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eBay Inc. – a pioneer in the online auction industry

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market study
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eBay Inc. (eBay) was founded in September 1995 as AuctionWeb in San Jose, California with the novel concept of bringing together buyers and sellers through a range of websites.

Over the years eBay has reached an operating income of $2 billion with 200 million registered users, and over 2 million visitors a day. It has also helped people from all walks of life transform their financial situation, allowing them to live in ways they could only dream about.

Business Strategies and Segments

Being a pioneer in the online auctioning industry with the absence of inventory management costs, and a huge and ever growing community of users not only gives eBay a dominant position in the marketplace but also lends it credibility and makes it tougher for competitors to eat into its 80% market share. At the core of its growth strategy is focusing on verticalization and in an effort to improve conversion rates the company sells across 13,000 categories, to a very broad set of buyers.

eBay operates in 2 business segments viz. marketplaces and payments. The former provides the infrastructure to enable global online commerce on a range of platforms, and includes eBay.com, StubHub, Shopping.com, Rent.com and Half.com, while the latter, comprises its online payment solutions PayPal and Bill Me Later.

Market Trends

According to most industry predictions global e-commerce is ready to rock. The industry is benefitting from some positive trends such as, explosive growth of broadband penetration, growing level of user comfort with shopping online, decline of certain brick-and-mortar stores, increasing fascination for & affordable prices of smartphones and extensive & intelligent interconnectivity among people through social media.
Goldman Sachs predicts e-commerce sales to grow by 19.4% and reach $963 billion by the end of 2013.

Europe looks like the most promising market followed by the US. With the internet penetration growing at 24% year-on-year, China is all set to become an emerging market for the e-commerce industry.
Innovations and Recent Growth Strategies
eBay has been working at improving various dimensions of its core business including providing a better user experience on its website through features such as removal of duplicate item listings and developing a Shopping Cart to enable customers to purchase several items with a single payment.

To make the most of the growing e-commerce industry, eBay is catching up to some of the web's recent innovations. The company has been taking steps to make the site's auction features available on social network pages, blogs and websites and stores outside of eBay via widgets such as eBay To Go.

To strengthen its presence in the mobile space, the company acquired Zong, to allow users to charge online purchases to their wireless carrier bills. In June 2010, eBay acquired RedLaser, a barcode scanning application for iPhone and in December it boosted its mobile applications development capabilities by acquiring Critical Path Software.

The greatest challenge eBay faces today is to maintain its leadership position in a global marketplace that is becoming intensely competitive.

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