Why eBay Announced A Price Match Guarantee

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As it looks to carve a bigger niche for itself in the e-commerce segment, eBay (NASDAQ:EBAY) recently announced that brand new items on its eBay deals page will qualify for a price match guarantee. This will be applicable for identical products available on competitors’ website such as Amazon, Walmart, Best Buy and a few others. Buyers can inform eBay’s customer service representatives of the lower prices, and upon verification the company would issue a coupon for the difference. While price is a key factor for customers in looking for online deals, faster delivery, authentic products and reliability are also extremely important. A price match guarantee can ensure that buyers do not leave eBay’s platform if they find a better deal on another website; however, it is unlikely be a major factor in attracting more customers to eBay.

Retaining Existing Users

At the initial stages of e-commerce, consumers preferred buying products online since they were cheaper than an offline store. However, players such as Amazon have changed the dynamics of the industry with faster, guaranteed and free delivery (for subscribers) and providing personalization based on the customer’s purchase history. In March last year, Amazon stopped its price protection policy for all products except televisions but continues to offer competitive prices and grow its Prime member base via several perks. However, other players such as Best Buy and Wal-Mart continue to offer price protection. While Amazon has a strong user base and does not need a price match guarantee to grow revenues, eBay is still working on a way to boost its revenues. A price match guarantee can ensure that customers who are already on its platform do not move to other sites where a better deal is available. We believe this strategy can help the company retain its existing customer base but might not help in growing it. The company needs to continue to work on its other initiatives such as a rich and unique inventory, and faster and reliable delivery to grow users.

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