SWOT analysis example: eBay


eBay is an Achilles of the online auction industry

Source: businessblog.winweb.com


eBay Inc. is an American multinational internet consumer-to-consumer corporation that manages eBay.com, an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide. Founded in 1995, eBay is one of the notable success stories of the dot-com bubble; it is now a multi-billion dollar business with operations localized in over thirty countries.


A company like eBay must always know its strengths,weaknesses, opportunities and threats. And to reveal and evaluate this four things a SWOT analysis is a must. Using this analysis eBay can focus on the good part of the business and focus more on the bad part to make it good.




  • eBay is the worlds largest online auction website. It is a giant marketplace used by millions of people all over the world to buy andsell all things one can possibly thinkof. It is capable of attracting vast audiences with diverse needs.
  • The company uses the power of customer relationship management by collecting data of buyers and sellers registered with the company. This is a big strength of the company as the data collected can generate reports and statistics that can make the company better and address its weaknesses and threats.
  • eBay gives a whole new meaning to the word middle man business. It does this by providing extra ordinary tools to sellers which, lets the seller target their products to the buyers. It also provides buyers with wonderful search tools, to get to the products they are looking for. eBay has made a very powerful platform for both sellers and buyers by being seamless and invisible but at the same time facilitating Customer to Customer relationship.
  • Diversifying has been a key policy of eBay. It does this by not only diversifying its products but also its market, by branching and localizing in countries like India, China and U.K.
  • Staying ahead of the competition has always been a focus of eBay. A fine example was acquisition of Paypal to support its online auction with a robust payment method. The combination of these two has been a knockout as it has given opportunities to new small startup businesses and helped facilitate enterprise businesses.



  • eBay does a very bad job of controlling fake or illegal auctions. There are numerous auctions still out there whose main purpose is to scam the buyers or are illegal auctions. A good example would be scammers trying to sell just the packaging box of the product and claiming it to be the real product. These sellers save themselves by claiming that the information about the product being just the packaging box is stated in the auction description, which is true. But the statement is in a very fine print.
  • One of the weaknesses of eBay is the sellers being able to enforce the payment method of their choice.This is a big favorite among the scammers as they choose apayment method like money transfers which does not protect the buyers from losing their money and buyers not returning back to eBay.
  • Shipping has been one of the biggest problems while shopping on eBay. Sellers to make their products on top of the search list practice lowering the price of the product while increasing the cost of the shipping as much as twice the price of the product. This has lead to buyers fleeing away to retail stores for better deal.
  • Another weakness of eBay is its inability to control the contents of the auction and auction items. Most of the content is checked only after the content or the auction has been posted. Due to this inability it facilitates large sale of copyrighted and not for resale items.



  • One opportunity that eBay saw was, how to sell a product like a normal website, an auction takes three to fifteen days to end. This is a long time and buyers tend to lose their interest. eBay saw a weakness and an opportunity at the same time, thus the Buy it Now button was created where, sellers can offer their product with a static price and offer it on buy it now. Buyers then can straightaway buy the product without having to wait for the auction to end. Further more a new tool Make an Offer is now available which gives buyers the power to offer a price to the seller for a product, if the seller agrees the transaction goes forward or the buyer just deny the offer.
  • Acquiring Skype the online telephony company came as a shock to everybody as eBay did not have anything to do with VOIP technology. eBay brought Skype Technologies in a deal reported to be worth $2.6 billion. eBay now has integrated Skype so that buyers can talk directly to the sellers using skype voicechat. This is altogether a new opportunity for eBay as it helps bring the buyers and sellers closer.
  • eBay has always believed in diversifying in every possible way so using its diversifying techniques, eBay has now started localizing its website allover the world. A good example would be a personalized eBay website for different countries like UK even developing countries like India and China.This is a big opportunity, as the outsourcing booms in these countries have significantly increased the spending limit of the consumer.


  • eBay as it is expanding and diversifying on foreign soil, it may be threatened by local competitors in the domestic market as the auction trends and the way they do transaction might differ locally.
  • One of the biggest threats to eBay is the scammers and the phishers which use eBay’s name to scam people. For example name of eBay and Paypal in scam email asking user to update their account information has been in high numbers. This has lead to many eBay and Paypal users distrusting the services provided by these companies and never coming back.
  • eBay has lots of tools for the seller sand buyers but there is no seamless integration of eBay seller store. The eBay seller store still looks like eBay.
  • A recent threat that has appeared as a competition to eBay is Google. Google has introduced Google Checkout a rival to eBay’s Paypal. Google has always been threat to other IT companies and with Google Checkout it has targeted Paypal. A recent aggressive strategy being used by Google is giving huge discounts on products all over the internet to attract buyers. Google has gone to a extend on setting up a conference and a party for significant eBay and Paypal users, the main goal of the party was inviting people to switchover.This was not well taken by eBay.



  • eBay needs to do a better job incontrolling the content, it needs to block certain illegal and fake auctions and at the same time be able to protect copyrighted material on eBay. This is possible and eBay is doing this to counter all the scammers however we can still find auction that are fake, illegal and other copyrighted materials. The advantage of using this alternative may result in lower amount of scams, illegal auctions and happy customers.
  • Shipping Calculator is must have for eBay, due to huge number of sellers exploiting this weakness of eBay buyers have flocked to other websites where the price might be higher on eBay but with shipping price, it is cheaper than eBay’s price. This tool would really bring more buyers to the site and can trust on the prices of the products.
  • Standardize Payment method is a must for eBay to be more reliable to the buyers. Everyday hundreds of buyers are being scammed by sellers using an alternate payment method like money order which has no fund security. By using Paypal as the standard payment method the buyers can use both their checking account and credit card to pay the sellers with some peace in their minds. eBay still need to provide alternate methods to its sellers as some countries do not allow Paypal transfers. However, eBay should devise a strict plan or a certification for sellers to offer alternate method of payment. This method will filter out all the sellers with bad intentions that just take the money and leave the buyers hanging. A trust factor is increased between the buyers and sellers. Also buyers can be assured of sellers that offer alternate payment as they are all eBay certified.
  • Localization is a keyword, just imagine being able to find an item in the city you live in and not have to deal with the hassle of shipping or waiting for the items to arrive for days. This feature can be a favorite among all as it can attract furniture sellers and garage sale items.eBay currently has a half of this option but is located in a very hard to see location. Making this feature a full-fledged feature and using it as one of the primary options can help a whole new set of buyers and sellers.
  • A good way to get away from the email scam would be using some kind of digital signature, so a user can just push a button to verify the validity of the email. The advantage of the solution is no more fake email to scam people.

Source / read more: scribd.com