Relationship Marketing: eBay’s Lethal Weapon

The age of technology has influenced the world in multiple aspects. According to the ‘Experience Economy Theory’ by Joseph Pine, the world of marketing has changed over the years and now, we currently live in the ‘Age of the Customer’. This has caused a paradigm shift in the world of marketing making relationship marketing a necessary strategy for business of all sizes. 

For those of you who are not familiar with eBay, well they are basically the Goliath of the e-commerce industry. A seller can list an item available for purchase or can even hold an auction for it. eBay also sells almost anything from antiques to cars, books to sporting goods and so much more. Let’s now have a look at how eBay incorporates this extremely vital marketing strategy into their operations.

Data Analytics & Personalised Marketing

First and foremost, eBay sets the foundation for their relationship marketing strategies by gathering data about their customers. This is conducted through an advanced database management system called the ‘Customer DNA System’. The system helps collect millions of data about customers on a daily basis, and this system helps refine that data into useful information.

Through this, eBay is able to identify what needs to be done in order to maintain healthy relationships with their customers and how to attract new customers.

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Subsequently, eBay uses personalized marketing to suggest products or services that are specifically tailored to the individual needs and wants of their customers – based on their past customer behaviour. For example, eBay has a Customer Relationship Management system that is integrated with their email system. This system routinely collects customer data, analyzes them and sends out offers and promotions to the respective customers via email.

This way customers are motivated to visit eBay and buy the product they are looking for, which in turn strengthens the bond between eBay and their customers.

Altering the System

In 2008, The President of eBay North America, Bill Cobb, announced changes to its marketplace in three major areas: fee structure, seller incentives and standards and feedback. These changes were made to make eBay a more trustworthy marketplace, in-line with their mission and vision statements. They also intended on improving the overall experience for their customers – both buyers and sellers.

By doing this the marketplace platform now consists of trustworthy and honest sellers, which facilitates more online sales whilst strengthening the relationship customers have with eBay due to their revised positive shopping experience. 

Effective Localization Strategy

One of the reasons behind eBay’s global success is its localization strategy in each target market. They acquired Flipkart to dominate the Indian ecommerce market, and similarly acquired Mobile.de in Germany, Sales Predict in Israel and so much more. As a result, they are more focused on the personalized needs of the customer and find localized approaches to attract the market. By having a localized foothold in each broad market, it is easier to gain the loyalty of the locals and build their customer loyalty base by deepening the relationship with them.

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According to Ansoff’s Matrix, eBay practices a diversification strategy, as they diversely meet all the specific cultural needs of customers across the globe, by expanding into new markets and offering new products to meet these specific needs.

The implementation of this strategy makes customers feel more valued as they find eBay was meant for them. 

In addition, these acquisitions all have a goal that is meant to be achieved. Majority of eBay’s acquisition goals are now revolved around building customer relationships and retaining their existing customers. For example, the most recent acquisition was Terapeak – a company that processes data about demand, supply and pricing strategies. This takeover was geared to provide better information to eBay’s customers and the previous takeovers, of SalesPredict and Teradata, were for the similar reason.

The Marketing Director of eBay UK stated:

“It is all about a shift away from the marketplace and over to being the ultimate shop” 

I guess it is safe to say that relationship marketing has transformed the ‘original’ structure, built by Pierre Omidyar, to this relationship-focused marketplace – governed by the ideology of ‘customer sovereignty’. Focusing on customers, their value and strengthening their loyalty has been a lethal weapon that eBay uses against its very fierce competitors. eBay is more transparent, trustworthy and customer-oriented in all of its operations; which is a necessity in this extremely volatile and unpredictable industry.

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