Read the following Case Assignment: Ebay
Creating Customers on the Move The advent of mobile commerce (m-commerce) has begun to create significant changes in the way consumers make purchasing decisions. The introduction of online shopping first began to draw customers away from brick-and-mortar retailers, changing the location of where they made their purchases. The use of mobile devices has expanded the location of purchase decisions even further, so now consumers can make purchases from almost anywhere, so long as they have a mobile device with them. It also has leveled the playing field for consumers in many cases, as it allows them to comparison shop on prices of products that they might find in stores.
In 2009, the mobile commerce market generated $18.3 billion in total revenue. By 2015 it’s projected to reach over $119 billion. When it comes to m-commerce, eBay has jumped in with both feet. It is estimated to hold about 3.3 percent of m-commerce, compared to online retailer Amazon’s 1.5 percent. It also was estimated to sell $1.5 billion in goods via m-commerce in 2010, compared to $600 million in 2009. eBay launched its first mobile application for the iPhone in July 2008 and has since produced 14 apps, including eBay Selling, StubHub, Deals, and Fashion. eBay’s core iPhone application has been downloaded 14 million times, and its entire stable of apps has seen over 30 million downloads worldwide. Purchases range from clothing and accessories to sporting event and concert tickets, computers and technology gadgets, collectables, and even luxury automobiles. Research indicates that more than half of regular m-commerce purchasers are comfortable spending over $100 on a mobile purchase, and 14 percent are willing to spend over $1,000.
eBay has been quick to embrace the trend toward comparison-shopping, as potential buyers compare in-store prices online with those offered by other retailers. In June 2010, eBay purchased RedLaser, a mobile app that uses the cell phone camera to identify a product’s barcode and locate that product within eBay’s system.
If a buyer is searching for a certain designer jacket for example, he could compare prices between eBay’s auctions, flat priced buy-it-now options, and eBay’s Fashion Vault, which offers limited-time deep discounts on select high-end merchandise.
But while eBay has excelled in m-commerce so far, its ability to fully capitalize on this growth potential depends on how it is able to influence consumer-purchasing decisions. Merely allowing consumers to search for items, compare prices, and then make a purchase isn’t enough. As eBay VP of mobile platforms Steve Yankovich says, “We want consumers to engage when they don’t have a purchase in mind.”
The combination of apps with mobile devices enables browsing and purchasing virtually anywhere at any time, especially during downtime—say when the potential buyer is getting a haircut or waiting in line at the coffee shop. By enabling buyers more opportunities to shop and make purchases, eBay is hoping to spark purchases based on the buyer’s immediate situation. The eBay Fashion app is designed to inspire browsing and experimentation, offering features such as a clothing-focused search function, a virtual closet to save various finds, and a mix-and-match feature that allows users to pair up articles of clothing with various accessories. Users can even take a picture of themselves using the phone camera and the Fashion app will superimpose the outfits they create over their figure, allowing shoppers to digitally “try on” the looks. So if a purchaser saw a dress she liked at a party, she could “try it on” and match it up with accessories in her wardrobe. eBay is planning to release even more apps like eBay Fashion, targeting key eBay shopping demographics such as car enthusiasts and home-and-garden enthusiasts.
Early trends suggest that shoppers are responding to eBay’s efforts as well. As eBay has continued to develop the offerings of the eBay Fashion app, average user browsing time on the app has increased by 40 percent since its original release and mobile fashion sales tripled over the past year. If nothing else, the new trends in m-commerce move very quickly, and eBay must continue to innovate if it wants to stay ahead of the game. Says Yankovich, “Nobody knows what’s going to happen in mobile. We need to be ready to spin on a dime.”
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