eBay VRIO/VRIN Analysis

VRIO is an analytical technique used for assessing and evaluating the resources and capabilities of the company and competitive advantage. It is the acronym of initials of evaluation dimensions. VRIO stands for Value, Rareness, Imitability and Organization. Here is the detailed VRIO analysis of eBay.

Value

This is the first component of the model which believe in resources should be valuable. The valuable resources bring the efficiency and effectiveness in business operations. It helps the company in implementing strategies which strengthen the market position and mitigate the threats. eBay is an-ecommerce business which connects buyers and sellers across the world. Its business model is highly valuable in the industry. To maintain the e-commerce website and connects different part of the world requires advance technology, which eBay manages very well. Its agreement with PayPal is highly valuable as it provides great benefit of security to consumers (Le, 2014).

Rarity

This is the second component of the model that focuses on rarity of the resources. The resources and capabilities of the company should be rare, which means only few or one company should possess them. Or else, every firm will use it in the same way, and the exclusivity will be finished. The technical proficiency that eBay has is rare, as it provides the services without any glitch. The company believes in securing the customers and sellers both in case of any mishap with the parcel. The customer service of eBay is highly valuable and rare as it completely takes the responsibility and cater its customers wisely. It deals in all kind of products, high price to low price, which requires lots of user trust (Arias, 2014).

Imitability

It is important for the companies to have unique resources which should be costly to imitate or hard to find the substitute for. The companies can make itself odd one out in the industry by possessing such resources. The uniqueness of the capabilities and resources will help the firm in attracting more consumers. e-Bay is operating across the globe, which is costly to imitate business model, as many risks are involved along with efficient strategies. This requires lots of investment and efforts and partnership agreements to avoid any mistakes. The brand awareness it created in short span of time is also very difficult to imitate, but few companies can copy the strategies (Perry, 2018).

Organization

This is the last component of the model, which deals with organizing the resources and capabilities. The resources will be mess if not treated properly in an organized manner and will not be advantageous for the company in long run. eBay is highly organized e-commerce business with strong rand recognition across the world. The company has skilled and trained staff wo helps it running the business and e-commerce operations very efficiently. The resources of the corporation is well manged (Arias, 2014).

Conclusion

eBay has achieved sustained competitive advantage in the e-commerce industry and has achieved huge customer base who trusts the company’s operations. It takes good care of resources and capabilities and continuously strive hard to bring more innovation and improve services.

References

Arias, M. 2014. eBay case analysis. [Online], Available at: https://prezi.com/9edvvizfviev/ebay-case-analysis/, [Accessed on: 18th May, 2020].
eBay, 2020. About us- company information. [Online], Available at: https://www.ebayinc.com/company/, [Accessed on: 18th May, 2020].
Le, T. 2014. eBay presentation for strategic management. [Online], Available at: https://www.slideshare.net/LeTheHien/ebay-presentation-for-strategic-management-class, [Accessed on: 18th May, 2020].
Perry, A. 2018. VRIO analysis of eBay. [Online], Available at: https://www.case48.com/vrio-case/19880-eBay-Partner-Network-A, [Accessed on: 18th May, 2020].

Introduction

EBay started off in 1995 as a platform for ecommerce by French programmer Pierre Omidyar. Since then this business has witnessed tremendous growth with more than 89.5 million active users. It started off as an auction site and the first item sold was a broken laser pointer. Today approximately 35000 Australians earn their income by selling goods on eBay.  Omidyar wanted to name it EchoBay but finding out that this name has been already taken he settled for a short version of the name eBay. Most popular selling items include: cell phone (sold every 6secs), shoes (sold every 8secs), and video game system (sold every 17secs). It makes money through variety of fees that it charges to sellers and thus maintains its financial viability. In 2014 alone more than $80 billion sales were carried out through this website which is greater than the GDP of Cuba.

Political Factors

The most politicized issue that eBay faces is what it does with the tremendous amount of information that it has in its system as a result of millions of transactions going on every day. eBay doesn’t use its customer’s information for its own use nor it lets other use the information, there is privacy policy document uploaded on the website on which all the details have been laid down about which information will be shared by other people and which won’t be. Discussions have been going on with the government regarding framing the privacy policies on internet. eBay discontinued the sale of firearms through its website because it believed that although there is a significant market of collectors that exist and it would be good for business but it is hard to distinguish between them and terrorists who might have harmful agenda. (eBay’s Whitman Addresses Political Issues Affecting E-Commerce)

Economic Factors

eBay includes offering from local, national and international sellers which allow customers to choose from a multitude of products within a same category. Research conducted has also proven that international buyers usually save around 17% through making a purchase via eBay instead of buying from store. It has also reduced the costs for marketing for sellers and searching costs for buyers by accumulating them on a single platform. It also helps in making purchases from people all over the world and see and buy what other countries have to offer. It is contributing towards formation and development of markets that would cease to exist in the absence of platforms like eBay like buying and selling of second hand products, collectibles and limited edition stuff. In UK, France and Germany approx 277000 people carry out their businesses through eBay according to research conducted through AC Nielson. (Economic study of the consumer benifts of eBay, 2008)

Social Factors

There are people who follow latest trend and fashion as soon as it walks on the ramp, for them it is important to sync with the latest and as a result of which they shop a lot and their previous goods soon become useless. Even they feel guilty for discarding goods that are as good as new therefore instead of just throwing them away they could now sell those goods through eBay to people who are laggards when it comes to adopting fashion trends. There are sites which offer mate shopping as well, allowing people to discard old partners and start afresh with new ones. eBay does not have that category developed as yet as it does not to become a dating site but with the increasing number of people facing mid life crisis there is room for modifications in business model or extension. With the online experience in hand eBay could handle any online platform.

Technological Factors

eBay evolved as a result of technological driven environment where internet had made it convenient for people to get hold of their favorite objects within few days and be able to compare the prices internationally in order to make informed purchase. As technology has aided platforms like eBay to establish their business models on e commerce it has also allowed scams to successfully fool people around without leaving footprint. As new software and interfaces are being developed which makes navigation easy eBay has to move along at the same speed so that it can provide its consumers with the latest experience. Electronic gadgets like smart phones, tablets and ipads have made it necessary for the company to develop and mould their website in a way that it is user friendly from all devices.

Environmental Factors

eBay has done what no environmentalist could have achieved, it has enabled people to buy green products; products that already exist. More consumption leads to more carbon dioxide emission and thus a more polluted environment, but through eBay preloved things have found their way in people’s lives. People are spending less and getting more.

Law/Legal Factors

Right after the aircraft crash in Columbia some people who got hold of the debris tried selling the stuff on eBay but the company immediately deleted those listings from its website in order to comply with a United States law which imposes heavy penalty on any such sale. In this case say it was easy to identify and locate the sellers and hence FBI was informed duly about the involved parties but in other cases where fake ids and addresses are given and people cannot be tracked down, the real question arises in case of intractable sources and leads. Some hackers generated fake emails with eBay ids asking for information about customers which eBay does not ask due o privacy issues. Customers could not differentiate between those fake emails and authentic ones generated by eBay. This again raises the question of how much freedom to conduct business should be given to these online sites. Then there is threat of stolen goods being sold at eBay and similar auction sites. There are fake sellers who simply take hold of people’s cash and fly away, never delivering the items. All these legal issues put a question mark on business model of such websites.

Bibliography

eBay’s Whitman Addresses Political Issues Affecting E-Commerce. (n.d.). Tech Law Journal .

(2008). Economic study of the consumer benifts of eBay. London: Frontier Economics Limited.