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eBay Marketing Program Natasha Bunch Andrea Pie Frank Roberts James Ruane Ben vonWurmb Positioning Strategy eBay Efforts: – 1) providing great bargains/deals – 2) giving 100% on improving auctioning service – 3) providing quality service and products Combination of Strategies: – Price/Quality Relationship – Reference to Competition Advertising & Promotion Checklist for Marketing Communications How Planning Who What Why Where When Advertising & Promotion WHO? Target Market includes: – – – – – – – – Anyone interested in service BUT Power Sellers, Store Owners Individuals looking for deals or to save $ At least 20 eBay transactions OR $100 shipping costs per month Mid 20’s to 40’s Income btw. $35,000 and $100,000 Access to UPS drop stations Internet Users Advertising & Promotion WHAT? Inform: eBay partnership with UPS for discounted shipping (HOW?) Educate: (sellers) How to use new service – Added step in selling process – Added portion to seller page for buyers to see Example Pages As a seller, you can choose several optional features to help promote your listing. Please note that these fees are non-refundable. Listing Upgrade Home Page Featured Listing Upgrade Fee $99.95 (single quantity) or $199.95 (quantity of 2 or more) Featured Plus! $19.95 Highlight $5.00 Bold $1.00 Listing Designer $0.10 Gallery $0.25 Gallery Featured $19.95 List in Two Categories Double the insertion and listing upgrades fees (excluding Scheduled Listings and Home Page Featured). 10-Day Duration The longest listing duration available $0.10 Scheduled Listings $0.10 Buy It Now $0.05 UPS Discount Rate FREE Advertising & Promotion HOW? Primary Target Market – Email to all members – Personalized notices to Power Sellers and store owners (Example) Secondary Target (General Public) – Add into existing promotions – E.g., AOL, TV commercials, billboards, search engines, word of mouth. (Example) From "eBay" <[email protected]> Date Wednesday, April 16, 2003 2:06pm To [email protected] Subject Spring back into action eBay Email eBay’s Partnership with UPS Start Saving on Shipping NOW!!! Advertising & Promotion HOW? Primary Target Market – Email to all members – Personalized notices to Power Sellers and store owners Secondary Target (General Public) – Add into existing promotions – E.g., AOL, TV commercials, billboards, search engines, word of mouth. (Example) Web Advertisement AND CLICK HERE Advertising & Promotion WHERE? Reach numerous geographic regions – Via email & internet ads Specific cities/towns near UPS stations – Via TV commercials and/or billboards Advertising & Promotion WHEN? Initially begin with United States After measuring progress and success, expand Advertising & Promotion WHY? Positioning Strategy – Provide great deals/bargains with quality service, while focusing solely on our auctioning site to continuously improve and perfect the eBay buying/selling community. Mutually Beneficial eBay Inc. – New source of profit – Creates definitive shipping UPS – Larger customer base eBay users – Shipping discounts – Less confusion Financial Implications eBay – Keeps 10% discount on shipping UPS – Offers 20% discount based on guaranteed usage Users – Realize 10% shipping discount – No possibility of overcharging Power Seller Levels Power Level Monthly Sales ($) Bronze 1,000 Shipping Discount (%) 11 Silver 3,000 12 Gold 10,000 13 Platinum 25,000 14 Titanium 150,000 15 Pricing Strategy Value-based pricing – Uncertainty reduction – Relationship enhancement – Cost leadership Competitive Analysis Auction sites vary Product categories Whether they carry inventory The bidding process Extra-services/fees Technical support Functionality Sense of community Strengths Strong brand identity eBay synonymous with online trading Dominates the market Easy to use No inventory or costs associated with inventory Weaknesses Shipping costs hinder online sales eBay’s site is sometimes “down” Expansion of services geared toward high volume sellers may be alienating the individual sellers Opportunities Strategic alliances Foster community affinity Enhance features and functionality Expand value-added services Threats Competition o Direct – Ubid.com, Yahoo Auctions, Amazon.com Auctions o Indirect – Any online or offline retailer Rising cost of technology Loss of market share Distribution eBay- Website available to anyone with internet access UPS – 200 countries worldwide – World’s largest package delivery company – 4000 UPS Store/ Mail Box Etc. worldwide – Box drops can be found almost anywhere – Retail centers Service Quick and easy way to save on shipping Hotline for shipping problems UPS- Known for quality service Marketing Budget Billboard s 2003 2004 2005 2006 2007 $10,200,000 $10,200,00 0 $20,400,00 0 $20,400,00 0 $20,400,00 0 $11,800,00 0 $11,800,00 0 Televisio n $7,500,000 $7,500,000 $11,800,00 0 Internet $6,187,500 $6,187,500 $9,281,250 $9,281,250 $9,281,250 Total $23,887,5 00 $23,887,5 00 $41,481,2 50 $41,481,2 50 $41,481,2 50 Revenue Average shipping cost Average percentage kept by eBay Average amount made by eBay per transaction $4.11 8% $0.329 Projected Number of Units Projected # of eBay transactions Projected percent using UPS rate Projected # using UPS rate 2003 2004 2005 2006 2007 565,800,000 712,600,000 859,300,000 1,006,100,000 1,152,800,000 25% 40% 60% 65% 68.8% 141,450,000 285,040,000 515,580,000 653,965,000 793,126,400 Income Statement 2003 Net Revenue $46,508,760 Expenses Product Development $3,400,000 Web Maintenance $4,526,400 Marketing Taxes (35%) Total Expenses NET INCOME $23,887,500 $5,143,201 $36,957,101 $9,551,659 Income Statement 2004 Net Revenue $93,721,152 Expenses Product Development $1,500,000 Web Maintenance $9.121.280 Marketing $23,887,500 Taxes (35%) $20,724,330 Total Expenses $55,233,110 NET INCOME $38,488,042 Income Statement 2005 Net Revenue $169,522,704 Expenses Product Development $3,400,000 Web Maintenance $16,498,560 Marketing $41,481,250 Taxes (35%) $37,850,013 Total Expenses $99,229,823 NET INCOME $70,292,881 Income Statement 2006 Net Revenue $215,023,692 Expenses Product Development $2,000,000 Web Maintenance $20,926,880 Marketing $41,481,250 Taxes (35%) $52,715,447 Total Expenses NET INCOME $117,123,577 $97,900,115 Income Statement 2007 Net Revenue $260,779,960 Expenses Product Development $2,000,000 Web Maintenance $25,380,045 Marketing $41,481,250 Taxes (35%) $67,171,533 Total Expenses NET INCOME $136,032,828 $124,747,133 Contribution Margin Analysis 2003 2004 2005 2006 2007 $46,508,760 $93,721,152 $169,522,704 $215,023,692 $260,779,960 $4,526,400 $9,121,280 $16,498,560 $20,926,880 $25,380,045 Contribution Margin $41,982,360 $84,599,872 $153,024,144 $194,096,812 $235,399,916 Contribution Margin Percentage 90.27% 90.27% 90.27% 90.27% 90.27% Revenue Variable Costs