SWOT Analysis

Strengths Weaknesses
1. World’s largest internet marketplace 1. Inability to measure illegal activity on
2. Business model site
3. Economies of scale 2. Lack of in depth descriptions of products
4. Payment system 3. Technology malfunctions
5. Brand reputation 4. High fees
6. Zero inventory held by company

Opportunities Threats
1. Growing number of mobile shoppers 1. Online security
2. Become a retailer 2. Increasing Number of Online Stores
3. Increase services and product portfolio 3. Increasing Number of Online Trading
through acquisition Sites
4. Increasing User of the Internet
5. Expand the eBay Community

Strengths
1. World’s largest internet marketplace. eBay has more than 150 million live listings and
more than 105 million active users globally in 37 countries. That makes eBay the largest
marketplace online, having a great power over other online retailers.
2. Business model. eBay only acts as a middleman between sellers and buyers, who bid and
sell items in eBay’s marketplace. Being a pioneer in online auctions, eBay had no
competition and currently has only few strong direct competitors in Malaysia such as
Zalora, Mudah.my and Lelong.com.my
3. Economies of scale. In the beginning, eBay had to invest heavily to gain IT and customer
relationship management (CRM) knowledge and skills, but since then, used its skills to
serve over 100 million users and to create the largest online marketplace with little
additional costs.
4. Payment system. eBay uses PayPal, its own payment system, to proceed nearly all of the
payments going from eBay’s marketplace. From eBay’s perspective, such tight
integration has the benefits of more fees collected (PayPal takes transaction fees from the
 businesses) and tighter control over buyer’s shopping experience. From buyer’s
perspective, PayPal provides easy to use online payment method.
5. Brand reputation. A recognizable brand name is important to the success of a company.
eBay has made sure to use color and unique writing to show their brand name off. eBay
is also a trustworthy brand, known all over the world.
6. Zero Inventory Held by the Company. eBay does not have stores or warehouses. They
do not hold any of their own inventories. This is strength for the company because it
keeps costs down and does not put any threat of having to liquidate the company. eBay
has kept it simple by simply being a place for people to trade items.
Weaknesses
1. Inability to Measure Illegal Activity on Site. eBay has taken many precautions to
prevent illegal activity on their site. They estimate that only 1 percent of transactions on
their site involve fraud. The customers however disagree to some extent. Some say that
there are as much as 10 percent fraudulent transactions. EBay has no real way to
measure the extent of illegality on their site.
2. Lack of In-Depth Descriptions for Products. The lack of description in products could
be a factor in the amount of counterfeit and wrongly identified products that are sold to
customers.
3. Technology malfunctions. eBay must take measures to keep malfunctions as low as
possible to retain happy customers and to keep hackers out of personal PayPal and eBay
accounts.
4. High fees. eBay fees for the sellers has risen significantly over the years. The firm
receives fees on listed goods, sold goods, some adornment fees and PayPal transaction
fees. The sellers often make zero profit on their low price products sold on eBay due to
its high fees.
Opportunities
1. Growing number of mobile shoppers. eBay has a strong payments system PayPal that
is widely accepted and used by many online retailers and online shoppers as it is
convenient and easy to use. The growing number of mobile shoppers represents a huge
growth opportunity for PayPal as its one of the few payment systems that meets the
requirements for convenient shopping and payment processing on the go.
 2. Become a retailer. eBay has an access to hugest online marketplace in the world and is
well placed to take an advantage of that by becoming a retailer. The company has its IT
and CRM systems in place already and could easily stake out a market share from other
online retailers.
3. Increase services portfolio through acquisition. The company has successfully
acquired many companies to extend its services offering and should continue adding new
services through mergers and acquisitions.
4. Increasing User of the Internet. The internet is being used more and more each day.
eBay can take this opportunity to expand and penetrate new markets.
5. Expand the eBay Community. For continued customer satisfaction eBay can increase
its community feel. With new resources and sites tailored specifically to their community
member’s eBay will continue to be the most highly respected internet auction site by its
members.
Threats
1. Online security. PayPal stores online shoppers’ personal information, such as bank
account details, which is a target for online thefts. The more online customers PayPal has,
the more attractive as a target for identity thefts it becomes.
2. Increasing Number of Online Stores. Online shopping is becoming more and more
common. Stores such as Zalora, Lelong.com.my and Mudah.my have developed sites
where people can shop from the comfort of their own home. This poses a large threat to
eBay. They are now not only competing with other online auction sites but also online
retailers.
3. Increasing Number of Online Trading Sites When an industry is attractive new
competitors will always try to enter and steal some of the market share. eBay already has
many competitors surrounding them including Zalora, Lelong.com.my and Mudah.my.
Some boast that they are an alternative to eBay while others just try to be better than
eBay. To sustain a competitive advantage above their competitors’ eBay must continue
to grow and advance in the online auction industry. Strategies must be determined and
defenses formed.
Strategy-Formulation Analytical Framework
Input Stage:

Internal Factor Evaluation (IFE) Matrix

Key Internal Factor

Weighted
Weight Rating
Score
Strengths
1 World’s largest internet marketplace 0.20 4 0.80

2 Business Model 0.10 3 0.30

3 Economies of Scale 0.14 4 0.56

4 Payment system 0.20 4 0.80

5 Brand reputation 0.06 3 0.18

6 Zero inventory held by company 0.08 3 0.24

Weaknesses
Inability to measure illegal activity
1 0.10 1 0.10
on site
Lack of in depth description of
2 0.10 1 0.10
products
3 Technology malfunction 0.05 1 0.05

4 High fees 0.05 1 0.05

Total Weighted Score 1.00 3.12

IFE result’s analysis


External Factor Evaluation (EFE) Matrix

Key Internal Factor

Weighted
Weight Rating
Score
Opportunities
1 Growing number of mobile shoppers 0.20 4 0.80

2 Become retailer 0.10 3 0.30

Increase service and product portfolio
3 0.14 4 0.56
through acquisition
4 Increasing Use of the internet 0.20 4 0.80

5 Expand the ebay Community 0.06 3 0.18

Threats
1 Online security 0.10 1 0.10

2 Increasing Number of Online Stores 0.10 1 0.10

Increasing Number Of Online
3 0.05 1 0.05
Trading Sites

Total Weighted Score 1.00 3.12

EFE result’s analysis


 Competitive Profile Matrix (CPM)

Critical Success Ebay Mudah.My Lelong.Com.My

Weight
Factors Rating Score Rating Score Rating Score

Advertising 0.05 3 0.10 2 0.10 1 0.05

Market Penetration 0.06 4 0.24 4 0.24 2 0.12

Customer Service 0.08 4 0.32 3 0.24 2 0.16

Brand Awareness 0.10 4 0.40 4 0.40 2 0.20

User friendly website 0.05 4 0.20 3 0.15 2 0.10

Revenue Growth 0.15 3 0.45 4 0.60 2 0.30

Financial Condition 0.15 3 0.45 2 0.30 2 0.30

Customer Loyalty 0.05 4 0.20 3 0.15 3 0.15

Market Share 0.10 4 0.40 3 0.30 1 0.10

Product Quality 0.08 4 0.32 4 0.32 4 0.32

Information about user 0.05 4 0.20 4 0.20 3 0.15

Price Competitiveness 0.08 3 0.24 3 0.24 3 0.24

Total 1 3.44 3.32 2.19

SWOT Matrix
INTERNAL
FACTORS
EXTERNAL
FACTORS
) company
Opportunities (O)
O1 Growing number of
mobile shoppers.
O2 eBay has an opportunity
to become a retailer
O3 Increase services portfolio
through acquisitions.
O4 Increasing user of the
internet.
O5 eBay could expand the
community with new
resources and sites.
Threats (T)
T1 PayPal stores online
shoppers’ information is
a target for online theft.
T2 Increasing number of
Online Stores.
T3 Increasing number of
Online Trading Sites
Strengths (S)
S1 World largest Internet
market place
S2 No strong direct competitors
S3 Create the largest online
marketplace with little
additional costs.
S4 Use its own payment system
S5 eBay is a trustworthy brand
S6 Zero inventory held by the
SO Strategies
1. Build on brand loyalty.
(S5, O1,O5)
2. Attract more customers with
better user security features.
(S1,O3, O4)
3. Establish for mobile
platforms and payment.
(S4, O3)
4. Maintain simplicity of
interaction with the online
community’s capability.
(S3, O5)
ST Strategies
1. Gains competitive
advantage among
competitors. (S2, T1, T2)
2. Use partnership to provide
better and easier product to
consumer. (S1, T2,T3)
3. Use online security option
for verification and
authentication. (S4, T1)
Advertise the bargain
capabilities of ebay website.
(S5, T2, T3)
Weaknesses (W)
W1 No real way to measure
the extent of illegality on
their site.
W2 Lack in-depth description
for products.
W3 Technology malfunctions
to keep hackers out of
personal PayPal and eBay
accounts.
W4 eBay fees for the sellers
have risen significantly
over the year.
WO Strategies
1. Increasing awareness of
customers product
portfolio and services
(W2, O1, O4)
2. Lower product fees to user.
(W4, O4)
System for online
verification of products.
(W1, W3, O3)
WT Strategies
1. Authentication of
consumer identity.
(W1, T1)
2. Aggressive advertising.
(W2, T2,T3).
SPACE Matrix

Internal Strength Position External Strength Position

Financial Strength (FS) Environmental Stability (ES)
Return on Investment (ROI) 6 Rate of Inflation -1
Leverage 2 Technological Changes -4
Liquidity 6 Price Elasticity of Demand -3
Working Capital 5 Competitive Pressure -5
Cash Flow 6 Barriers to Entry Into Market -6

Financial Strength (FS) = 25/5 Environmental Stability (ES) = 19/5

Average = 5 Average = -3.8

Competitive Advantage (CA) Industry Strength (IS)

Market Share -1 Growth Potential 5

Product Quality -2 Financial Stability 4
Customer Loyalty -2 Rivalry Among Competitors 4
Technological know-how -3 Resources Utilization 4
Control over supplier and -5 Profit Potential 6
Distributors

Competitive Advantage = -13/5 Industry Strength (IS) = 23/5

(CA) Average = -2.6 Average = 4.6

Directional Vector Coordinates: X-axis = -2.6 + 4.6 =2

Y-axis = 5 + (-3.8) = 1.2

 FS

5
Conservative Aggressive
4

3
2
(+2, + 1.2)
1
CA IS
-6 -5 -4 -3 -2 -1 1 2 3 4 5
-1
-2
-3
Defensive -4 Competitive
-5

-6

ES

ebays should pursue Aggressive Strategies

 Quantitative Strategic Planning Matrix

Strategic Alternatives
1 2

Establish for Enhance Security

Key Factors Weight Mobile Platforms & features
Payment

AS TAS AS TAS

Opportunities
1. Growing number of mobile shoppers 0.25 4 1.00 3 0.75
2. Become retailer 0.10 4 0.40 2 0.20
3. Increase service and product portfolio
through acquisition 0.05 4 0.20 2 0.10

4. Increasing Use of the internet 0.05 4 0.20 2 0.10

5. Expand the ebay Community 0.02 2 0.10 3 0.15

Threats
1. Online security 0.10 - -
2. Increasing Number of Online Stores 0.10 4 0.40 3 0.30
3. Increasing Number Of Online Trading
Sites 0.09 4 0.36 1 0.09

Sum of Weights 1.00

Strengths
1. World’s largest internet marketplace 0.20 1 0.20 3 0.60

2. Business Model 0.10 - -

3. Economies of Scale 0.14 1 0.14 3 0.42

4. Payment system 0.20 2 0.40 3 0.60
5. Brand reputation 0.06 4 0.24 2 0.12
6. Zero inventory held by company 0.08 4 0.32 2 0.16

Weaknesses
1. Inability to measure illegal activity on site 0.10 2 0.20 3 0.30

2. Lack of in depth description of products 0.05 3 0.15 2 0.10

3. Technology malfunction 0.05 2 0.10 3 0.15

4. High fees 0.02 - -

Sum of Weights 1.00

Sum of Total Attractiveness Score 4.97 3.13

Grand Strategy Matrix
Financial Highlights

Comparison from 2013 or 5 yr

2010 -2012 2010 2011 2012 average

Profitability
ROA 10.34% 4.72% 8.78% 8.2%
ROE 56.13% 58.48% 25.4%
Operating Profit Margin 5.1% 3.6% 4.4% 4.19%
Net Profit Market -0.1% 0.0% 0.3% 3.41%
Liquidity

Current Ratio 1.52 1.33 1.39 1.30

Quick Ratio 1.18 0.95 1.03 1.00
Inventory Capital

Leverage

Debt/Assets - - - -
Debt/Equity (5 year average) - - - 1.46
Long term D/E (5 year average) - - - 1.48
Activity

Inventory Turnover 12.3 11.4 11.1 11.2

Fixed Asset Turnover 29.4 28.6 29.7 27.4
Total Asset Turnover 2.5 2.7 2.7 2.60
Average Collection Period

Shareholder's Return

P/E Ratio 60.6 87.7 82.6 52.49

Dividend Payout Ratio