How eBay leverages Crowdsourcing


eBay.com is an online auction and shopping website in which people and businesses buy and sell a broad variety of goods and services worldwide. It is managed by eBay Inc., an American internet consumer-to-consumer corporation. [1] Founded in 1995 and with more than 97 million active users globally as of Q2 2011, eBay today is the world's largest online marketplace [2] and a multi-billion dollar business with operations localized in over thirty countries. As a platform that facilitates and runs entirely on the process of users transacting in items for purchase, it leverages crowdsourcing across a multitude of business functions and attributes.

external image ebay.gif?5f2860

Contents [3]

1 Areas of application of Crowdsourcing
1.1 Inventory Management
1.2 Product Pricing
1.3 Shipping & Payments
1.4 Quality Control
1.5 Customer Support

2 References

Areas of application of Crowdsourcing


Inventory Management

eBay does not have to hold physical inventory for the fact that it is held by the users. These users may be selling in individual capacity or as business entities. Instead of eBay, it's these users who anticipate and respond to demand for products and services and adjust the inventory and supply accordingly. This surrogacy in the nature of stock-keeping allows the eBay model to be highly scalable but at the same time it can prevent the company from enjoying any measure of management control over the stock-levels. For this purpose, eBay employs a category structure through which it influences, organizes and maintains desired inventory bases. The structure can expand up to five levels. It also acts as an index and enhances the search capabilities for the users to browse through potentially thousands and millions of available items.

Product Pricing

In addition to fixed-pricing where sellers can decide the price points, eBay offers online auctions as a flagship service. The online auctions help the demand and supply find an equilibrium but warrant the need for a critical mass per auction. As a mitigatory and diversionary tactic, eBay also offers the additional "Buy it Now" feature with which a buyer can

procure the item at a price stipulated by the seller, in case no bids are in till that point in time[4].

Shipping & Payments

Through its crowdsourcing eco-system, eBay avoids the costs and operational complexity that would've otherwise been associated with the marketplace if it were to undertake Shipping or Payment collection activities. However as a facilitator that doesn't directly control the logisitics and payments, it needs to tackle trust issues and address security concerns. To this effect, eBay offers online money transfers via PayPal, thus promoting secure remote payments. It also offers a Buyer Protection Program under which users can claim repayment in case something goes wrong with their transaction. A buyer using PayPal receives special protection benefits in case the seller too uses PayPal.

Quality Control

Transaction quality is ensured through a feedback system. Under this, users who buy an item from a merchant can rate the transaction or the merchant. It is a transparent process
and since eBay doesn't intervene by picking winners and allows it to be truly democratic, it finds great credence amongst the users. The only potential drawback in the system is that it mainly allows positive, neutral and negative votes and is therefore limited in scope. However, with a good number of transaction for the sellers, it becomes a sufficient mechanism to distinguish quality from below-par fares.

Customer Support

eBay offers email support to its customer and also a phone-in facility for certain high-value users. In addition to this, it features community forums where users can help and co-operate with each other. Although there might be the slight aspect of lack of control over opinions, such an environment creates high levels of engagement and also promotes brand advocacy.

References


1. Wikipedia- eBay. http://en.wikipedia.org/wiki/Ebay
2. eBay Inc.- Who We Are. http://www.ebayinc.com/who
3. David Gracia, Professor at IE Business School, Madrid. Slideshare- eBay Crowdsourcing http://www.slideshare.net/davidgracia/ebay-crowdsourcing
4. Managing Change UK Ltd.- Dynamic Pricing: eBay Case Study. http://www.managingchange.com/dynamic/ebay.htm