Lightweight Models and Cost-Effective Scalability

The growth of Internet technology has become great challenge to any Web2.0 applications. High user’s expectation, fierce competition from other companies and fluctuation in economy are some of the factors that give huge impact to the survival of the applications. Besides that, their business model and technology should be scalable enough to compete in the rapid growth era or otherwise it will end up being a downfall to their services.

eBay is expected to continue to benefit from the rapid growth in online sales. “eBay’s business model, which requires no inventory and is not capital intensive, generates substantial free cash flow” (Forbes.com, 2010). The market of eBay has expanded to Germany, Australia and China. For instance, customers of China UnionPay, the largest electronic-payment-services provider, will be able to use PayPal to shop online from the third quarter of 2010. This will give eBay an access of millions of cardholders. Given the facts, unsurprisingly eBay got total revenue of 2,196 million in first quarter of 2010 compared with $2,021.0 million in 2009 (Forbes.com, 2010).

As part of the Company’s strategy to promote lightweight model and improve scalability, eBay has created a platform to enable developers to make more money with eBay. It is reported that their developer program has more than 70,000 members who have created more than 12,000 live applications (Kerner, 2008). Furthermore, eBay has no longer charged for the use of their API by the developers. With this, eBay is establishing a large community of outside developers where they can share APIs among themselves. It also allows outside developers to contribute services that can communicate with eBay. In term of high scalability, eBay has shown its effort with its version, started with v1 in 1995 and moved on with current version v4. It is noticed that all the functions in the previous version are replaced with Java code, which is developed using Eclipse (more details).

There are also issues with eBay. Many third parties claim that eBay has infringed on their intellectual property rights. In addition, eBay will likely to face a patent infringement charge regarding payment services that it offers. Other than that, fluctuations in exchange rate will have a bigger impact on the Company’s results in the future. eBay also needs improve their services if they want to become a potential contender in many years. Go to this site for example of eBay problems.

The Future of eBay

eBay is one of the largest online e-commerce companies in the world. Its closest competitor is Amazon. Before, their business models were different; eBay is based on auction model, Amazon established with its fixed model. However, the competition between these companies has been prominent in financial climate. eBay is now changing their business to fixed price, along with their auction model as well. Therefore, it is obvious that fierce competition in e-commerce and online payments are posing threats and challenging eBay’s dominance.

Source:

Forbes.com. (2010). eBay INC. Retrieved May 2010, from Forbes.com: http://finapps.forbes.com/finapps/BuyHoldSellAnalysis.do?tkr=EBAY

Kerner, S. M. (2008, June 16). eBay Opens Up Wide to Developers. Retrieved May 2010, from Internetnews.com: http://www.internetnews.com/dev-news/article.php/3753036/eBay+Opens+Up+Wide+to+Developers.htm.

Leveraging The Long Tail

About six years ago, Chris Anderson, editor of WIRED magazine, wrote an article about new theory to improve business model: The Long Tail. Since then, the theory has been widely referenced and Anderson’s subsequent books on this topic has been used in many online and offline businesses. According to Anderson, “the Long Tail refers to the reoccurring appearance of a long, drawn out tail section in graphs that rank popularity for an applicable data set” (Dreller, 2008). This concept can be described as the niche strategy of selling a large number of unique items in small quantities, to selling fewer popular items in large quantities (Wikipedia, 2010).

An example of tactics to leverage the long tail concept is applied by Google Maps with its feature; MyMaps. Google Maps is a map service embedded with various mapping technologies to create an interactive online map. It helps users to find business information and provides guideline to travel from one direction to the other with effective navigational tips (SEM Clubhouse, 2009). Moreover, users can search location and get accurate directions with Google Maps. With MyMaps, users can generate their own custom maps with different views based on how they want to target their audience. This feature gives advantage to any business to market their website and location. Obviously, Google Maps can help to further promote user’s own content to more consumers. With this feature, a small niche location will be accessed by many users, and not only popular places in the world. To see how Google Maps leverage this long tail marketing tactic, read this article.

There are also other mapping sites available in the Web that serves similar services with Google Maps, which are Yahoo Maps and MapQuest. Though all these three mapping sites offer mapping and navigational services, Google Maps is seen more user friendly and simple. It also have clean layout and easy to navigate with features of Latitude and Longitude coordinates. Furthermore, Google Maps connectivity with Google Earth provides rich experience to users (see details of the comparison here).

Despite rated the most popular mapping site in the Web, there are also issue with Google Maps. Issue concerning privacy has been a long tradition with Google. With Google Maps, users complain that their license plate number, faces and other identifiable details are exposed and indirectly violate their privacy. Besides that, Google’s Street View camera can capture photos of people’s activity and can be viewed by other millions people. For that reason, there is suggestion that Google should incorporate fundamental privacy principles into its online services.

In near future, people can explore shops through Google Maps since Google has started accepting application from businesses to incorporate store interiors and floors photo into Google Maps. With this feature, companies will not only promote their location, but gives more interesting views of their premise.

Source

Dreller, J. (2008, October 10). A Practical Guide To Leveraging The Long Tail For SEM. Retrieved April 2010, from Search Engine Land: http://searchengineland.com/a-practial-guide-to-leveraging-the-long-tail-for-sem-14998

SEM Clubhouse. (2009, October 12). Leverage Google Custom Maps As A Long-Tail Tactic. Retrieved April 2010, from SEM Clubhouse: http://www.semclubhouse.com/google-custom-maps-long-tail-tactic/

Wikipedia. (2010, April 25). Long Tail. Retrieved April 2010, from Wikipedia: http://en.wikipedia.org/wiki/Long_Tail