EBay Case Study
Organizing for sustainable growth
Ebay, the world’s’s online marketplace, was established in 1995 in order to facilitate communications and transactions between sellers and shoppers buyers in auction format. In 1998 the company went public. Today, the company has localized websites in 39 countries, including the U.S., with approximately 84 million active users. [i]
Ebay’s Percentage Growth Rate
EBay experienced the most rapid growth of revenues during the first four years after its inception and reached the highest growth rate in 1998 with 375% [For details see Appendix I]. The same situation can be observed in case of GMS (Growth Merchandise Sales) and number of registered users, showing the increase by approximately 200% in 1999. In the first years after going its IPO public the company’s performances turn out to be the most exciting. Since then, eBay’s growth profile has been continuously declining. For example, in the year 2000 all three growth indicators dropped by more than 60%. The growth rates improved in 2003 due to the acquisition of PayPal (2002), which made eBay more attractive due to the improvement of the payment process. During the last five years, the company experiences slow-down of its GMS and revenues growth rates. Since 2006 eBay has been outgrown by the marketthe market has outgrown eBay. However, after 2006 due to launching eBay Excess, and thus shifting its facilities to fixed-price e-commerce, the company succeeded in acquiring new users. Unfortunately, this increase in users hasn’t had an impact on sales yet. According to the Harvard Bbusiness Review, customers prefer the fixed-price selling to the auction format.
Ebay’s Growth Path
EBay has frequently entered new markets and new segments through acquisition, but once established in a market or segment, they have largely grown...