Case Study of eBay’s e-Commerce Process Model
Instructions:-
Starting out as a side hobby by its founder, eBay.com boasted as the world’s largest e-business in 2009. From its original C2C (Customer to Customer) business model, eBay.com expanded its business model to include a more standard retail B2C (Business to Customer) business model.
In its original C2C model, eBay.com assists direct trades between customers – people can sell their (2nd hand) goods to other people directly via eBay.com, where eBay will take a fee as a middleman that facilities business transactions [2]. eBay later on expanded its business model to B2C (Business to Customer). This is pretty much a standard on-line retail business model – where it assists businesses to sell products to customers via its on-line trading web site [3].
Part I: (10 marks) 2-3 pages
Working as a consultant, you have been asked to create an IDEF3 process model for eBay.com’s hybrid retail and auction business model [2]. This process model will allow eBay.com to understand the process flow on how a customer may use their web site to view and/or purchase goods.
You should firstly describe the business model or the part of the eBay operations that you plan to model in English. This description will be used to check against the correctness of the produced process model. This description will be used to check against the correctness of the produced process model. The correctness of your English based description of the business model of eBay is secondary; as long as the core business is reasonably assumed and consistently described (for instance you could not describe eBay as if it operates in a completely different sector).
The aim of this coursework is to understand whether you could produce a correct IDEF3 process model, given a suitable description. A small part of this coursework is to measure whether you could carry out independent research, i.e. to find out information about eBay.com independently.
Note you do not need to create processes to assist sellers using eBay.com’s web site.
Part II: (20 marks) 4-5 pages
Working as a consultant, you have been asked to create an IDEF3 process model for eBay.com’s hybrid retail and auction business model [2].
To provide a holistic view of its operations, you have been asked to assess whether its current processes adhere to its business rules and missions. You are therefore asked to use the three-layered business process modelling framework: i.e. the business, logical and application layers, to represent its operations and operational context.
Following the same style as provided in the case study in slides set 2, create your own case study for eBay.com based on its hybrid retail and auction business model [2]. You should provide suitable details for each of the three modelling layers; clearly provide your assumptions, especially in the business layer.
This description will be used to check against the correctness of the produced process model. The correctness of your English based description of the business model of eBay is secondary; as long as the core business is reasonably assumed and consistently described (for instance you could not describe eBay as if it operates in a completely different sector).
The aim of this coursework is to understand whether you could produce a correct IDEF3 process model, given a suitable description. A small part of this coursework is to measure whether you could carry out independent research, i.e. to find out information about eBay.com independently. Your process model will allow eBay.com to understand the process flow on how a customer may use their web site to view and/or purchase goods. Note you do not need to create processes to assist sellers using eBay.com’s web site.
Solution
Case Study of eBay’s e-Commerce Process Model
As one of the leading e-Commerce globally, eBay.com offers an effective platform for its customers (buyers and sellers). The Company brings sellers and buyers together through the online auction platform. Through a shared vision of the eBay conglomerate, it creates a virtual marketplace where buyers and sellers interact with the former placing items for sale and buyers bidding on the items. According to eBay (2017), the Company’s mission is mainly to connect people through its virtual market allowing profitable interaction. Tapping into e-Commerce, eBay receives a percentage of the sales made per person as its profit, normally between one and five percent of the opening bid. The profits increase with increasing average sales price for products auctioned through the site. Effectiveness of the company is improved by the integration of an effective process model. This report offers an extensive discussion of eBay’s operations, the adherence of the processes to the Company’s rules and objectives, and further integrates an IDEF3 process model for its hybrid retail and auction business model.
eBay’s Operations and Adherence to its Mission and Rules
eBay operates under a clear mission of connecting the global community as a community of buyers and sellers. It offers a platform that allows sellers to auction their products and buyers to place their bids. The Company focuses on augmenting its revenue from the profits of its different affiliates. Currently, the eBay marketplace offers every seller 50 free entries but charges the final value fee. All other transactions by the seller attract a percentage in accordance with the agreement. Most importantly, in all its operations, the eBay marketplace promotes the Company’s mission of creating an open and trusting environment that brings online sellers and buyers from across the world together (Sen, 2014). This makes it possible for the operations to work towards developing e-loyalty and fruitful and profitable cooperation between the eBay’s customers. As a company, it does not sell but offers people the opportunity to do so. Therefore, the operations are within and adhere to the mission and rules of the Company.
The Company offers excellent customer support and solutions for enhanced and profitable interactions. The prioritization of the customer places the Company at the top of the list of the most convenient, customer-oriented, and supportive online selling and buying platforms. The objective is to ensure the growth of the sellers’ businesses and ensures that the buyers receive excellent services through an honest and trusting business environment. According to Omidyar (2011), eBay.com offers quality service and support to its customers; the sellers and buyers. Most importantly, the eBay operations offer customer protection through its business policy ad rules. The rules offer sellers and buyers the guidelines for interaction for thus limiting scam sellers and unfair practices. The operations adhere to the rules and regulations by ensuring that sellers understand the items they can sell while the buyers follow specific guidelines in placing bids and paying for the products.
According to Aguilar-Savén (2014), an effective business model considers eight critical components. These components include value proposition, opportunities, competitiveness, effective leadership and management, organizational development, the business environment, revenue model, and an efficient market strategy. EBay’s business model considers these factors for effectiveness in operation as an online business. The Company offers buyers community features, the platform for comparison of products before placing bids, the convenience of only shopping, and extensive markets with a broad range of products to choose from. On the other hand, it offers the sellers a vast audience, an efficient platform for doing business where the site allows for bidding without requiring the involvement of the seller and guarantees payment. These aspects of value proposition give the Company a competitive edge. Amazon, Best Buy, and Yahoo Auction among other online companies operating almost similar interfaces pose a significant competitive challenge. Additionally, eBay leadership and management is efficient and focuses on the achievement of the set organizational objectives to ascertain organizational development (eBay, 2017). The processes must adhere to the mission and rules and integrate strategies such as acquisition and activity to ensure that it records increased customer registration and sales.
The Process Model
The Company’s customers include the sellers and buyers. However, the following model places emphasis on outlining the process flow on how the buyer accesses and uses eBay’s services. The initial steps of account sign up is critical for determining the identity of the buyer. eBay requires every buyer and seller to create an account for navigation of the website and sale or purchase products of interest. The buyer creates an account using valid personal information and contact details (eBay.com, 2017). The process allows the Company to minimize cases of fraudulent buyers or scammers. As a result, through the process it prevents under-age persons and scammers from purchasing anything from the platform.
The next steps of the purchase involve mainly the navigation of the site for search and research to identify the required item and place a bid or bids. The buyer goes through the listings of different sellers to determine the products that meet the specifications of interest and whose placed bid is within the anticipated bid. The search and research option offered by the website allows the effective search of the items of interest. The buyer places a bid and if another client(s) places a higher bid the customer is at liberty to place a higher bid (eBay, 2017). The Company discourages unfair practices where close friends and family members may place higher bids without the intention of buying to initiate an increase in the bidding. It is encourage that only buyer who intend to buy place bids, otherwise people who promote unfairness are likely to face harsh consequences according to the rules and regulations. However, it is not mandatory that a customer who registers membership account with the Company buys.
Losing a bid means that the buyer must consider other products, which leads him/her to the search and research stage. The identification of a similar or different product of interest means that the customer places a bid on the product. However, if the buyer wins the bid, then s/he advances to the purchasing stage. The customer must understand all the rules and regulations that guide the processes of bidding and purchasing. Once one wins the bid then they are obligated to make payment through the authorized methods of payment. This process assumes that the company authorizes payments only through four platforms (Thaker & Casadesus-Masanell, 2012). These assumed modes of payment include PayPal, PayPal Credit, Debit/Credit cards, and payment on delivery of the product. However, it should be noted that there are other methods of payments though restricted by eBay.
After
all the processes are over, payment is done and the items purchased delivered. The
Company has a platform where the buyer rates the services offered by the
seller. The review of the services may be negative or positive depending on the
customer’s satisfaction or lack thereof. The platform allows future or
returning buyers to consider the rating of the available sellers to determine the
efficiency of their services.
References
Aguilar-Savén, R. S., 2014. Business process modelling: Review and framework. International Journal of Production Economics, 90(2), p. 129–149.
eBay.com, 2017. Rules for everyone. [Online]
Available at: http://pages.ebay.com/help/policies/everyone-ov.html
[Accessed 31 March 2017].
eBay, 2017. Our Leaders. [Online]
Available at: https://www.ebayinc.com/our-company/our-leaders/
[Accessed 30 March 2017].
eBay, 2017. Rules for buyers – overview. [Online]
Available at: http://pages.ebay.com/help/policies/buyer-rules-overview.html
[Accessed 30 March 2017].
eBay, 2017. Who We Are. [Online]
Available at: https://www.ebayinc.com/our-company/who-we-are/
[Accessed 3 30 2017].
Omidyar, P., 2011. EBay’s Founder on Innovating the Business Model of Social Change. Harvard Business Review, 89(9), pp. 41-44.
Sen, S., 2014. Window to the World. Business Today, 23(24), pp. 94-96.
Thaker, A. & Casadesus-Masanell, R., 2012. eBay, Inc. and Amazon.com (A).. Harvard Business School Cases, Volume 1, p. 1.
