listings currently available on eBay, the company has somehow developed a negative brand image over the years. Many people perceive eBay as a ‘second hand’ products marketplace. However, it is worth mentioning that eBay has taken a number of initiatives recently to change consumer perception.
Many sellers complain that eBay’s fees for listing items and payment processing are very high and these fees have risen significantly over the years. These high fees often leave the sellers without any profits, and therefore, many of them go out of business fairly quickly. In addition, the sale of counterfeit goods by some sellers has damaged eBay’s brand reputation.
Success is not the only story that eBay can share; it has some stories of failure to share as well. For instance, eBay entered the Chinese market in 2014, but failed badly as it was unable to compete with the local tech giant Alibaba. Likewise, it entered the Indian market in 2004; however, could not create any significant market position till today. Its global ‘one size fits all’ strategy has failed to help it take first mover advantages in the Indian market (Pani, 2018).
Opportunities for eBay
There has been a remarkable rise in the number of people exploring online shopping experience over the years. The increase has been seen in many countries such as the USA, the UK, Canada, and India to name but a few. Consequently, the high streets are dying which in fact offers eBay a great opportunity for further growth and development. Drawing the attention of new users is certainly worth exploring.
eBay can grow further by adding new countries to its Global Shipping Programme (GSP). Likewise, opening online stores in the countries where it has no operations yet is worth exploring. It should be mentioned that eBay has added many services to its portfolio over the years through acquisitions or through buying significant stakes in some companies. Pursuing similar growth strategies may turn out be very useful for eBay.
Threats to eBay
Threat is the last element to address in the SWOT analysis of eBay. eBay faces a stiff competition from a good number of competitors. Amazon, Alibaba, and Walmart.com are widely considered to be the major competitors of eBay. Likewise, many other online marketplaces e.g. Shopify, BriskSale, StoreEnvy, Poshmark, Jet, and Facebook also compete with eBay directly or indirectly. In addition, many regional low-cost online retailers are causing eBay significant problems.
Online security threat is also a major issue to consider in this discussion. Many online platforms have been hacked over the years. In fact, eBay’s security was breached in May 2014 causing the theft of consumers’ data such as usernames, passwords, phone numbers, and physical addresses.
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Last update: 14 July 2019
eBay Inc., (2019) Who we are, available at https://www.ebayinc.com/our-company/who-we-are/ (accessed 12 July 2019)
Interbrand (2019) https://www.interbrand.com/best-brands/best-global-brands/2018/ranking/ebay/ (accessed 12 July 2019)
Pani, P. (2018) How eBay failed to gauge India’s e-comm scene, available at: https://www.thehindubusinessline.com/info-tech/how-ebay-failed-to-gauge-indias-ecomm-scene/article9640407.ece (accessed 14 July 2019)
Photo credit: Pixabay
Author: M Rahman
M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He is a graduate of Leeds Metropolitan University and London South Bank University.