e-bay technology e-commerce

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The Background

An industry is a group of organisations producing the same principal product/service or more broadly the group of organisations producing products/services that are a close substitute for each other, for example the hotel industry or the manufacturing industry etc.

The Task

a) Briefly describe the industry and choose a reputed organisation in that industry.

b) You need to gather information on that particular organisation within that industry/sector. Information is to be collected from a variety of sources.

c) You are then required to produce a single report that assesses the nature, success or failure, benefits of the innovation within the organisation.

d) First hand data on innovation may be collected by means of interviews, e-mails, surveys or questionnaires from the organisation. You may include employees, customers and any researchers related to the innovation.

The Report

Your report should include an audit of how the innovation process has been managed, by considering the following points.

a) Approach adopted

b) Evaluating the implementation mechanisms

c) Determine how the innovation has improved the performance of the organisation

d) Make recommendations outlining the practical steps necessary to improve the management of innovation within the organisation

e) Outline how innovation might be managed in the future within the industry


Innovation is very essential for all organizations as it is the factor which separates the best from the rest, by adding value to the organization or their services. Today, most organizations have recognized the importance of innovation and these organizations are trying to integrate innovation with their business strategies.

Innovation is mostly inter-linked with technology. The increased competition as a result of globalization, has prompted most of the companies to innovate with the technologies to stay afloat in the competition. Similarly, technologies are helping the companies to innovate new business strategies and models. One example of such an innovation which changed the business world is e-commerce. It re-defined the basic concepts of business and the way business operates.

Creation of innovative ideas alone will not do any good. The success depends on making the ideas realistic and commercialising it. So, a good vision of the future and an organizational culture encouraging innovation are essential for success. A continuously innovative organization will definitely create a competitive advantage over others. One such organization, which conquered the world through their innovative ideas is ebay. The assignment will be focussing on the innovative strategies followed by ebay to become the world leader in e-commerce.


Technology is already pervasive in our lives and it affects us, both as consumers and as business people. Businesses and consumers continue to embrace technology and it has brought about evolutionary and revolutionary changes in the field. Electronic commerce was such a revolutionary change, which was triggered by the internet era.

Gone are the days, where consumers had to go to shops for purchasing goods and products. e-commerce makes buying and selling of goods much easier. The main advantage is that it has no defined boundaries, including time zone and country. Now, a vast array of goods and services are available just a mouse click away. The number of goods and services selling online are increasing every day. E-commerce is conquering the audience throughout the world. It is here to stay and will continue to change the way we do business.

But only a handful of the companies were successful in doing business on the web because, the others neglected standard business practices such as good customer service, strong fulfilment channels, and target marketing to the right customers. The companies with the right vision, such as e-Bay and Amazon, emerged victorious in the competition. Being the world leader in e-commerce, my assignment will be focussing on eBay.


eBay is unquestionably successful as the world's online marketplace. With a community ranking in the millions, it is the most popular trading place on the internet. It connects millions of people by providing internet platforms of choice for global commerce, payments and communications. It was founded in 1995, and since then it has expanded by occupying some of the strongest brands including PayPal and Skype.

e-commerce can be of different types such as business to business, business to consumer and consumer to consumer, and ebay is focussing on consumer to consumer business. The main business of eBay is online auction. It acts as an intermediary between the process of buying and selling. Without a service like eBay, it would be difficult for buyers and sellers to come together for online business. Even though it wasn't the first company to start online auctions, it was the one which succeeded, and it maintained its top position over the years.

Fostering Innovation

From a simple concept, this company grew to a global virtual market by harnessing the resources of the internet, and it is constantly looking to increase its markets by providing international sites and moving into new markets. It is their good vision and new innovative ideas that helped them in occupying the prime spot. eBay is ranked among the top 20 innovative companies of the world. It is continuously evolving and launching new ideas and tools for improving their performance.

The company received the ‘National Medal of Technology and Innovation' in 2007 for pioneering the technology that encouraged and supported online trade, enabling global entrepreneurship and the growth of the internet worldwide (ebay Ink, 2008).

This assignment will be focusing on the business strategy of eBay as the innovation, rather than the hundreds of innovative ideas and applications developed by the company.

The main reason for the success of this company is its innovative ideas. The company encourages the employers to come forward with new ideas and incorporates these ideas into their services. The company conducts innovation demo expo at regular intervals which gives chance for the employees to share their innovative ideas by building new applications and showing them to the company executives. Many of the applications used in the eBay site, including eBay mobile and eBay pulse are developed through these innovation expos (ebay Ink, 2008). The company also presents Star Developer Awards for those who show the most innovative use of eBay and PayPal platforms to improve the user experience and customer service (ebay Ink, 2008). And, the company has a Disruptive innovation team for working on the innovative ideas developed by the employees (Computerworld, 2007).

eBay is introducing hundreds of new applications day after day. Now, let us discuss about some of the innovative ideas and applications used by eBay.

· Acquisition of PayPal: PayPal is a company owned by eBay and it helps in financial transactions between the traders. It is integrated into the eBay site and it helps in making the payment immediate and secure. The decision of eBay to use PayPal for payment was an innovative move, because it facilitated sending and receiving of payments in different currencies, which in turn was a boon for international trade (MacRae, 2005).

· Acquisition of Skype: Skype is a communication software owned by eBay which helps in the communication between buyers and sellers.

· Acquisition of Shopping.com: Shopping.com is an online shopping site owned by ebay.

· Feedback system: It is the lifeblood of eBay. It is actually a very simple system, but in a community based more on trust than legislation, it is the means by which buyers and sellers make informed decisions about who to deal with and who to avoid (MacRae, 2005). The feedbacks are published on the eBay website and are publically available to anyone, so that one can check a trader's feedback before entering into an auction.

· Applications: ebay is introducing new applications in their web sites very frequently in order to improve the customer experience. Examples include ebay pulse, Jaast, ebay mobile etc.

The eBay way of managing

In this era of globalization, innovation is the key to the success of all organizations. In the case of eBay, its online business demands innovative ideas from IT and business. Here, I will discuss some of the management strategies followed by eBay.

Integrating technology with the business teams is the most important step followed by eBay, which contributes to their success. This helps in creating more opportunities to introduce new technologies or to identify changes to the existing ones. The business team and technology team are introducing a continuing stream of innovations into every process to improve the user experience.

Another management tactic followed by the company is working closely with a few vendors to customize their products. Normal products will not be useful due to the huge volume of their business. So they invite some vendors to their labs to work alongside with them. They also encourage third party developers to create applications for integrating with the eBay system (Information Week, 2007).


The main problem they faced was that, because of the new nature of their business, they didn't had any role models or proved strategies to follow. So, they had to create their own strategies and go in an unexplored way, which in turn was a very risk step. But, by building on the first-mover advantage to gain momentum, they went on to become the monopolies in their area of business.

Another problem they had to face initially was the reluctance of people to shop across the net because of concerns regarding data protection and privacy. But, eBay was able to overcome this problem to create a community of millions. The company also won the award for the most trusted company for privacy this year.

As the business blossomed, they faced more problems. They no longer could use the ordinary platforms and applications because of the huge volume of the business involved. They overcome this by joining with some companies to create platforms and applications specifically suited to eBay.


The factors which are very vital for this business to survive are intellectual capital in the form of creativity and innovation, customer knowledge and service, brand equity and web site popularity, and lifelong customer relationships. eBay is the unassailable leader in e-commerce, but I am afraid whether they can keep up the dominancy. It is facing tough competition from other companies like Amazon.

The core business strategy of eBay has always been focussed on auction business and the company was only trying to enhance the variety and appeal of the products in its site. But over the years, consumer preference had changed and they prefer more of a fixed price for the buying items. Even though the company was aware of this change in consumer preference, they were wary of changing the long existing and profitable equilibrium between the buyers and sellers and they refused to re-orient their core business model (The New York Times, 2008). But of late, the company is trying to change their business strategy to overcome the competition from Amazon, Google etc. Now the company is focussing on diversification, by providing products and services that people prefer to perform on the internet. The company is extending its horizon to other segments of e-commerce also. Acquisition of online shopping site, Shopping.com and online telephony company, Skype are steps in this direction. So, preference should be given to consumer tastes to retain its top position in the market.

Another problem area for eBay was that, it tends to give more importance to sellers than buyers. For any business to succeed, customer satisfaction is essential. So ,it is high time for eBay to change its policy.

Another problem is the difficulties with its site. The eBay site is very complicated and it is very confusing for an ordinary customer. A well-designed, easy to navigate, uncluttered web site is very essential to prompt the customers to revisit the site (Feather, 2000). Moreover people are no longer interested in browsing through all the sites. eBay has already recognised this problem and they are working on some software to integrate with other sites, so that the customers can view eBay listings on their personal websites.

Maintaining its customer base will be the most important challenge faced by the company in future. The increasing number of fraud and illegal auctions is a major concern for the company. It will lead to a reduction in its customer base, if not dealt with.

Moreover, the company has reached a stage of stagnation. It is not able to sustain their growth rate and the sales have dropped marginally. There is a limit to every growth and the company is reaching that.


The key to the success of any business in this global village is innovation. The success story of ebay underlines its importance. The company which started with relatively zero net asset grew phenomenally to become the world leader in e-commerce, by using innovative ideas and strategies. Knowing the importance of innovation, the company developed a culture which fosters innovative ideas, and by following the policy of continuing innovation, the company was able to maintain its first mover advantage.

Online auction was an unexplored area when they started their business. But, with the right visionary goals, creativity and innovation, they overcame all the challenges to become the global marketplace for online auctions. But, as the technology advances day by day, innovation has to be a continuous process, and for this, it has to be integrated with the company's business strategy. So, ebay is a role model for all companies that wish to prosper.


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2) MacRae, K (2005) eBay Manual, Somerset: Haynes publishing, p.45, 57.


3) Computerworld (2007) Mancini to boost eBay's innovation, [online]. Available from: http://www.computerworld.com/s/article/9012225/Mancini_to_boost_eBay_s_innovation (Accessed on: 15/12/2009).

4) Ebay Ink (2008) eBay Receives 2007 National Medal of Technology and Innovation, [online]. Available from: http://ebayinkblog.com/2008/09/03/ebay-receives-2007-national-medal-of-technology-and-innovation/ (Accessed on: 25/11/2009).

5) Ebay Ink (2008) eBay Innovation Demo Expo, [online]. Available from: http://ebayinkblog.com/2008/10/24/ebay-innovation-demo-expo/ (Accessed on: 20/11/2009).

6) Ebay Ink (2008) Star Developer Awards announced, [online]. Available from: http://ebayinkblog.com/2008/06/16/star-developer-awards-announced/ , (Accessed on: 20/11/2009).

7) Information Week (2007) The Ebay way, [online]. Available from: http://www.informationweek.com/news/global-cio/showArticle.jhtml?articleID=201200007 (Accessed on: 10/12/2009).

8) The New York Times (2008) Amid the Gloom, an E-Commerce War, [online]. Available from: http://www.nytimes.com/2008/10/12/business/12giants.html?_r=1&partner=permalink&exprod=permalink (Accessed on 18/11/2009).


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