MARKETING ANALYSIS OF EBAY

eBay would seem to have realized the goal of a perfect market where buyers and sellers have access to perfect information about other buyers, sellers and merchandise. Because eBay charges a small fee relative to the price of the products, and because the company does not maintain or manage any inventory of its own, it depends on large volume and low overhead in order to remain profitable. The auction site has also expanded its original vision of merely providing an auction forum to a site where buyers can select a "buy it now" price for many items, and where new items are sold directly to consumers as well as used items. At this point, it is possible to buy items for a few dollars that would otherwise be found at a garage sale, and also entire homes and businesses for millions of dollars. This research examines the marketing strategy of eBay and how the company's marketing works to further eBay's long-term strategic objectives.

Although the World Wide Web was, at one time, expected to bring about a revolution in management--resulting in the so-called "new economy," companies learned that old-fashioned attention to profitability was still required for success. One of the few companies that did have a new approach to doing business was an online auction house that survived by providing a forum for strangers to sell goods to other strangers. From these inauspicious beginnings, eBay has become a commercial powerhouse,

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l to reach 69 million consumers--the number registered with eBay at the time the program was announced (Spethmann, 2003). When looking at the marketing mix, eBay continues to provide essentially the same product--a forum for selling goods and services--although it has expanded that product to include auctions, traditional sales, new products, old products, products with corporate alliances and unusual products such as homes ("The Online," 2002). The company's price strategy has remained relatively fixed throughout its history, with an emphasis on keeping the cost to buyers and sellers low. With items such as shipping left entirely to the two parties completing the transaction, eBay ensures that it receives a small percentage of the transaction costs, but with millions of transactions occurring each month, that small amount adds up. The company's distribution strategy has not changed--it does not have brick and mortar stores, but remains entirely based on the Web. Its promotional strategy has expanded over the years to include television commercials, and its alliances with corporations represented a significant move away from its original position, but such strategy also provides co-operative promotional opportunities that the

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