Ebay Case Analysis

2960 Words 12 Pages
Register to read the introduction… Security in the payment process was the major concern that consumers worried about. Originally, credit companies and international banks responded for all the payment processes on eBay (Datamonitor, 2010). Credit companies and international banks used to charge high rates of commission, which increased the cost of transactions. In 2002, eBay acquired PayPal, which was famous for its security and efficiency (Datamonitor, 2010). eBay introduced PayPal to all the registered of users on eBay’s community. PayPal quickly became one of major channels of money transfer in the online auction industry. In 2010, PayPal had total payment volume of $92 billion and 94 million active registered accounts, which means eBay is capable to use its resources …show more content…
Payment process and shipment are two important parts of online transactions. eBay uses PayPal to increase the efficiency of payment process on eBay community. eBay established local sites in 24 countries in 2009 (eBay, 2009). Consumers could trade on local sites if they don’t want to wait for shipments. Low cost and economies of scale not only led to more net profit, but also high barrier of entry.

Mobile shopping has become the most popular way for consumers to make purchases. Consumers could access the Internet anywhere and anytime with mobile devices after 3G-technology was introduced. To respond to this phenomenon, eBay launched its first mobile commerce in 2008 (eBay, 2010). In 2010, eBay has nearly $2 billion sales volume on its mobile commerce platform. eBay successfully expanded its business by innovating with a new business model.

eBay implements a reputation system called multilateral reputation mechanism, in which users’ reputations are based on all the trading they made and what feedbacks they received. Reputation is intangible asset of users. With a high level of reputation, users could find it easy to sell or buy items on eBay. Moreover, eBay also integrated solid punishment policies to its users. For instance, user’s account would be automatically suspended if his reputation were too low. Reputation system and punishment policies motivate users to maintain trustful environment on

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