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OVERVIEW
Introduction Why e-Bay failed its business in China? TaoBao versus e-Bay Pitfalls and Challenges for re-entry to China Discussion: What if you were the new e-Bay Chinas manager?
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INTRODUCTION
Basic Information of e-Bay Why e-Bay wanted to enter China initially? About e-Bays failure e-Bay is going to re-enter China now.
In 2003, eBay entered Chinas C2C market by acquiring EachNet EachNet, founded in 1999, was Chinas No.1 auction with peak market share of more than 90%
In 2004, Taobao occupies over 50% of Chinas C2C market; eBays EachNet about 35% In 2006, eBay sold 51% of its China division EachNet to Tom Online
Neither one spoke Chinese or understood the local market among the top management team. Ex) Chinese consumers prefer private deals, as private transactions between buyers and sellers can build trust. eBay buyers and sellers are not allowed the direct contact, while Taobao have allowed real-time direct communication through an instant chat program between the two sides.
EachNet focuses more on price information and product listings, similar to eBays style in the U.S. Taobaos Web page provides much more than mere product listings. It actively makes product recommendations and provides suggestions and tips, promoting a sense of social community. Ex) entertainment news, fashion trends, product reviews, practical tips for online shoppers
eBay blindly indulges in its global first C2C brands and neglects innovation. Taobao's success was that it did not charge any transaction fee from sellers on the website while eBay had listing fees for its sellers.
terminated EachNets homegrown technology platform and moved all EachNet users to the eBay US platform in October 2004
It made loading speed of eBay Chinas webpage slow. Three months after the platform moved, eBay Chinas market share had dropped to the almost the same level as Taobao
Taobao
Transaction commission
As the posting free or commission may highly transferred to the consumers, Taobao is more attractive than EBAY for both consumers and sellers.
Trustful payment method ALIPAY () 3rd party is involved to manage the payment process TaoBao has great cooperation with the local banks (ICBC) The mode of payment or settlement on online bank is born
PROCESS OF ALIPAY ()
After-sales and helping center (officially) 24 hours online consumer service center
1. Low income in lower tier cities/rural areas 2. Direct competitors(i.e.TaoBao) 3. Low nternet coverage in some regions
LOW INCOME IN LOWER TIER CITIES/RURAL AREAS Very big market in developed/first tier cities Income distribution drastically varies among city classes Most of the wealth and consumptions power are possessed by first class cities such as Beijing and Shanghai Rural areas purchasing power is pretty low Only economically established regions can be the major market
Since 1978 income gap has kept widening Growth rates of rural income was much lower Slightly alleviate, but not eliminate poverty in rural
DIRECT COMPETITORS
Direct competition on e-commerce market in China Examples: TaoBao.com, Baidu.com, etc. Keen competitions facing e-Bay
Although China is now perceived as a very sizable market for online selling industry Its demand is shared by other competitors Whose competitiveness and business are even better and greater that e-Bay in China Example: TaoBao News http://www.chinadaily.com.cn/bizchina/201109/20/content_13739102.htm
EXAMPLE: TAOBAO
MOST OF THE REGIONS IN CHINA ARE RURAL AREAS, BUT ONLY 27.3% CHINESE INTERNET USAGES ARE FROM RURAL AREAS.
Discussion:
IF YOU WERE THE NEW EBAY CHINA CEO, WHAT WOULD YOU DO DIFFERENTLY THIS TIME FROM THE LAST TIME?
EBAY
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