eBay Inc. is the world’s largest online marketplace and auction website, with more than 90 million active users globally. Founded in 1995 in San Jose, California by Pierre Omidyar, the first item sold on eBay was a broken laser pointer for $14.83(cite). eBay’s first target market was antique collectors and sellers. Now eBay connects a diverse community of buyers, sellers, and many small businesses all over the world. Practically anyone can buy and sell anything on eBay. eBay has a heavy impact on e-commerce, in 2009, the total worth of goods sold on eBay was $60 billion that is $2,000 every second (cite). Even though eBay strive in e-commerce, system failures, lack of control over counterfeit products, and exposure to Internet fraud pose as threats for eBay by turning away buyers and sellers from using eBay.com.
Issue 1: System failures
Cause: Third party services are not accessible
Impact: Reduce current and future revenges and hurt customers’ businesses
Recommendation: Improve system monitoring and provide adequate notice
System failures lead to unavailability of many of eBay’s services like PayPal and Skype. eBay Inc. acquired PayPal in 2002. Since then, PayPal's customer base has grown both on eBay and across e-commerce (cite). eBay use PayPal for one of their payment methods online. System failures for long duration increase operational risk for eBay. In 2008, the eBay.com site has been interrupted for periods as long as 22 hours, and PayPal was unavailable for five continuous days (cite). Another one of eBay’s services is Skype. The company was acquired by eBay in September 2005 for $2.6 billion (cite=dm). eBay users use Skype for faster means of communication, allowing the users to have video calls and voice calls over the internet for free. Earlier in 2007, Skype was unavailable for users for a period of 2 days (cite-dm).
Due to frequent unscheduled interruptions for long periods, eBay’s reputation and reliability will have a negative effect on the company. Repeated system failures might lead customers to believe that the systems are unreliable and may lead them to switch to other competitors. Thus, affecting current and future revenues and profits for eBay Inc. Ultimately, system failures could result in damage to eBay customers’ businesses and eBay to pay significant compensation for their customers’ losses. Although system failures may occur, eBay has improved its monitoring system to reduce downtime in the event of outages and catastrophic occurrences. Despite any precautions, eBay and third party hosting providers will provide adequate notice to close any of their services for future service interruptions.
Issue 2: Lack of control over counterfeit products and auctions
Cause: Selling of copyrighted products and infringement of intellectual property rights
Impact: Lawsuits against copyright infringement
Recommendation: Remove counterfeit listings and suspend users who have created such listings