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eBay - Expansion in the US market

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market study
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eBay.com, an online auction and shopping website, was launched in 1995 as AuctionWeb in San Jose, California by a French entrepreneur Pierre Omidyar. It now connects a diverse community of buyers and sellers, dealing in a broad range of products, utilizing PayPal to ensure safe transactions. Separate eBay sites such as eBay US allow users to make transactions in local currency and in 2010, the company sold more than $2,000 worth of goods every second.
Its expansions through innovative acquisitions such as those of Shopping.com (online shopping comparison site), Bill Me Later and StubHub (secondary tickets marketplace) have positioned eBay as a global leader in e-commerce and payments.

Market Analysis

Though eBay has been reaping the advantages of being a pioneer in the e-commerce industry for long, the scenario is slowly changing. On the one hand, increased broadband penetration, growth in buyers' trust and satisfaction with online shopping channels, expansion in the use and availability of PCs, mobile devices etc. and most of all, convenience in shopping online have substantially increased the size of the e-commerce marketplace. The U.S. online retail sales grew at a healthy 12.6% in 2010 and are expected to grow at a compounded annual rate of 10% through 2015. Almost 1/3rd of this growth came from the addition of 5.5 million new online shoppers and researchers expect more and more people to be attracted away from physical retail stores in the times to come.

However, this growth has also attracted more competitors. The intensity of competition in the industry is on the rise. eBay competes with e-tailing majors such as Amazon, Wal-Mart, Target, Sears, Macy's, Staples, OfficeMax, AOL.com, Yahoo!, Google and the like. A recent addition to this list is the Japanese auction site Rakuten, which bought U.S. based Buy.com to strengthen its position in the Western market.

eBay's Business and Growth Strategies

eBay has been competing in the online auction industry by diversifying its product portfolio, customer base and global reach. The company achieves broad differentiation of the products offered through its strong community that is not matched by any other competitor.

It has been proactive in monitoring the internal and external environment, has been quick to innovate and change to take advantage of potential future opportunities. To leverage from the growth of social networking sites, eBay has been taking steps to make its site's auction features available through widgets like eBay To Go. It has strengthened its presence in the mobile space, by acquiring Zong (to allow users to charge online purchases to their wireless carrier bills), RedLaser (to develop a barcode scanning application for iPhone) and Critical Path Software (to boost its mobile applications development capabilities).

With 1/3rd of Americans registered at eBay, rapid expansion of Amazon.com and increasing number of online stores, the question is: Has eBay reached its peak in the US market? And, will its presence in the marketplace decline or rise up from here?

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