Overall, Amazon and eBay operate in a wide range of markets and dominate the online retail market in the UK. Meanwhile, there are many other e-commerce platforms that operate in niche markets, contribute to the intense competition in the UK online retailing market.

For eBay, the threats of substitutes come from both trading websites and brick-and-mortar stores. As stated above, a number of e-commerce platforms such As Amazon, Argos and Tesco are substitutes to eBay. Besides, the large population of brick-and-mortar marketplaces is considered a strong contributor to the intensity of the threat in eBay’s industry environment.

The threat of new entrants for eBay is moderate. On the one hand, the entry and switching costs of online retailing are low. That is, companies of various sizes can easily set up e-commerce platforms to compete with eBay. For customers, low switching costs mean minimal consequences in shifting from eBay to new entrants.

But on the other hand, new entrants need large funds to promote their brands, in contrast to eBay, which has developed a strong brand. In the next place，the market size that eBay has developed over the years contribute to the high economies of scale. The company's trading site, classifieds, and other e-commerce operations are large enough to build effectiveness and efficiencies that many new entrants struggle to match. Based on these analyses, the threat from new entrants to eBay is regarded as moderate.

Customers of eBay have strong bargaining power. First, eBay’s low switching costs mean that customers can switch platforms easily. Second, consumers can easily access high-quality information online, allowing them to compare rates across channels and switch platforms. Third, eBay buyers are extremely price-sensitive, in this situation, customers will migrate to Amazon or other sites if eBay increases the service price. The above three factors combine to give eBay customers significant negotiating power.

 

Suppliers of eBay have low bargaining power. The key explanation for this is the large number of manufacturers that provide homogeneous products. Meanwhile, suppliers, unlike consumers, pay eBay for platform support, which can result in a high switching expense. These two factors contribute to the low bargaining power of suppliers.
https://disfold.com/top-e-commerce-sites-uk/

 

 Human:
   1.  eBay's continued future
performance is strongly predicated upon the ability of it's senior management.
In this category eBay is looking at some significant risks in the future since
they do not have "key person" life insurance policies. They also have
some vacancies in the senior management team. Compounding on these other issues
is the fact that eBay has experienced some difficulty in answering the
principal-agent problem due to a fluctuating stock price.

 

 

 

Affected by the epidemic, most industries around the world have experienced an economic recession. From 2010 to 2019, the UK had slight increases in annual growth of GDP, moving between 1.3% to 2.9%. However, due to the impact of COVID-19, the growth of GDP was -9.9% in 2020. Similarly, due to the impact of the coronavirus (Covid-19) pandemic, the growth of consumer spending in the UK slowed down considerably in March 2020. In the month before the spread of the coronavirus became more widespread, consumer spending increased by 2.2% year-on-year, but it fell by 7.1% year-on-year in December 2020. And the UK has a decreasing trend in the unemployment rate since 2011, but an increasing trend in 2020. The unemployment rate reached 5.1% in December 2020, which is the highest figure since August 2016.

 

 

However, eBay generated 1678 dollars of net annual revenue in the UK in 2020, which is its highest revenue since 2013. This could be the result of the increase in the use of online shopping in every age group. There is an increasing trend in the share of individuals who made online purchases in Great Britain from 53% in 2008 to 87% in 2020. And in 2020, 95% of people aged between 16 and 54 use online purchases. For people aged 55-64 and 65+, the shares are 79% and 65% in 2020 respectively. As a result, a consumption habit change happened and e-commerce has been a trend in all age groups. Also, Covid-19 has a positive effect on online retailing. Comparing to February 2020, non-store retailing had the most significant increase than other industries like food stores and clothing.

 

https://www.statista.com/statistics/1185640/retail-sales-volume-growth-comparison-great-britain/

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https://static.ebayinc.com/assets/Uploads/Documents/eBay-Impact-2019-Report.pdf

Due to the rising mobile device usage, eBay is facing to more consumers in the global markets. The functions of the retailers’ apps are similar, so that better service experience such as money transfer technology and product recommendation on the apps influence people’s choices. Over the years, eBay has made several acquisitions and technological advancements in order to compete with other online platform. It trains its AI algorithms by referring to its customer behavior insights and a two decades database. Whenever buyers and sellers trade on the platform, these algorithms will become more and more intelligent. The report of Online retailers accessed via mobile in Great Britain 2014 showed that eBay had 52% of consumers having accessed it via mobile app, which was the greatest share among retailers.

 

However, the report of Monthly downloads of the eBay app to iPhones in Great Britain 2019-2020 illustrated a slightly decreasing trend. This may mean that other companies were also developing their technological advantages and therefore the gap between eBay and them was becoming smaller.

 

-       Legal:

Because of the Brexit, there were changes in the regulation of the global transport, affecting both importing and exporting. For instance, exports to the EU will also now be subject to import VAT at the destination EU country. Therefore, eBay UK has also updated its Terms and Conditions for a service offered to sellers in 16 February 2021. More than this, according to the report of Value added tax (VAT) forecast United Kingdom (UK) 2017-2024 Published by D. Clark, Apr 23, 2020, the amount of VAT is predicted to keep a raising trend. That would affect the e-commerce on eBay.

 

-       Environmental:

People’s increasing environmental awareness leads to higher requirement of companies’ corporate social responsibility (CSR). Also, government set Technical guidance for regulated industry sectors: environmental permitting in 2014. Environmental requirements about CO2, water, etc. were mentioned. In this aspect, eBay did quite well. In eBay’s 2019 Impact Report, it has reduced 31% carbon emissions in 2019 compared with 2016 and set achieving 50 % in absolute reduction by 2025 as its target. Amy Skoczlas Cole, the head of the eBay Green Team, said that eBay sells $2,000 worth of junk previously-owned merchandise per second. Meanwhile in the report of Location of purchase of second-hand and vintage clothing in the UK 2019 demonstrated that eBay was the second popular choice besides charity/thrift shops, which showed that 20% of respondents purchased their pre-owned clothing on eBay.

 

1. One of the significant difference between eBay and its competitor such as Amazon. eBay establish a marketplace which only provide for independent seller, eBay would not sell their inventories or products on their marketplace platform. As we can see its competitors such as Amazon has Amazon prime which will significantly compete with other sellers. So eBay may build up a competitive advantage because it is more friendly for sellers.

 

2. Auction function may be the second competitive advantages of eBay. As we known eBay is one of the first companies which establish the first online action system in the world. This function gives an opportunity for everyone to action their products, and that how eBay become famous. This function attract hundred millions of users, and during these years, eBay keep innovating and completing its auction system and publishing more policy to make it safer and more mature. This is a important part of eBay’s competitive advantages.

Compared with eBay, one of the biggest strengths is that amazon has a stronger brand. As a global e-commerce giant, Amazon has a strong position and a successful brand image on the market. Secondly, amazon has higher user engagement due to its prime membership, which raising the cost of switching platforms. Last but not least, FBA program greatly contributes to the high efficiency of amazon. Third-party sellers can position their goods in Amazon's warehouses, and Amazon will be responsible for all logistics, customer support, order fulfilment, and returns. This opens the door for more items to be qualified for Amazon Prime, which is critical for the program's success.

Given that Amazon is an online-only retailer, the company's singular emphasis on online retailing could inhibit its expansion plans, especially in emerging markets. 

What is more, the retail operations of Amazon are barely profitable. The majority of Amazon's remaining earnings come from advertising. That means that if it were forced to sell AWS or its marketplace business—which helps draw advertisers—it would not be able to afford to provide Prime members with generous free and quick shipping choices, among other perks.

 

However, the technology gap between eBay and its rivals such as amazon became smaller in 2019 and 2020. And it is also important to improve problems like system overload and security requirements.

 

eBay may benefit from the UK import increase due to the Brexit, and the implementation of new VAT may lead to a decrease in the cost of exporting some goods to the EU in the UK. Both Covid-19 and consumption habit change causes an increase in online shopping in all age groups.

 

However, the company faces threatens that trade costs of import and export between the UK and the EU increase due to Brexit, and transport times increased because of Brexit and new VAT rules. Also, the world experiences an economic recession, and there were declines in the growth of GDP, growth of consumer spending, and employment rate in the UK. Moreover, the threat from existing rivalry is strong, and the pressures are from online retailers, online stores of offline businesses and brick-and-mortar stores. But the threat of new entrants for eBay is moderate, and the pressures are from a low threshold for new companies and low switching costs for customers. So, customers of eBay have strong bargaining power, but suppliers of eBay have low bargaining power.

 

Cost leadership helps eBay to compete in the industry. As the Porter’s Five Forces analysis mentioned before, there are threats from its competitors such as Amazon, which is also positioned as cost leadership. However, the second competitive advantage of eBay contributes to be different from others. By providing great auction-trading platform, consumers and sellers are drawn it based on eBay’s attractive pricing strategies.