The global business environment has shown gradual changes over the past decades. The industries have become highly competitive in nature as an increasing number of firms have come to operate in the markets. Moreover, the demands and preferences of the customers have also changed over time. They are constantly looking for new product and service experiences (Liao, Kickul and Ma, 2009). In order to meet the customers’ demands the firms are constantly seeking out for innovative ways to design their value propositions. In this context, the existing firms have also realised that they need to adapt to the changing macroeconomic factors and consumption trends to make sure that they can maintain their position in the industry in terms of market share. The e-commerce sector has shown promising prospects in terms of growth and popularity (Hong and Zhu, 2006). Large number of companies has opened their own e-commerce wing to reach out to large number of customers.  Companies like Amazon and eBay have adopted e-commerce as their mainstream business strategy which has proved to be quite lucrative for them. This paper is focused on the discussion of how eBay can position for the changes in the e-marketplace. It covers innovation theories, based on which the proposed strategies have been designed for the company.

Background Information

 The e-commerce sector has shown significant growth owing to the rising popularity of the internet and development of secured online transaction processes (Statista, 2016c). The increase in the number of internet users has made it easier for the e-commerce companies to increase their customer base. The reports of Statista (2016a) have shown that the number of e-commerce users have increased significantly over the past years, which have resulted in the growth of this sector and have increased its attractiveness for the firms. The companies have started to use the e-commerce platform to attract the customers and increase their volume. This as a result has increased the competitive threats for the mainstream e-commerce retail companies like eBay.

EBay is one of the biggest e-commerce retail companies in the world and currently holds the third position after Amazon and Alibaba. These two companies are the primary competitors of eBay and have posed a significant threat to the company which is clearly reflected in the y-o-y revenue growth. According to the reports of Statista (2016b), the revenue growth of eBay has fallen quite significantly over the past few years, which is mostly due to the rise of other e-commerce firms and potential new entrants in the industry. Moreover, owing to the highly lucrative proposition of online selling, other retail companies have also established their own e-commerce wing apart from their traditional brick and mortar stores.

These changes in the e-commerce industry have proved to be quite menacing for eBay as their sales volume has shown a downward trend. Moreover, eBay has also failed to generate new value propositions or provide a better experience for the customers (Forbes, 2015). Therefore the customers who were once loyal to eBay have started to shift to other companies, thereby resulting in the fall in revenue growth. In this context it is imperative for eBay that it should be able form new innovative strategies to strengthen its position in the changing e-commerce market place or e-marketplace.  Thus, the success of the company is largely dependent on the way in which the company is able to maintain a consistency in terms of innovation and constantly offering new experience for the customers. In order to regain the brand image and develop a differentiation among the customers, eBay needs to come up with unique value propositions that are not found in any other rival firms.

Innovation Theory

This section discusses about the theories and models from the literatures based on organisational innovation. According to Wu and Lin (2011), the innovation can be defined by the inception of a new idea, product, services or process that is unique in nature and can be marketed to the customers or has the potential to drastically improve the profitability of a company. Ashraf and Khan (2013) have mentioned that the innovation is different from invention, even though both of them are associated to developing new and unique products or processes. In case of innovation the potential of the newly developed idea to generate value for an organisation is assessed in terms of its ability to improve the financial condition. However, in case of an invention, the concept of commercialisation of the idea is not present.

Gallego, Rubalcaba, and Hipp (2013) have mentioned that the organisational innovation often comes from the need to create a strong and unique differentiation that can eventually change the market trends and ensure long term growth of the firm. It has been further mentioned by King and Baatartogtokh (2015) that organisational innovation can be broadly segmented in to two types which are incremental innovation and disruptive innovation. This segmentation has been done for establishing the potential of the innovative idea or product to impact the macro-environment (Polder et al, 2009). The incremental innovation of a company allows it to make gradual changes in its value proposition or operational processes that eventually improved the overall performance of the organisation. This process is usually slower and helps to foster gradual improvement of a firm (Wu and Lin, 2011). On the other hand, in case of disruptive innovation, the company is able to develop new products or services that can be considered a breakthrough in the industry and can eventually change the trend of customer demands and can have significant impact on the macro-environment.

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