Electronic Commerce EC STAR Sanaz Kahkouee به نام خدا

Electronic Commerce EC STAR Sanaz Kahkouee Achieving Sustainable Competitive Advantage in E-Commerce using Information Systems looking at

Electronic Commerce EC STAR Introduction  E-commerce influence competitive environment in many ways.  Internet change competitive environment and reduce differences among competitors as offering are difficult to keep proprietary.  Achievement of competitive advantage is vital for companies.  Companies have begun using information systems strategically to gain significant competitive advantage.  Information Systems can be used by companies to reduce costs across the board, in relation to competitors and enhance differentiation in product quality and services in order to gain advantage over their competitors.

Electronic Commerce EC STAR Why ?

Electronic Commerce EC STAR Most profitable company Fastest growing company Good Business Model World wide community Best e-business leading company Most widely known online auction World’s largest online marketplace Most popular shopping website

Electronic Commerce EC STAR  Competition is so fierce in e-commerce HOW eBay achieved Sustainable Competitive Advantage over its competitors  Different models introduced for achieving Competitive Advantage ( 5 Competitive Forces )( 5 Strategic Thrusts ) Porter’s Framework Wiseman’s Model INFORMATION SYSTEMS INFORMATION SYSTEMS COMPETITIVE ADVANTAGE

Electronic Commerce EC STAR 1. Overview of Competitive Advantage Concepts 2. eBay Company Overview  Corporate history  Company profile  Business model 3. Business Strategy Analysis  Competitive Forces of eBay (Porter’s Five Forces Model)  Competitive Strategies of eBay (Wiseman’s Strategic Thrusts Model) 4. Conclusion and Summary Presentation Overview

Electronic Commerce EC STAR “Competitive Advantage (CA) exists when a company is able to return higher profits than its competitor and if this advantage is maintained successfully over time that is referred to as a Sustainable Competitive Advantage (SCA)” Campbell et al 2001 What is Competitive Advantage?

Electronic Commerce EC STAR

Electronic Commerce EC STAR Corporate History  The online auction website was founded as Auction Web in San Jose, California, on September 3, 1995  Founded by French-born Iranian computer programmer Pierre Omidyar  Today is the world’s largest and most profitable online Auction House  The UK’s number one e-commerce site  eBay provides online marketplaces for the sale of goods and services by a diverse community of individuals and businesses.  It also provides commerce, platforms, online payments services and o nline communications offerings to individuals and businesses.

Electronic Commerce EC STAR  Name: Pierre Omidyar  Title: Founder and Chairman  eBay responsibilities: Overseas strategic direction and growth, model and site development, and community advocacy.  Education: B.S., Computer Science, Tufts University  Nov 1996: Licensing deal with co. Electronic Travel Auction to sell plane tickets and travel products  Sep 1997: Changed name from AuctionWeb to eBay  Sep 1998: eBay went public and omidyar became instant billionaire  Forbes 200 World’s Richest People: #17  Net Worth: $8 billion  The Richest Iranian  #1: Changiz Khan : $417 billion !!? Corporate History

Electronic Commerce EC STAR Company profile – Mission & market MISSION eBay’s mission at its lunch was to provide a global t rading platform where practically anyone can t rade practically anything on earth ” MARKET eBay enables trade on a local, national and international basis. It features a variety of international sites, categories and services.

Electronic Commerce EC STAR Company Profile  Registered Users : million users worldwide  Employees: 15,500 (2008)  Revenue : $8.46 billion USD in 2008 (an increase of 28.5% over FY07)  Net Income : $348.3 million for year 2008 (a decrease of 1% over FY07)  Global presence in 33 markets and has about 99% share in most of its markets  Hosted approximately 383,000 stores worldwide with 50,000 trading categories  Operation :in more than 30 countries and established 30 localized websites  eBay owns PayPal, Skype, StubHub, Gumtree, Kijiji,and other businesses. Strong margins and revenue growth Market leadership Increasing market share Recognizable brand name Business model International operation (PayPal services)

Electronic Commerce EC STAR International Operation

Electronic Commerce EC STAR

Electronic Commerce EC STAR

Electronic Commerce EC STAR E-Business Model Supplier / Seller Customer / Buyer Chat rooms C2C B2C

Electronic Commerce EC STAR Competitive Advantage in E-Business Model  Four sources of competitive advantage in e-Model:  Save on costs, due to lack of intermediaries  Save on time in communications and transactions  Improve information management & supply chain management  Increase in market share, eBay members and revenue base

Electronic Commerce EC STAR Business Strategy Analysis

Electronic Commerce EC STAR Competitive Forces Analysis Porter’s Five Forces Framework

Electronic Commerce EC STAR Amazon Buy.com Yahoo! MSN Wal-Mart Macy’s Sam’s Club First auction Dell Home Depot EBay changed the rules of competition by creating a new type of service company that has become a leader in C2C online auction market Bidbay Industry Competitors

Electronic Commerce EC STAR Industry Competitors AmazonYahoo!eBay  Low business cost  High business cost  Large selection of goods for custom ers (50,000 categories)  Couldn't provide the number of pro ducts/goods as eBay did  More than 12 services on site  Fewer than five different services  “Buy it now” feature, “Billpoint” servi ce and "PayPal” service  None of them offer these services  Revenue comes from listing and sa les fee  Amazon and other rivals offered fre e auction  Automatic insurance for sales  Not offer insurance  Provides free space for auction item Pictures  Not provide space for pictures: place pictures on some other sites BidBay Source : Cost Analysis

Electronic Commerce EC STAR

Electronic Commerce EC STAR

Electronic Commerce EC STAR Threat of New Entrants  Online auction market is Easy to set up  Highly automated customer service management systems (CSM) to attract buyers and sellers  High quality customer services to keep customers satisfied  Chat rooms, discussion boards, FAQs…  CRM systems on C2C business model to get close to customers and increase their loyalty.  Large Market Share and expansion of eBay services and brands (99% market share)

Electronic Commerce EC STAR

Electronic Commerce EC STAR Threat of Substitutes  eBay differentiate itself from the competition and gain CA using IT  created a Developer Program to:  Keep costs low using reliable, scalable technology  Expand into new markets  Move quickly through development and testing  eBay feedback profile help it to make changes and improvement co nstantly  Strong technology platform for customers to interact repeatedly  feedback forum service helps Knowledge Management

Electronic Commerce EC STAR

Electronic Commerce EC STAR Bargaining Power of Suppliers and Buyers  Use IS to develop relationship with customers/suppliers and reduce their bargaining power to gain CA  Improved market service and customer loyalty schemes  eBay locked its customers in the business  Constantly develop various tools, programs and applications to offer: SafeHarbor, PayPal Buyer Protection, The eBay Toolbar, Seller Tools, Editor kit… Lower transaction costs Easier access to price and product information Convenient purchase of associated services Lower selling costs Access to wider market Avoidance of powerful channels

Electronic Commerce EC STAR

Electronic Commerce EC STAR

Electronic Commerce EC STAR Competitive Strategies Analysis Wiseman’s Five Strategic Thrusts

Electronic Commerce EC STAR Competitive Strategies Analysis Strategic Thrusts Information Systems Role Sustainable Competitive Advantage ALLIANCE Provide an easy-to-use marketplace for eBay ’ s customers Keep its profits growing Provide an easy-to-use marketplace for eBay ’ s customers Keep its profits growing Purchase of Paypal, Skype, StubHub, Gumtree, Kijiji and other businesses Various IS tools such as: eBay Safety Center, Seller tools and Educational tools Purchase of Paypal, Skype, StubHub, Gumtree, Kijiji and other businesses Various IS tools such as: eBay Safety Center, Seller tools and Educational tools GROWTH Facilitate credit cards payment & provide simplified cross-broader transactions and international operation Expand into new markets and increase revenue base Facilitate credit cards payment & provide simplified cross-broader transactions and international operation Expand into new markets and increase revenue base PayPal ’ s services and International websites with local languages & currency Programs and resources such as Buyer protection, feedback rating & Account guard for members PayPal ’ s services and International websites with local languages & currency Programs and resources such as Buyer protection, feedback rating & Account guard for members INNOVATION Develop new products and keep customers satisfied Leader and innovator of on-line auction market Develop new products and keep customers satisfied Leader and innovator of on-line auction market High quality customer service and eBay feedback profile to identify changes in customer needs Internet technology and web-base auction Chat rooms, FAQ, etc … High quality customer service and eBay feedback profile to identify changes in customer needs Internet technology and web-base auction Chat rooms, FAQ, etc … DIFFERENTIATION Distinguish eBay from other competitors Increase its market share Distinguish eBay from other competitors Increase its market share Developer Programs Buy it now feature and PayPal service for customers Other 12 services on eBay site Developer Programs Buy it now feature and PayPal service for customers Other 12 services on eBay site COST Reduce transaction costs to eBay's suppliers and buyers Lower the actual cost of doing business Reduce transaction costs to eBay's suppliers and buyers Lower the actual cost of doing business C2C e-commerce systems and software applications such as automated Customer Service Management System (CSM) Different technologies on eBay e-business model C2C e-commerce systems and software applications such as automated Customer Service Management System (CSM) Different technologies on eBay e-business model

Electronic Commerce EC STAR SERVICESERVICE GLOBAL…GLOBAL… SYSTEMSYSTEM To Became the World Leader in e-Market Place BUSINESSBUSINESS MODELMODEL eBay Strategies Conclusion

Electronic Commerce EC STAR Summary Organizations are able to achieve Sustainable Competitive Advantage with the use of Information Systems to support business strategies which directly affects its competitive position

Electronic Commerce EC STAR