Stubhub - an online Ticket Trading Website

BY

SUMI

ABOUT STUBHUB

Stubhub is an online ticket trading website which allows people to buy and sell their tickets online. The tickets range from major sporting events like NBA, NFL, WWE etc. to music concerts and live events. The company, presently acquired by e-bay started small but because of its excellent business model, became the major competitor of e-bay and largest ticket trading website. The Stubhub was founded by Eric Baker and Jeff Fluhr, two 1st year M.B.A students at Stanford Graduate School of Business. Their idea was to create a bridge between a buyer and seller so that trading of tickets could be done in an efficient way. The company was successful in creating a good environment and minimizing the harassment caused to fans by ticket scalpers. As company progressed, it diversified horizontally. Presently, Stubhub has contract with some major sports teams and sells their tickets online. The company has strength of 200 employees, a prime office location in San Francisco, seven satellite offices and two call centers. From 2004 to 2005, Stubhub tripled its volume to $200mn worth of tickets sold, generating $50mn in commission.

BUSINESS MODEL

The USP of Stubhub’s business model is its simplicity. As compared to its competitors, the Stubhub does not charge its sellers for listing the tickets. It lets its sellers decide their selling price and even to modify it. The listing of tickets closes 4-5 days before event so that seller gets ample time to ship the tickets and buyer gets them on time. Also, the processing of payments is simple as sellers can either choose to receive check or can receive their money by pay-pal. Stubhub charges a commission of 15% from seller and 10% from buyer. In this way it distributes the load of commission between buyer and seller and makes a decent profit. The disclosure of commission at the time of listing enables seller to decide his/her own price. If the ticket is not sold, there is no charge to seller, however he/she can modify the price any time. Stubhub operates with Fed-Ex and all the orders are delivered by 2 day express delivery in order to ensure safe and sound delivery of tickets. Also, the buyers can track the orders. Buyers have a wide range of tickets to choose from and since all the prices are displayed together, the chance of overpricing by an individual is eliminated. Stubhub also has a Fan Protect guarantee for both buyers and sellers. To buyers, this guarantee ensures the timely delivery of tickets, authentication to enter the event, comparable or better tickets or money back and money back if event is rescheduled or cancelled. To sellers, this guarantee ensures no contact by buyer, modification of prices and timely receipt of payment. The benefits of the fan protection guarantee play an important role in creating value and are the benefit that creates most value is about the money back guarantee to buyers.

STUBHUB AT BEGINNING

When Stubhub entered the market, big companies like Ticketmaster, E-bay and Amazon were already present. But Stubhub was able to serve as a bridge between the buyer and seller. Its unique guarantee which protected the interest of both buyers and sellers had an edge over other companies. Ticketmaster was and is charging and excess money in the form of convenience fee and that is criticized by the customers. E-bay is a wide database of online shopping, therefore it lacks a specialization in selling tickets. When company entered the market, ticket scalpers were at boon. They charged unreasonable prices and promoted hoarding. The company reduced its risk by keeping the policy of no ticket inventory. The sellers and buyers can select the event and venue for the search of tickets. The major difference that created difference between Stubhub and E-bay was of listing fee. Sellers felt insecure on listing on E-Bay because if there tickets are not sold, they still have to bear the listing fee. At Stubhub, this was not the case. Also, the design of website is user friendly. For every event, the options to buy or sell are listed parallel. By doing this, Stubhub supersedes Amazon and E-bay where buying and selling account options are different. At E-bay sellers are known by their ratings which develop with time. This makes buyers skeptical about new sellers and the sellers with poor ratings. Stubhub eliminated this and took guarantee of all the transactions.

STUBHUB’S VALUE PROPOSITION

Value Proposition consists of the whole cluster of benefits the company promises to deliver. It is more than the core positioning of the offering. Stubhub’s core positioning is tickets to various events, but the company promises to