Ebay Strategic Choices That E-Bay Term Paper

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"In the last year, for example, the online auctioneer made roughly $1 in ad revenue per visitor, compared with Yahoo's estimated $7 in ad revenue per person" (Olsen, 2006). However, eBay has found a solution -- its new alliance with its one-time online commerce rival Google. Rather than continue their bitter rivalry, the two have negotiated a deal "that allows the two companies to share revenue on search-related text advertisements delivered on eBay's sites outside of the United States" (Olsen, 2006). As part of the deal, "Google will deliver sponsored links to eBay's search results pages only when there are insufficient results from eBay for a particular query" (Olsen, 2006).

However, Google is not the only major Internet force that eBay has allied with, in its effort to remain competitive and to remain the premier Internet auction site. In 2005, according to a May, 25 press release, Yahoo! And eBay agreed to collaborate by allowing Yahoo! search users to get more up-to-date listings from eBay through its tool bar. Yahoo! also selected PayPal to become the exclusive third-party provider of its online wallet, making it easier for Yahoo! users to use PayPal to buy from eBay.

Thus, eBay is expanding its strategic model to not merely generate a comparative advantage from a lack of brick-and-mortar expenses.

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It has sought to turn its rivals into friends, and even entered into alliances with two companies still at odds with one another, the search engines Yahoo! And Google. By doing so, eBay hopes to capitalize upon its name, which it built partly through its initial uniqueness and few maintenance expenses, and to generate more revenue through its strategic alliances. If it remains 'the' Internet auction site in the minds of most Google and Yahoo! users, sellers will go by default to eBay because they know that is the place where the most sellers are looking for products.

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