Comparison of eBay.com and Alibaba - LIQUORI | CSS XHTML and PHP

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Comparison of eBay.com and Alibaba.com

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12/16/2009
Professor Reddi: BUS451

By: Thomas Liquori, Danauda Benjamin, and Anca Barbu
Comparison of eBay.com and Alibaba.com

TABLE OF CONTENTS
EBay.com Introduction ................................................................................................................................. 3
EBay.com Products and Services .................................................................................................................. 5
Ebay.com Financial analysis ...............................................................................................................e........... 6
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Ebay.com Last Three Year Financial Graphs ................................................................................................. 7
EBay.com TOWS Matrix Analysis .................................................................................................................. 9
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EBAY.com TOWS Matrix Graph ................................................................................................................... 13
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Competitive Forces for ebay.com ............................................................................................................... 14
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EBay.com Industry Rivalry .....................................................................o...................................................... 14
EBay.com Threat of Entrants ...................................................................................................................... 14
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EBay.com Supplier Power ........................................................................................................................... 15
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EBay.com Buyer Power ............................................................................................................................... 15
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EBay.com Threat of Substitute Products or Services .................................................................................. 16
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Ebay.com Core Strategies .................. ……………………………………………………………………………………………………17

EBay.com Differentiation Strategy ...s.......................................................................................................... 17
EBay.com Cost Leadership Strataegy ............................................................................................................ 18
EBay.com Growth Strategmy ......................................................................................................................... 18
EBay Growth Trend Graphs ......................................................................................................................... 19
EBay.com Diffeorentiation Strategy ............................................................................................................. 20
EBay.comh Growth Strategy ......................................................................................................................... 20
AlibTaba.com Introduction ....... ………………………………………………………………………………………………………………25
History of Alibaba.com ................................................................................................................................ 27
Alibaba.com Products, Services, and Key Brands ....................................................................................... 29
Alibaba.com Last Three Year Financial Graphs ........................................................................................... 30
Alibaba.com Core strategies ....................................................................................................................... 31
Alibaba.com Growth Strategy ..................................................................................................................... 32
Alibaba.com Differentiation Strategy ……………………………………………………………………………………………………34
Alibaba.com Price strategy ......................................................................................................................... 35
Competitive Forces for Alibaba.com ........................................................................................................... 37
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Alibaba.com Threats of New Entrants ........................................................................................................ 37
Alibaba.com Rivalry..................................................................................................................................... 38
Alibaba.com Supplier power ....................................................................................................................... 39
Alibaba.com Buyer Power ........................................................................................................................... 40
Alibaba.com Threat of substitutes .............................................................................................................. 40
Alibaba.com TOWS Matrix .......................................................................................................................... 41
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Alibaba.com Strengths ................................................................................................................................ 42
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Alibaba.com Weaknesses ........................................................................................................................... 42
Alibaba.com Opportunities .......................................................................................................................... 43
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Alibaba.com Threats ................................................................................................................................... 43
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Alibaba.com SO Strategy ............................................................................................................................. 43
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Alibaba.com WO Strategy ........................................................................................................................... 44
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Alibaba.com ST Strategy ............................................................................................................................. 44
Alibaba.com WT Strategy ..................................................q.......................................................................... 44
Comparitive Analysis ...............................................i.................................................................................... 45
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Group Investment Perspective ................................................................................................................... 46

Group Challenges ........................................................................................................................................ 47
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Works Cited ................................................................................................................................................. 48
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Works Cited: Continued .............................................................................................................................. 49
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Ebay.com Last Three Years Income Statements ......................................................................... Appendix: A
Ebay.com Last Three Years Balance Sheets .................................................................................Appendix: B
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Alibaba.com Last Three Year Income Statements ....................................................................... Appendix: C
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Alibaba.com Last Three Year Balance sheets .............................................................................. Appendix: D
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Once upon a time during the dawn of the internet, a man named Pierre Omidyar decided
EBAY.COM INTRODUCTION
to sell a broken laser pointer online on his website called EBay, named after his consulting
company Echo Bay. The site at that time during the year 1995 was not primarily an auction site,
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the auction part was an afterthought and was named auction web. Auction web grmew quickly
among internet fanatics, and soon Pierre had to hire several employees to take care of the many
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tasks that involved his day to day operation. After two years, the site name was changed to EBay,
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a site that was devoted to online auctions, soon after, the worldwide obsession with EBay and
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consumers. Currently, Pierre is ranked #40 among the 40u0 richest Americans in the country by
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Forbes, released September 30, 2009.
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EBay’s mission statement says,” eLBay's mission is to provide a global trading platform

where practically anyone can trade anything." EBay’s vision, “pioneers communities built on
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commerce, sustained by trust, and inspired by opportunity. EBay brings together millions of
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people every day on a local, national and international basis through an array of websites that
focus on comomerce, payments and communications”. Comparing the mission statement to the
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vision of the company gives off the impression that EBay doesn’t have focused priorities .This
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means the mission statement seems clearly focus on the website, eBay.com, but their vision
statement is focused on the array of subsidiary websites.
During the year of 1998, Pierre hired an experienced CEO named Meg Whitman to
become head of the public exploding company who now had 130 employees and a spot on the
New York Stock Exchange with a symbol as EBAY. Over the course of the next 10 years with
Meg Whitman’s leadership, EBay mania grew into an enormous multinational company who two
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years ago employed over 15,000 employees in 39 countries. In January 2008, John Donahoe took
over Meg Whitman’s place as CEO, and currently EBay has 16,200 employees (an 8% employee
increase in one year) in over 30 countries. EBay is an online provider of marketplaces for the
sale of goods and services. It also provides commerce, platforms, online payments services and
online communications offerings to individuals and businesses. EBay’s foreign entry sterategies
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into other countries have played a key role in their success for worldwide domination in the
online auction market. The products and services that EBay offers. vary from online
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communication services to the sales of goods and services. r
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The products and services that EBay provides is an online marketplace for the sale of
EBAY.COM PRODUCTS AND SERVICES
goods and services. The company’s key products and services include the following:
• Online services for the sale of goods and services
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• Online communication services
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• Online payment and transactional credit services
• Online classifieds .
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• Advertising
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The key brands that the company has and operates areo a number of subsidiary websites
that are under the EBay umbrella. These companieus include:
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• EBay's fixed price media marketplace Half.com
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• EBay’s payment solution Paypal.com: Bought by EBay in Oct. 2002 for
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approximately $1,492,504

• EBay’s low cost connectivity communication platform Skype.com: Bought by
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EBay in October 2005 for $3B
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• EBay’s credit at point of sale payment solution Billmelater.com: Bought by EBay
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in October 2008 for $910M
• oEBay's marketplace to buy and sell tickets for events Stubhub.com: Bought by
hEBay in February 2007 for $292M
T• EBay's online shopping comparison website Shopping.com: Bought by EBay in
August 2005 for $634M
• EBay's apartment listing service platform Rent.com: Bought by EBay in February
2005 for $415M
• EBay’s Swedish online auctioneer Tradera.com: Bought by EBay in 2006 for
$48M
• EBay’s green marketplace Worldofgood.com

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The company generates about 75% of its revenues from the US, Germany and the UK.
EBAY.COM FINANCIAL ANALYSIS
The company recorded revenues of $8,541.3 million during the financial year ended December
2008, an increase of 11.3% over 2007. The operating profit of the company was $2075.7 million
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in financial year ending 2008, an increase from $613.18 million in 2007. Net Profit min financial
year ending was $1,779.5 million as compared to $348.3 million in 2007. The increase in profits
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is attributed to acquisitions and increased revenues from advertising and the payments business.
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The current stock price as of November 5, 2009 is $23.13, can be seen in the chart on the next
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page in the below bottom right table. u
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The increases in EBay’s financials for the past three years have been impressive.
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According to Annualreports.com 2008 Lannual report for EBay, the company has seen

tremendous increases and growth for the online giant. Some examples of the increases over the
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past year for EBay and somae of its platforms include its payment option paypal.com. In 2007
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delivered a total of $1.9 billion in revenue, as of EBay’s 2008 annual report, paypal.com not
hosts nineteen currencies with more than $60 billion dollars in revenue. A tremendous increase
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in EBayh’s payment platform suggests that more people are becoming comfortable sending and
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receiving money over the internet, as well as the number of internet users are growing as well. In
EBay’s communication segment platform of skype.com, in 2007 skype.com hosted more than
276 million users, as of EBay’s 2008 annual report, skype.com now registers more than 405
million users. The increase of more than 47% shows that consumers are very comfortable with
EBay and the platforms that the company provides. As of EBay’s 2008 annual report, there are
more than $100 billion worth of pre-owned items on EBay, making it the world’s largest engine
for reuse.
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EBAY.COM LAST THREE YEAR FINANCIAL GRAPHS
2008 Year Income 2007 Year Income

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$9,000.00 $8,000.00 $7,672.30
$8,541.30 Revenue m
$8,000.00 $7,000.00
$5,909.40
$7,000.00 $6,313.20 (Millions U.S. $6,000.00 Revenue
$6,000.00 Dollars) $5,000.00 (Millions
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$5,000.00 $4,000.00 i U.S. Dollars)
$4,000.00 Gross Profit $3,000.00
$3,000.00 $1,779.50 (Millions of $2,000.00 r$348.30 Gross Profit
$2,000.00 U.S. Dollars) $1,000.00o (Millions of
$1,000.00 $-
U.S. Dollars)
$- Net Income u
Fiscal
Net Income
Fiscal Year (Millions U.S. q Year
(Millions
Ending Dollars) Ending
i U.S. Dollars)
2008 2007
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2006 Year Income
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Stock price as of 12/15/09: $22.50
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$6,000.00 $5,969.70 Revenue
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$5,000.00 $4,713.00 (Millions
$4,000.00 h
U.S. Dollars)
$3,000.00
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$2,000.00 $1,125.60 Gross Profit
$1,000.00 (Millions of
$-
U.S. Dollars)
Fiscal
Net Income
Year
(Millions
Ending
U.S. Dollars)
2006
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EBay.com TOWS MATRIX ANALYSIS
EBay faces high risk of internet fraud due to which it is involved in various litigations.
Below we will go over EBay’s strengths, weaknesses, opportunities, threats, and strategies to get
a better understanding of the strategic choices that EBay faces.
The strengths that the company has can be argued that they were the first to eenter the
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online auction business, as well as having a majority of the marketplace. The external strength
opportunities of EBay can be consisted of a strong market position due .to wide usage. This
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strength can maximize EBay’s opportunities, over the years, the rcompany has built a strong
brand, currently the brand value stood at $12.9 billion and owas ranked 54th in brand value
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rankings. EBay’s internal strengths have focused on a swift increase in the number of users and
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number of product listings. As of 2009, EBay has 88 million active users and about 150 million
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listings worldwide and in any given day, Lhas about 14 million listings. An increased number of

customers contributed to the growth of the company, and it emerged as one of the largest global
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online auction website with presence in 39 countries. EBay’s strong customer base and market
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position provides competitive advantage and gives EBay considerable bargaining power which
will have a poositive impact on the top line of the company. EBay’s strength threats strategies can
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be consisted of reinforcement of marketing, management, and systems as a concentrated effort.
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EBay’s weaknesses can be favorably argued that the company has an insufficient
screening process to control counterfeit products. EBay does not have an effective screening
process in place to control sale of counterfeit products on its market places. While some sellers
commit fraud intentionally, some of them are unaware of any infringement. For instance, some
sellers might not be aware that certain products are not allowed for resale. The company does not
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have effective tools to monitor and weed out such instances. In most cases, the company is able
to identify counterfeit products only after the items have been listed.
The weakness threat strategies can be categorized as having an exposure to large
contingent liabilities due to litigations. EBay has consistently been involved in various lengthy
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litigations, stretched over a period of two to three years because of which it is exposed to large
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contingent liabilities. Many complaints were filed against EBay for offering counterfeit items.
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This being the main area of contention, there were lawsuits filed by comipanies like Net2Phone,
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Netcraft Corporation, and PartsRiver which claim that EBay, Skype and PayPal have infringed
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their patent rights. In 2007, a lawsuit was filed alleging that EBay and PayPal, through various
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anti competitive acts, were monopolizing markets. Most of these lawsuits filed in 2006 and 2007
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are still pending. Lengthy litigations are expenisive, and they expose the company to uncertainty
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and large contingent liabilities. The damages awarded were as large as $56.8 million in a lawsuit

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which claimed that EBay failed to curb sale of counterfeit products. Other than having to pay
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damages, EBay might be prohibited from selling certain items or continuing certain business
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practices. This affects the operations adversely. Litigations are expensive, time consuming and
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they result in diversion of significant operational resources. EBay has to actively take measures
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to ensure it is not involved in any further litigation as they are counterproductive.
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The company’s weakness opportunities strategies can consist of diversifying into new
product markets, as they have been over the years. The company can also try to implement an
online verification of goods being auctioned to avoid very expensive lawsuits and time
consuming litigations that hurt the company. The weakness threats of the company can consist of
the alliance with postal carriers implemented on the company’s website for sellers to choose
from when shipping their items.
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