Blue Ocean Strategy Strategic Sequence - EBay

Blue Ocean Strategy
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Chris Wiggins
Student (University), United States

Blue Ocean Strategy Strategic Sequence - EBay

eBay operates in a Blue Ocean today due to their ability to capitalize on their first mover advantage and immense popularity. The BOS sequencing for eBay is:
- Buyer utility: eBay innovated a convenient way for sellers to list, and buyers to bid on and purchase, items online. The utility is clear for both buyers and sellers: buyers get the chance to purchase items at extremely attractive prices due to the buyer-driven market, and sellers are offered the exposure of a global marketplace in which to sell their items—all done with the excitement of an auction-style sale.
- Pricing: since eBay was only a sales broker of sorts, pricing was free for buyers and only a percentage of total sale price for sellers—and in its most basic format, sellers were only charged if the item sold. The online auction model was untested, and would be fairly easy to imitate by a competitor, so strategic pricing was set very low since volume was the key as they would be dependent upon network externalities to be successful.
- Cost: since all transactions occurred online, and all with third-party goods offered for sale, overhead was low. eBay was able to apply price-minus costing to arrive at a profitable yet hard to match price cost structure.
- Adoption: eBay's clearest adoption hurdle was consumer trust. Today there are numerous tools which were introduced at various points in the history of the business that help create trust in eBay's market, such as detailed seller feedback and dispute resolution processes. However, at the time of company founding, the online auction concept was so new that eBay had to take a leap of faith for the sake of their own market. eBay addresses this on their values page of their website where they state, "Pierre Omidyar founded eBay on a simple idea: people are basically good." eBay started small, and as trust was built quickly gained momentum--aided no doubt by their low pricing structure and overall value innovation.

  Caroline Pittman
Student (University), United States
 

BOS eBay Strategic Sequence - Adoption

eBay also eliminated risk by partnering with PayPal to handle their transactions. This was necessary as purchasing on th...

  E. von Ammon
Business Consultant, Switzerland
 

Local Markets not Served Well

But eBay does not serve local and regional markets well. A Swiss competitor named Ricardo is the trusted platform to peo...

  Eva Niklaus
Business Consultant
 

BOS EBay and Local Markets

@E. von Ammon: it´s exactly what I try to tell to my Swedish colleagues. As a Swiss do I experience differences between ...

  Chris Wiggins
Student (University), United States
 

EBay BOS and PayPal Acquisition

Caroline: I agree, enabling PayPal was an extremely beneficial move on eBay's part. This allowed all their users to p...

  david walters
Professor, Australia
 

Blue Oceans versus Golden Ponds

Surely the eBay has been an example of looking for a compromise between competitive advantage and acceptable levels or r...

  Chris Wiggins
Student (University), United States
 

EBay and Regional Markets

@E. von Ammon: thank you for your feedback. I agree, eBay does not do much to foster regional trade. It is one of the "e...

  E. von Ammon
Business Consultant, Switzerland
 

Trade Barriers and Behaviour

@Chris Wiggins: you are right - more visibility is fine. But eBay still depicts a world of customs and trade barriers wh...

  Eva Niklaus
Business Consultant
 

EBay and the Reality

@E. von Ammon: I agree with you! I am living in Sweden for some years but I'm originally Swiss. All you tell is exactly ...

 

More on Blue Ocean Strategy:
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Forum
Why is it Called 'Blue' Ocean Strategy?
BOS is More of the Same
Execution Hurdles in Blue Ocean Strategy
The Four Actions Framework for Blue Ocean Strategy
Porter Model vs Blue Ocean Strategy
Filtering Blue Ocean Ideas: Strategic Overlays
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