Case Study on "Ebay Versus Google and Microsoft the Competitive Battle for E-Commerce Supremacy"

Case Study 6 pages (1864 words) Sources: 1+

[EXCERPT] . . . .

agree with Google and Microsoft that eBay is now vulnerable to their assaults via Google Base and Windows Live Expo? Why or why not?

eBay is very vulnerable to its two strongest competitors Google and Microsoft in both its core and ancillary businesses. Google practically invented and is in the process of perfecting the online advertising business model and Microsoft has continually invested a large percentage of their Research & Development (R&D) funds to keep pace just in the advertising industry. As a result of Google and Microsoft competing with each other in the very lucrative online advertising market globally, the innovations both produce in online auctions, e-commerce, storefronts, and payment gateway integration will set a pace eBay will find difficult to keep up with.

Online auctions are highly dependent on real-time data analysis and rapid search (Bapna, Jank, Shmueli, 2008). These are two areas Google and Microsoft will continue to compete with each other on as each have technologies and patents under development in these areas today. eBay will have to eventually rely on the Application Programmer Interfaces (APIs) from Google and Microsoft to gain the real-time data analysis and rapid search necessary to stay at competitive parity.

A second issue which is just as critical is that of website quality and the trust of each of the competitors analyzed here. Google and Microsoft both have defined usability standards including security features that make their e-commerce, store front, and payment gateways more trustworthy given the depth of software development, patents, and innovations they have produced over the last decade of their intensive efforts in this area (Gregg, Walczak, 2010). eBay then will find that they will eventually have to choose to support either Google or Microsoft as a platform, or both, if they want to have the level of real-time data search and analysis to be viable in their auction markets for the long-term.

When the real-time search and related technologies that Microsoft and Google are creating are also applied to pricing dynamics, specifically pricing execution and optimization, the auction technologies that eBay have will also have difficulty staying current (Wang, Jank, Shmueli, Smith, 2008). With online advertising being the primary competitive objective of Google and Microsoft, pricing optimization is critical to that business model. The technologies developed specifically for online advertising can easily be transferred to auctions. This will eventually put eBay into a competitively difficult position.

The technological innovations created for online advertising are also directly transferrable to Google Base and Windows Live Expo. This is what makes the rush of both Google and Microsoft into online advertising so competitively challenging for eBay. The strengths of both Google Base and Windows Live Expo will increase exponentially over time. eBay today holds a competitive advantage due to their expertise in seller reputation management systems (Cabral, Hortacsu, 2010). Yet this over time will also be difficult to sustain as there are credibility issues with their current system (Dini, Spagnolo, 2009) and as a result buyer trust has at times been impacted. The future of online auctions will be much more integrated and focused on the entire online experience, where trust will be crucial. As a result of all these factors, Google Base and Windows Live Expo are a formidable challenge for eBay in both the short- and long-term.

What are the major advantages and limitations of Google Base and Windows Live Expo? Which do you prefer, or would you use both? Why? Go to their Internet web sites and read reviews at other sites to help you

Both Google Base and Windows Live Expo have comparable features and functionality, yet of the two, Google Base is the easier to create a store on, navigate and use. Google Base also has created geo-location-based search that capitalizes on the core technologies of the Google search engine, and also has the flexibility of listing products in brick-and-mortar stores or retail storefronts by their location geographically. For a retailer this is a significant advantage in terms of promoting their goods online. Google Base also supports online and offline content including digital goods including e-books and music, and also makes all content searchable by Google. What is also very useful about Google Base is the support for defining the attributes of each item so they can be searched using Froogle in addition to the Google Maps. Because of all these features the use of Google Base is much more comprehensive in scope.

Windows Live Expo on the other hand has limited functionality and while it strongest to have geo-tagging of products the functionality of this site has drastically been reduced in recent years.

What is most indicative of comparing Google Base and Windows Live Expo is the potential each of these competitors to eBay has for creating an entire e-commerce, auction and online advertising platform (Lin, Daim, 2009). From the online shopping experiences including geo-location based information about specific products or services of interest to the development of expert and referent systems, Google and Microsoft both have the potential to scale their online marketplaces to support far more of the functionality of eBay today. The build-out of a complete e-commerce platform that includes pricing analysis and evaluation would serve as a catalyst for many online resellers to create in effect smaller "mini-eBays" that would in term propagate the Google or Microsoft standards throughout the global online community (Hof, Lacy, 2005). This platform-based build-out would also lead to entirely different dynamics of buyer and seller relationships and would force much greater levels of trust and transparency through transaction verification as well. Google and Microsoft have these technologies for transaction verification form their efforts on e-commerce with a series of server-based applications built over the last ten to fifteen years (Hof, Lacy, 2005).

Despite all of these competitive threats eBay however continues to take the perspective it is an application first, not a platform, and this can be seen in how they continue to pursue partnerships with Craigslist for example (Galante, 2009). Instead of concentrating on building on eBay as an entire e-commerce platform the focus continues to be on the tactical aspects of geo-location-based e-commerce first. As Google and Microsoft take a much more platform-centric approach to defining entire e-commerce systems including auctions that can dynamically define prices based on personalization eBay faces the daunting challenge of making their many efforts at the application level integrate well enough to compete on a much broader competitive spectrum (Hammond, 2010). The fact that social networks including Twitter today have geo-location of Tweets and support from third parties for payment shows eBay is falling behind quickly.

Are eBay's development of KijiJi acquisition of Skype, alliance with Yahoo, and other acquisitions as noted in this case enough to ward off the competitive assaults of Google and Microsoft? Define your position eBay will still fall short of their competitive position they need to attain in order to hold off the inevitable onslaught of Google and Microsoft. The points have been made earlier with regard to these two dominant competitors' mindsets about platforms (Lin, Daim, 2009) yet both also have a much more efficient approach to valuing the inputs from their customers, in fact capturing the voice of the buyer much more effectively given their platform-based mindset (Vitzthum, Konsynski, 2009). As a result eBay will continue to struggle from a competitive standpoint even with its integration of Kijili (Bruell, 2010) and the purchase of Skype then its resale (Castelluccio, 2009). The failure of the Skype acquisition is directly tied to the company's lack of ability to plan, execute and sustain itself as a platform instead of as a series of applications. The eBay 25% investment in eBay and occasional mention of wanting to purchase the popular website (Ricadela, 2008) continually underscores this application vs. platform-based approach.

eBay will continue to also be challenged eventually in their core markets including auctions, e-commerce platforms and e-payment systems as a direct result of this mindset of looking first to applications instead of platforms. It is only a matter of time until Google and Microsoft surpass eBay in their auction technology for example. Both Google and Microsoft have the ability to complete extensive, Internet-wide pricing analysis in real-time and actually define the demand curves for products, determining optimal price. eBay does not have this ability and is years from this depth of pricing analysis on their platform. This fundamental strategic weakness of eBay emanates from their focus on being a product and services exchange instead of a deeply defined e-commerce and trading platform. There is a major difference between defining a business as an exchange vs. A platform (Lin, Daim, 2009). eBay will need to make this transition very quickly in order to stay competitive with their two dominant and well-funded rivals.

Finally eBay is struggling on the most pivotal issue there is for any e-commerce and auction site, and that is trust. Despite the continued investments in fraud safeguards and the continual pursuit of better referent and expert recommendation systems, the company… READ MORE

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