The three benefits have been highlighted in the case as reducing ecommerce friction, incorporating a pay per call model and options available to eBay for cross marketing. The mentioned benefits are derived form the nature of Skype, its operations and the technology used by the company. By acquisition of Skype the eBay is able to use the innovative peer to peer sharing and communication technologies into its online business model. The pay per call capability provided by Skype can enable the company to increase communication in the virtual market place between buyers and sellers.
This increases the chance of a purchase taking place as the sellers can persuade the buyers, and the buyers themselves are more content and satisfied to know about their purchase before they finalize the del. Aside form this the VIOIP services would also enable the company to provide detailed information to those interested in the purchase of complex products online The cross marketing option would also enable the eBay business to capitalize on Skype’s presence outside US, where eBay is relatively less prominent.
The three mentioned benefits which are highlighted in the case are very relevant to the business model eBay. The first highlighted benefit pertains to reducing friction in the virtual marketplace through the introduction of VOIP facility on the internet. By incorporating this facility eBay can offer its customers for fixed price products as well luxury products to contact the company through VOIP and get to know more about the product. This would increase sales for the company as the customers would be more satisfied and confident about making the purchase.
Similarly the pay per call model would enable eBay to make additional revenue from enabling communication between buyers and sellers. This would provide an alternative source of revenue for the company as well as enable the customers online to be more confident and satisfied with the purchase they are about to make.
The third benefit pertained to the operations that eBay would have for cross selling. eBay is a well established company in the US while its operations, while Skype has been known for its operations outside of US. Using this to the strategic advantage eBay can make use of the technology and the platform of Skype to target the extensive market in Europe and Asia.
Conclusively it can be mentioned, that the three advantages of the acquisition highlighted in the case are prominent and strategic in nature enabling eBay to increase its revenues and profits as well as its market share.
As mentioned earlier the advantages that would be attained by the eBay company through the acquisition of Skype were numerous and strategic in nature. The increase in the potential scale of operations, technology available for business on the internet as well as the increased exposure to the target market in Europe and Asia is crucially important and beneficial for eBay which is currently restricted in its operations to the United States only. Keeping this is mind the cost of the acquisition in terms of $2.6 million is justified as it enables the company to have access to an established market outside of US as well as provides a structure for communicating with customers and getting information form them for CRM purposes which can enable the company to adjust its business operations to better suit its customers.