Amazon & Ebay Case Analysis

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Compare to Amazon’s business model, eBay’s business model seems simpler. eBay was founded in an auction platform to connect buyers and sellers. eBay does not have much change from the beginning. the core competency of eBay is the auction system and pay-pal. On the other hand, unlike Amazon, eBay has a very low operating cost, their operating cost is only from websites operations, payment processing, customer support. Therefore, they have a higher profit margin than Amazon. However, eBay’s business model lacks of an advance strategy which could make a better performance on their core competency.

In conclusion, in order to covert inferior position in competition with Amazon, eBay should improve the uniqueness of its business model. As we know, eBay recently started a premium service called eBay Valet, the service allows eBay to take care of selling items for its seller, they will take picture of the item, listed in eBay official store, and when the item is sold, they will take a commission from its revenue. eBay valet provides a convenient service for both customers and buyers, and it also could avoid fake item and fraud because the selling process is operated by eBay instead of seller. In addition, when buyers want to do some complicate operation such as return or exchange, it is more efficient going through eBay. Therefore, we would like to recommend eBay to cut their profit margin to lower the eBay Valet cost and built an well-organized operation team to manage the eBay valet service. The new service would fix its existed problem, enhance its reputation, and set a high barrier for the competitor to enter.

Exhibit 1

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