Ebay PEST Analysis

In the present report, we analyzed the macro factors, key success factors and threats faced by Ebay, the market leader of the online auction industry. PEST Analysis Through the use of PEST Analysis, we Intend to evaluate the present Macro Factors.

First, to Identify how the Political factors affect the online auction industry, we analyzed the laws and regulation In use.

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It might be necessary to deal with several lordliness’s, once Internet Is everywhere (the auction company may be located In one country, the seller in another and the buyer in a third one). The main type of regulations are the age requirements laws in several countries that forbidden the use of the online auction sites by people under a certain age (e. G. 18 years old).

There are also laws that mandate minimal educational requirements, which mean that these companies are forced by states to reduce its target and sales.

However, companies may benefit with some political requirements, by the cooperation with law enforcement agencies, like eBay does, to identify customers. Since there is a global economical crisis and people search desperately for new ways of saving income, It’s Seibel to establish the way how the Economical factors affect this industry. Customers can sell or buy (used or new) products, over the Internet, at a price lower than the one found In stores, reducing the money spent.

So, we could Identify that this Industry has the opportunity to grow In bust economical cycle.

In this Industry, companies may consider the consumer Socio-cultural habits. There are still some social opinions regarding this business, such as the prevailing suspicious of buying through the Internet and the possible lack of security. One example that shows that here are some cultures that don’t adapt such a solution is the fact that eBay had to discontinue its operations in the Japanese market in 2002.

However, there are some cultural-social factors that may be an advantage. People value their own personality and uniqueness and in a standardized society, it’s difficult to have it, but in online auctions, It’s possible to buy unique products (clothing, mobile, etc. ), unlike most stores.

Online auctions Industry is affected by Technological factors. It’s highly dependent on the Internet capabilities and certainly has the advantage that It’s so rueful nowadays. It’s also affected by others technological factors, such as the payment devices (e. . Papal was acquired by eBay, what shows its value).

Threats To define the 5 biggest threats, we applied the Porter Five Forces model. Regarding the threats of New Entrants, there is a relative lack of entry barriers in eBay’s domestic business, since the access to the online trade channel is universal, and the physical assets required to setup an auctioning site are all commercially available. It may imply an increase of competition in the future and potential market saturation.

There are some Substitute products in this market that may represent a threat to eBay, such as flea markets and outlets, where people can find great brands with great discounts; shops, classified advertisements In newspapers; collectibles shows; garage sales and other venues such as local auction houses and liquidators. Concerning the power of Buyers, eBay faces constantly the lack of trust that people have on Internet money transactions. In fact, people can’t be sure that their confidential Information will not be disclosed and it is difficult to check product quality and avoid frauds (e.

Scams looking Like eBay emails Tanat ask users to update toner account International can cause several damages: decreasing reputation and lost of customers). EBay’s success is based on its customers and if they choose to go to another online option or even another type of channel, eBay will be in risk. Traditionally companies consider their Suppliers as those that provide the raw materials required to a particular good/ service. However, eBay’s suppliers are also its customers, those who want to sell their products. The same problems of trust and fraud are applied to suppliers.

We can add the fact that they also have a high bargaining power since eBay must keep its fees and commissions low in order to attract and keep loyal sellers. Regarding the industry Competitors, there’s a rivalry among existing companies that may represent a threat. EBay is competing globally but is threatened by local competitors in the domestic market that have the competitive advantage of knowing the local social habits (eBay’s competitors include Amazon, Yahoo, ibid, Overstock, etc. ).

Alliances companies, like USPS, may also become a threat to eBay, since they are so important hat have enough power to negotiate.

An alliance end could damage eBay. Key Success Factors Customer opinion – It is important for a company in this industry to listen to customer opinion, in order to improve the business (e. G. It was created the EBay University that collected questions and concerns in order to develop some uncover areas). “Stickiness” – A company has to use strategies that improve the return of a customer (loyalty).

It has to present an attractive, easy to use, website with appellative pictures and with new and creative things happening. It will increase profits. Trust –