EBay Case Study-Oral

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Introduction

Question

“How should we (eBay) establish a profitable and strong market position in the Latin American Market?”

As a team we have decided that eBay should keep their existing presence in Brazil and

expand throughout Latin America via the use of a joint venture or strategic alliance with either Deremate.com or Mercadolibre.com.

Resource Report

In researching these findings we have utilized the following materials:

• Case study

• Marketing Texts from past courses

• Internet sites

Method

Drawn upon current marketing knowledge so as to apply the information from the case study to the knowledge base.

Case study data and the analysis enabled assumptions to be made and conclusions as to the best options were drawn.

Graphed the proportions of total internet usages in Latin America.

Collected and tabled data in relation to the GDP and GDP growth per capita of the various Latin American countries

Calculated the Internet penetration for the major Latin American Countries.

We applied the following marketing tools:

Product life cycle development

Market positioning

Market Segmentation.

Market research and analysis.

Market screening for country selection.

Competitor Analysis on Mercadolibre & DeRemate (go into further in 20 minute)

Findings

• A move into the Latin American market would support our (eBay) original vision to create the world’s largest global trading community and keep pace with our international growth plan to have a presence in 25 countries by 2005.

• Since It’s US launch eBay has entered 21 countries via the use of Joint Venture, Acquisitions or Direct market entries

• Currently have a presence in Brazil with Ibazar, it cannot be utilized in other Latin American countries.

• Direct Market entry in the whole of Latin America would not be considered appropriate due to the heavy work load put on the San Jose office, language and cultural barriers and the existence of two already established and popular competitors who already have an understanding of the Latin American market and culture, this is similar to the Japan situation where our presence is weaker due to the fact of Yahoo’s early market entry and success.

• EBay should use the Joint Venture or Acquisition method to gain a strong position with rapid growth in an already established environment.

• Therefore it is seen as essential that we (eBay) look to other South American auction houses such as Mercadolibre and DeRemate for Joint Venture opportunities.

• Even though the online auction house market is in a growth stage areas. The markets are already quite established and hard to break into directly which also strengthen the argument for Joint Venture or Acquisition.

• Target higher income earners, who already have internet access and use other online auction sites- offer them cheaper listing rates etc. to switch to eBay.

• Position ourselves as the only auction house in Latin America that can give you access to buyers/sellers from all around the globe.

(Talk About Market Mix in 20 minute)

Recommendations

• We believe that the presence in Brazil is too valuable to disregard and we must maintain our presence in Brazil. Either through joint venture or creating our owned and operated eBay site. (Ibazar site is already there either continues to use in conjunction with eBay and slowly takeover with eBay name as done in other parts of world). Important that we have a strong presence in Brazil as it accountable for ½ of all Latin America’s e-commerce. 17% of population uses the Internet.

• As eBay we set up two main sites, these been eBay Brazil and eBay Mexico. This will allow us to have a basic interface for the Portuguese and Spanish speaking populations in Latin America. Other countries were considered but dismissed. Brazil and Mexico dominate the online trade market in Latin America which is expected to rise to 72 billion by 2005 (How can we not enter)

(Refer to table in 20 minute)

• Then through a joint Venture with DeRemate we establish a presence in the rest of Latin America due to their existing presence and expertise in these countries. Important to use these existing companies so we don’t exhaust our resources and jeopardize our expansions into Europe and South Korea. We have already decided into enter the profitable European market so a “full on” entry into the Latin American market would be unwise at this time.

( Show Time Line of Development in 20 Minute)

• In the future depending on our financial success a purchase of DeRemate could be undertaken but for now it is important to get the eBay name established and accepted by the Latin American consumers. While we do not jeopardize our expansion in other areas of the world.

• Latin American market in America (particularly California). DeRemate and MercadoLibre already target them) – OPPORTUNITY to broaden product selection from an area where existing eBay users had a rich heritage. Look at ‘big picture’ impact of market entry and affect on US revenue? Broadening product range is consistent with eBay’s vision “to create the world’s largest global trading community and to help people trade practically anything on earth”. Can use Latin American market to target Hispanic Population in America

Summary

We have found that it is important that we establish the eBay name in the Latin American market place to keep inline with our global goals and objectives. We recommend that we establish two stand alone eBay sites (already have one in Brazil) and go into a joint venture with an existing Latin American auction house preferably DeRemate to create and our presence throughout the rest of Latin America. When we have finished our European expansion plans then we can turn our full attention to Latin America and acquire a market leader or go it on our own, but until then we believe that the above mentioned approaches would be appropriate for gaining a foothold in the Latin American Market place.