The Acquisition of Ebay and Paypal

In: Business and Management

Submitted By walklty
Words 1172
Pages 5
Introduction This case study is going to introduce the acquisition of eBay and PayPal, and why eBay decided to acquire PayPal, what happened after the acquisition, and my recommendations about eBay’s acquisition strategy. I will start with the backgrounds of these companies. In PayPal's official website, it described itself as “ the safer, easier way to pay and get paid online. The service allows anyone to pay in any way they prefer, including through credit cards, bank accounts, PayPal Smart Connect or account balances, without sharing financial information." (PayPal, n.d., para 1). It is a person to person (P2P) payment system that people can transfer money easily by using its services; it is very popular in the online shopping area. Another company, eBay, was defined in its official website as an online shopping website in which individuals and companies can buy and sell various goods and services worldwide (eBay, n.d., para 1). Both companies are focusing on the online trade sector; but eBay is similar to an "auction" as well as PayPal is a payment method. Motivation Online P2P payment was a new idea at that time, and as any emerging market, many P2P services such as Flooz, Beenz, and CyberCash were failed (Punch, 2002, para 3). PayPal was one of those P2P payment companies that survived after competition. At that time, PayPal became the leader in P2P payment industry, and it was the most popular payment method in eBay auctions; more than 50% eBay users were using PayPal (LD, 2010, para 2). On the other side, eBay's own online payment service, Billpoint, had struggled to win market share from PayPal. According to Kane, a staff writer of CNET News, eBay wanted to increase the number of electronic payments made via eBay (2002, para 7). However, Billpoint was unsuccessful, so the administer of eBay decided to acquire PayPal in order to help eBay to speed…...

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