Ebay Case Study

1. Numerous business models are utilized by EBay. The brokerage model is the key business model used by EBay. Through the brokerage model, EBay acts as an auction broker where they conduct auctions for sellers and charge the seller a listing fee and commission scaled with the value of the transaction. The advertising model is also used through links to EBay stores, which are outlet versions of popular businesses like the Fujitsu Scanner Outlet or the Motorola Outlet discussed in the EBay case. Next, the merchant model is used through virtual merchant stores which make sales only online. The Motorola Outlet uses the manufacturer model to sell extra products directly to consumers online. Normally, Motorola would have to rely upon distributors or discount outlets to sell excess inventory, but their EBay store allows them to sell these products themselves and increase their profits.

2. EBay offers a number of benefits to manufacturers wishing to sell their products directly to consumers. First, EBay allows manufacturers to sell their inventory surplus either by auction-style bidding or by setting a price for the products. Selling products on EBay is cheaper and more profitable than using discount outlets, which used to be the only way to get rid of extra products. Another advantage of an EBay “outlet store” is that the manufacturer can choose the payment method. EBay stores also require little involvement for the manufacturers, so that is added value for the companies.

One disadvantage of an “online store”