Amazon and eBay Firms’ Customer Perceived Value

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Introduction

The volume of purchases from a particular online marketing platform depends on the customer’s perceived value of the website (Maita 2018). Amazon and eBay are some of the most renowned online markets worldwide, and their survival in the highly competitive commercial environment is due to the unique positioning that each of the firms has adopted. The model of value hierarchy categorises the value of a product into three levels, which are the purposes and goals, desired consequences, and the desired characteristics (Echchakoui 2018). In this model, the clients attach preference to a product depending on the extent to which it will help in the achievement of the desired goal. The item may also be valued based on its capability to help the clients in achieving the desired value. This paper discusses the customer perceived value of Amazon and eBay, and further explains a new proposed value for the markets.

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Definitions

The customer perceived value can also be defined in terms of the value of the product, efficiency of services, value of customer care, and personnel. All these exclude the monetary value of the item. Therefore, the customer perceived value is the perceptions of the client concerning the benefits of using a given product or platform. Social, economic, and relationship benefits are the values attached to the products and services offered by Amazon and eBay. Holbrook’s typology value framework explains customer perceived value of a given product based on its extrinsic and intrinsic values.

Customer Perceived Value for the Customers for the Online Markets Amazon and eBay

Economic Benefits

For the case of Amazon, the online sourcing and shopping platform provide customers with relatively low prices, to enhance their corporate image in the global market (Echchakoui 2018). The adjusted prices, therefore, act as a tool through which the clients select Amazon products in preference to the products of other online shopping platforms. However, the low costs on Amazon do depend on the perceptions of the users, and not the general pricing model in the market. The pricing model is the main survival technique for Amazon. Generally, 8% of televisions on Amazon retail at lower prices than those of other platforms, 41% of smartphones sell at lower costs, while 19% of vacuums at lower prices than those of other online shopping platforms.

The price degree of the second degree creates a negative perception of the manufacturers concerning eBay. Similarly, eBay places a minimum purchase ore for some of its products, as a strategy to maximise profits from sales. Some of the clients who do not buy on large scale, therefore, develop a perception that eBay does not offer the convenience of purchasing any product in any volume. Only large scale buyers may have a perception that eBay is a perfect platform for high volume purchases. On the other hand, the low-volume purchasers may also be subjected to high fees of delivery, due to the fixed charges on delivery per volume of the products.

Convenience/Accessibility

Amazon enhances the convenience at which the customers can search for the products and view their qualities or properties. Amazon provides clients with a detailed description of the items, and this includes the dimensions, year of manufacture, capacity, ingredients, and material of manufacture. Amazon also provides customers with a variety of products, for example, sourcing for a laptop on Amazon presents the customer with an opportunity to view several models and different prices (Maita 2018). The different models presented on the platform make the clients have a perception that Amazon is the platform where goods of all models and properties can be obtained at different prices. Amazon also stocks a variety of items, ranging from consumables to heavy industrial goods such as production machines (Maita 2018). Clients, therefore, consider Amazon a one-stop point for obtaining all the goods. Customers may, therefore, perceive Amazon as a convenient platform for the purchasing of a variety of products. Moreover, Amazon provides average discounts of 13% for every purchase (Langston 2019). eBay also provides a variety of items on the same platform, and this attracts the attention of other large companies, who then consider marketing or sourcing their products from eBay (Muhammad 2016). However, eBay does not purchase nor sell anything as their own belonging – it acts as a marketing platform for other companies, therefore, its revenue is based on the commission received from the manufacturers of the products. This has pushed eBay to volume sales, hence discouraging those who stock products on low volume.

eBay considers the convenience of the delivery of its products, and this involves the use of several delivery platforms (Satar and Dastane 2019). Clients are assured of timely delivery of their orders, even though with an additional delivery fee. Most clients in the global market find this strategy convenient since they do not have to trace the product – their orders are delivered at the comfort of their stores. Furthermore, eBay offers discounts on transport charges, depending on the volume of purchase and the destination of the product. The customer-centric approach provides eBay with a platform for commercial survival, even when the number of customers who purchase on a low scale reduces.

Social Benefit

eBay uses a marketing strategy where the clients are provided with log-in information, for access to the stock of goods (Muhammad 2016). eBay platform requires that the clients sign in using personal details. This assures clients that they are logging into a safe platform. The clients also have a perception that they are purchasing products from a safeguarded platform. Even in the physical stores, clients would be comfortable purchasing from a retail shop that is secured, for the fear of loss of goods or physical injury due to burglary. Amazon website also requires one to subscribe to the platform, for any updates on new arrivals and any changes on policies. Both Amazon and eBay provide free shipping of products up to a certain volume of the order, and this improves the social image of the firms.

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Relationship Benefit/Quality

All the products sold by Amazon and eBay undergo quality control and assurance before they are posted for sale (Satar and Dastane 2019). Clients are therefore assured that any item on the online market is of good quality. However, in case the client is served with any substandard product, they have the freedom to return the item for a quality one.

Holbrook’s (1994) Typology Value Framework

The Extrinsic Value

The extrinsic values of Amazon and eBay depend on efficiency, excellence or quality, status, and esteem (Ahuja 2018). The two online markets adopt order and delivery policies that are aimed at optimising efficiency. The marketing position of the platforms in the globe also create an impression that they have a high status and possess or stock all the products that the clients may require.

The Intrinsic Value

Hedonic values are the pleasures associated with the use of an item, and the perception of physical appearance (Zauner et al. 2015). The hedonic values of Amazon and eBay may include the physical appearance of the websites and the manner in which the items are arranged. Generally, clients take more time shopping at eBay and Amazon due to the pleasant physical display of the products. The two websites conform to the ethical standards by using neutral language to explain products’ features, and this safeguards the spiritualty and ethical beliefs of all the users.

Evaluation of Existing Value Proposition Comparison

Amazon and eBay Value Proposition – Comparison

Customers’ Experience

Amazon provides products for existing and target clients from diverse markets all over the globe. Amazon employs sales and marketing strategies that are customer-centric, hence the prices of products are reduced to the lowest possible (Ahuja 2018). The Amazon and eBay platforms can be accessed through some of the simplest gadgets and smartphones, and this allows the maximum number of clients to log in and view the products. Despite being a one-stop solution to a person’s shopping demands, Amazon has other specific strategies to ensure that their products and services are preferred by the clients. The strategies improve the market share of Amazon. However, on eBay, the subscription fees for the specialised business platform limit the achievement of the maximum number of shoppers.

Competitive Positioning

Amazon and eBay apply different models of sourcing for their products, and these include standard inventory, just-in-time inventory, and third party clients (Šapić and Topalović 2015). The standard inventory has the most popular items in their stock at their centres of fulfilment. The just-in-time inventories are delivered directly from the manufacturer to the Amazon stores. The 3rd party sellers only use Amazon and eBay as sales and marketing platforms.

Benefits

A fair percentage of the profits from the increased volumes of sales are shifted to funding deliveries, such that consumers receive their products earlier than the initial delivery time (Satar and Dastane 2019). The reinvestment of revenue to enhance delivery further provides Amazon with the opportunity to lower the unit costs of their products. This forms the virtuous cycle where the company makes profits even on low volumes of sales, as opposed to eBay where the revenue is proportional to the volume of sales. The leading factor for the purchase of items from Amazon is the price factor, followed by the prime benefits, then the convenience. Customer selection, fast shipping, reliability, reviews, and easy returns are other factors that spur purchases from Amazon and eBay.

Price

Amazon has 3 main techniques of value proposition, and these include low prices, fast delivery, and vast selection (Ahuja 2018). The company uses its virtuous cycle as a reference point for the provision of products and services. Similarly, eBay uses the price reduction strategy and fast delivery, as techniques for the improvement of volumes of sales. Product selection and low prices are the main objectives of Amazon, right from the initial days of its operation. However, due to the price adjustment strategy that led to the shifting of many clients to Amazon, the competitor also adopted the price reduction technique, as a way to retain the existing clients and bring back the ones that shifted to the other online stores. Initially, Amazon applied the strategy of cost-cutting but saved most of the revenue from brick-and-mortar outlets. The virtual cycle consists of the sellers, the experience of customers, the flow of goods (traffic), and the selection, which is manipulated by a low-cost strategy. Amazon converted their relatively low prices to higher revenues, and this was indicated by the rise in the volume of shares and stock prices (Murphy and Murphy 2017). However, even with the strategy of price reduction, eBay still experiences a seasonal reduction in revenues and share prices, and this may be due to the shift of clients to other online purchasing platforms where the prices are relatively low.

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Competitive Differentiation

Amazon and eBay have department links for the ease of selection of products, ranging from electronics, media, foods, and consumables (Ahuja 2018). Each of these product categories has a specific link through which the customers can navigate and place their orders. However, this customer proposition is a great one but can be costly if the market shifts to serve mainly brick-and-mortar clients.

Benchmarking Value Proposition of Amazon and eBay

Proposed Functional Value

Amazon developed from being an online store for books to a provider of a wide range of products. The expansion to stock many products, and to deliver them to the international market, is a strategy for the enlargement of customer volume (Satar and Dastane 2019). This can be noticed from the company’s mission statement, which emphasises the value of customers, and the provision of anything that the clients may need to outsource online. eBay was initially a free platform on which anyone could subscribe and view or post products for sale. Currently, eBay gains value proposition by improving accessibility, brand, and the reduction of risk (Muhammad, 2016), (Mencarelli and Lombart 2017).

Proposed Emotional Value

Amazon uses different platforms to reach company owners and other business people who produce and stock goods on a large scale (Ahuja 2018). Marketplace allows large scale retailers to reach a wider customer audience, hence an improved volume of sales. On the contrary, eBay is a general platform where buyers and sellers can post and buy items at the same time. Tools for posting questions and reviews concerning the individual products or the quality of services are also provided by Amazon. This helps in the conversion of viewers to customers since it is easier for potential clients to trust Amazon products based on the buyers’ reviews. A similar feedback platform is offered by eBay, and this enhances sales for producing companies (Satar and Dastane 2019).

Proposed Social Value

Amazon has also organised its services and products to be provided using affiliate websites. This enables the company to reach different audiences without having to congest all of them onto a single platform (Zauner et al. 2015). For instance, Kindle is an online book store where the readers can access, buy and download a variety of books. Kindle can also be used as a storage for soft copies that the readers have downloaded. Therefore, through Kindle, students, educators, researchers, and any other person who uses a large volume of books can find Amazon a suitable source for the digital versions of the reading materials. On the other hand, accessibility on eBay is enhanced through a channel for obtaining items that are quite cumbersome to get, and also provides a large customer base for any product that is posted for sale. Clients have the option to sell their products at any desired price, provided the cost is above the minimum set by eBay (Muhammad 2016). Sellers specify the state of their products so that buyers have prior knowledge of the product before they place their sales.

Amazon enhances the lead time of their products by using a specific channel for delivery. The company adopted Prime, as a tool for the enhancement of online convenience (Ahuja 2018). Prime is a platform that is suitable for clients who want their products to be delivered urgently. eBay does not have any special delivery channels (Muhammad 2016). Through the free one-day delivery of the products, Amazon captures a wide market of clients whose orders are urgent. Prime is a specialised platform, where the clients feel privileged and accorded special attention. On eBay, clients have the same priority of access to the products.

Proposed Epistemic Value

eBay provides a guarantee for stock, hence buyers are at liberty to return goods whose properties do not match the order (Muhammad 2016). Orders are placed based on a cli]ent’s understanding of the described product properties. eBay provides a money-back guarantee for goods that do not match the initial clients’ requirements. Amazon also provides a money-back guarantee for items that do not match clients’ initial requirements. Some of the strategies for value proposition used by the companies are the same, while other techniques are unique to a given company. Generally, the strategies employed by Amazon seem superior to those of eBay. Therefore, the firms should borrow each other’s unique strategies to make efficient online sales platforms.

New Proposed Value for Amazon

The interconnectivity of the global economy has instigated drastic changes to be encountered in the business world over the last few years. Consequently, there is a rise in the apprehension of firms for risk oversight, unethical practices, the accountability of the management, and the strategic management of company stakeholders (Yu et al. 2018). The drastic results triggered by the 2008 recession caused investors in the stock market to consider the environmental, social, and governance factors of the firms that they aimed to capitalise in to ensure that their businesses were sustainable in the long term. ESG investment allows three aspects of a company that are not finance-related, to be considered concerning various stakeholders. Firstly, it analyses the impact of the company on society through philanthropy, product safety, health and safety, fair trade principles, and company diversity and inclusion. Secondly, it considers the impact of the company on the natural environment based on water use, energy consumption, and carbon emissions, and the use of renewable energy. Lastly, it enhances the quality of a firm’s corporate governance by analysing stakeholder protection, board independence, and bribery and corruption.

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The Shareholder Value Theory, which was popularised by Mildred Friedman in 1970, has been adhered to by many investors and financial managers over the years (Uzsoki 2020). The theory argues that the main social responsibility that firms have is to maximise the wealth of shareholders. Therefore, using this theory, many investors have put profit maximisation above all other factors in their investment practices. Over the years, the high returns on businesses have led to the continuation of the shareholder value theory, but modern investors have realised that this method of investment has a high price that society has had to pay for. Consequently, this has increased the popularity of ESG investment principles.

Amazon can adopt the ESG strategies of investment to ensure that they have a good corporate image in the global market (Uzsoki 2020). The ES strategies can be adopted through several strategies such as green transport and delivery systems. The companies can gain the attention of suppliers and clients if their activities are aimed towards the reduction of costs and the development of a clean environment. Clients would be more inclined to transact with firms that mind the environmental impact of their business activities.

Different ESG investment strategies have been used over the years. Firstly, there is the engagement and voting strategy, which is built on the theory of shareholder stewardship (Yu et al. 2018). It is based on the notion that stockholders are stewards of the assets that they decide to invest in and that they have an obligation to the beneficiaries based on their methods of selecting the assets that they invest in. They, therefore, support actions that are in line with ESG principles or fight against the efforts that are either controversial or that do not support their principles. By being active in the firms that they invest in, shareholders hence ensure that they honour their social obligations. The higher the proportion of non-executive directors and shareholders who are actively involved in company operations, the higher the returns recorded by the companies. Impact investing refers to investments that bring socio-economic gains that are measurable and which also bring in financial returns. Customers are generally attracted to conducting business with companies that have a good financial image in the international market. Therefore, good financial reports will earn Amazon and eBay more clients who advertise their products on the 2 online marketing platforms.

Impact investing has been categorised into two groups, which include sustainability-related projects and projects that bring about social integration (Uzsoki 2020). The exclusions or negative screening strategy. This involves the elimination of specific firms or sectors from a portfolio due to various motivations. These include; environmental factors, faith-based reasons, or governance issues. There is a sustainability-themed investment screening strategy that considers different issues such as climate change, energy efficiency, forest management, and water preservation. There is also norm-based screening, which involves the screening of existing and potential firms against a range of ESG standards. Companies that use ESG investing strategies have high returns, which increases shareholder wealth. There are many cases where company returns increase due to the implementation of ESG investment strategies since managers leverage ethics to build capital added value.

Implementation Plan

The ESG strategies are implemented by considering financial and customer perspectives (OECD 2017). The value of enterprise-level can be created or realised by the institution of effective processes that aid in the achievement of a sustainable allocation of resources, quality and effective governance, and the efficient integration of new modes of operation. The financial synergy of a firm is created when the processes for the change in modes of operation are conducted in a manner that ensures continuity in operations in the long term. A company that may wish to merge with the other, for the sole purpose of achieving the objectives of the ESG strategies has to adopt a governing process that is savvy and robust. The customer perspective should also be recognised to ensure that all the adjustments in operations consider the welfare of clients. The leveraging of associations between the other business units ensures that all the clients experience the benefits of the new mode of operation, which in this case, is the adoption of the ESG strategies.

The implementation of the ESG strategy by Amazon can begin internally with an effective strategy of convergence, where all the planned processes for the implementation are communicated through the channels of the companies (Kumar and Dayaramani 2018). The second stage for the implementation involves a test run for the ESG, to establish how efficient it can be in the execution of the companies’ internal affairs. The companies may choose a section of the departments to test the proposed strategies. The mode of operation is adjusted depending on the impact that the ESG strategies have on the efficiency of operations. The new model for conducting internal affairs is tested for the second time, after the adjustments. When the company has achieved the desired level of efficiency with the incorporation of ESG strategies, the new mode of operation is rolled out to the other departments (Mooij 2018).

The external implementation of ESG strategies begins with a pilot run at single outlets (Kumar and Dayaramani 2018). The new mode of operation is tested in a selected region, for example, the geographical market within the UK. The program is adjusted depending on the outcome of the pilot run until the desired levels of efficiency and sustainability are achieved. The ESG strategies are finally rolled out to the international market, for the realisation of the desired extent of corporate sustainability. The budget and Gantt for the implementation are indicated in table 1 (refer to the appendix).

Conclusion

The study established the customer perceived value of Amazon and eBay, by looking into the economic benefits, convenience, social, and quality advantages. The research established that the two online markets provide economic merits to the users by adopting price adjustment strategies that are aimed at maximising the volume of purchases. Convenience is achieved by the display of goods in specific groups, depending on product type and the corresponding target group. The websites also gain a good reputation by monitoring the quality of products, and the provision of free or subsidised delivery for specific purchase volumes of some products. The companies enhance their product variety by sourcing from different manufacturers, and this creates an impression that the markets are a one-stop solution to the client’s demands. Value proposition advocates for the improvement of delivery, pricing, and social value. The advancements can be achieved through the adoption of ESG investment strategies, which ensure that the companies consider sustainability in the social, environmental and governance in their commercial operations. Extensive research should be conducted to establish the operational sustainability standards that are currently adopted by Amazon and eBay.

Appendix

Table 1: Gantt Chart and Budget

Activ. No. Activity Start date End date Budget ($)
1 Sensitisation about the ESG program 01/05/2020 30/05/2020 5000
2 The initial pilot run internally 01/06/2020 31/08/2020 7500
3 Testing and adjustments 01/09/2020 13/09/2020 2000
4 Full roll-out internally 01/10/2020 10000
5 The initial pilot run externally 01/11/2020 23/12/2020 8000
6 Testing and adjustments 24/12/2020 31/12/2020 3000
7 Full roll-out externally 02/01/2021 100000

Source: Author (2020)

References

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Echchakoui, S. (2018). ‘An analytical model that links customer-perceived value and competitive strategies’. Journal of Marketing Analytics, 6(17), 138-149. Web.

Kumar, R. and Dayaramani, N. (2018). A practical framework for identifying the ESG strategy that is right for you. Web.

Langston. (2019). Consumer behaviour and expectations in today’s changing media landscape (1 ed.). Web.

Maita, C. (2018). An exploratory study on consumer perceptions of Amazon Echo, Alexa, and Smart Speakers. Web.

Mencarelli, R. and Lombart, C. (2017). ‘Influences of the perceived value on actual repurchasing behavior: empirical exploration in a retailing context’.. Journal of Retailing and Consumer Services, 25(9), 2-27. Web.

Mooij, S. (2018). Asset manager’s ESG strategy: lifting the evil. Web.

Muhammad, F. (2016). ‘Factors affecting the repurchase online shopping intention of Thai customers in Bangkok: a case study of eBay.com’. Journal of Business Research, 50(2), 1-7. Web.

Murphy, R. and Murphy, R. (2017). Electronic commerce and the value proposition. Web.

OECD. (2017). Investment governance and the integration of environmental, social and governance factors. Web.

Šapić, S. and Topalović, S. (2015). The influence of perceived value dimensions on customer loyalty. Web.

Satar, N. and Dastane, O. (2019). ‘Customer value proposition for E-Commerce: a case study approach’. International Journal of Advanced Computer Science and Applications, 10(2), 454-458. Web.

Uzsoki, D. (2020). Sustainable investing: shaping the future of finance. Web.

Yu, Y., Chan, A., Chen, C. and Robert, O., 2018. Review of social responsibility factors for sustainable development in public–private partnership. Sustainable development, 28(13), pp. 2-10.

Zauner, A., Koller, M. and Hatak, I. (2015). Customer perceived value—conceptualisation and avenues for future research. Cogent Psychology, 2(10), 1-17. Web.

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