tao bao ebay china by ying wang. taobao vs.ebay china 2006 2003 2002 20012000 2008 tao bao ebay...
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Tao Bao EBay China
By Ying Wang
TaoBao vs.EBay China
20062003200220012000 2008
Tao Bao
EBayChina
EachNetEBay ChinaTao Bao
eachnet.com
EBay acquired EachNet
1999 2004
Launch www.ebay.cn
90
%
60
30
founded by Chinese entrepreneurs Bo Shao and Haiyin Tan
EachNet Issues Strategic Decisions
1999reluctance to complete transactions online
2000
lack of an efficient delivery system
charge listing fees to sellers
online fraud
Lack of trusttrading booths in each city, bust costlycreate a cash-on-delivery system partner with the four largest banks in China
2001 a user rating system
conduct investigations & punish cheaters
Real Name Program for user registration.
Difficultly raise capital
offered escrow service &PayPal-like serviceProcess payments
eBayfounded by an engineer named Pierre Omidyar1995
1998
Launch websites in Germany, U.K, Australia
eBay went public on NASDAQ
1999
2000 Launch websites in Japan, Canada, France, Taiwan and Austria
2001 expanded to 17 markets &had spent more than $1.6 billion on acquisitions
2002 Exited Japan & acquired EachNet
2003 James (Xigui) Zheng joined EachNet as its CFO.
2006 Established a new joint venture with TOM to operate C2C business
2007 Rank the 3rd in the C2C online market
EachNet was entirely cut off from eBay’s global platform
eBay’s Global Strategy and OrganizationChanges in eBay China
centralized to eBay headquarters in U.S
platform
servers
EachNet’s leaders
Website maintenance
pricing technologies
interface styles
listing categorization
eBay Asia.
http://www.ebay.cn/ http://www.eachnet.com/
Taobao
Jack Ma Founder & CEO
Alibaba.com B2B in 1999
• A local college English teacher
• no knowledge of computers• Step down on May 10, 2013
invest $12 million in 2003
Taobao.com C2Cheaded by Tongyu Sun
the leading B2B website in China.
searching for treasures
Softbank Capital Masayoshi Son founder&CEO
defeated eBayhttp://www.taobao.com/index_global.php
http://s.taobao.com/search?q=shoes&keyword=&commend=all&ssid=s5-e&search_type=item&atype=&tracelog=&sourceId=tb.index&rt=1369084842133&source=haiwaigou&pid=mm_14507416_2297358_8935934&unid=
Why Taobao took over eBay China?
• Taobao has an embedded competitive advantage to transform a better understanding of the national culture into an organizational culture.
• Organizational culture has significant impact on the competitive strategies and market performance.
National culture in China
• Business deals had often been negotiated face-to-face
• Guaranteed by individual reputations, • Financial transactions had relied on cash
based systems• No credit infrastructure at the individual level
Different Organizational Culture
eBay China Taobao
Wholly owned subsidiary of eBay Chinese C2C website
• Resembles its American parent in many ways
• the popular Chinese martial art subculture.
• Six core values • shop servant
Difference operation styleseBay Taobao
Communication Hierarchy and indirect Direct communications
Employees Highly educated&experienceProfessional elite
• Highly motivated college graduates• Consider each other as sisters and
brothers
Executives • western educated• Hired from all over the
world
• Local college graduates• Mostly promoted inside the co.
Difference operation styleseBay Taobao
Operational strategy
• Integrated China operation into eBay global platform
• Implemented corporate policies and procedures
• Improvised and experienced based• adapted quickly based on market
and technology environment
Decision making
• Centralized and analytical • Decentralized and semi-analytical
Customers Treated as external entities Treated as part of the company
Attitude toward media
NegativeAvoid if possible
PositiveEmbrace and take advantage of
Competing for CustomerseBay China Taobao
invest heavily in its marketing campaigns in China
switched to the “ants’ way.”
sign exclusive contracts with almost all the major Chinese websites.
posted thousands of messages to bulletin board services (BBS)
emphasis on quality service launched with an entirely no-fee model
used the category structure set by eBay’s global platform.
designed its categories in accordance with the typical structure of a Chinese department store
foster a sense of community on its website, • setting up online forums• encourage interaction b/w sellers&buyers.• integrated an instant messaging service
Less informal and friendly More informal and friendly
eBay China’s users Taobao
Competing in Payment Services
An Fu TongPayPal
AliPay
• Confused An Fu Tong &PayPal• Transaction system had erred
similargrowing slowly
• escrow services • delivery of transacted merchandise• customized services at discounted
prices to users of AliPay
offers
rapidly being adopted
eBay China
Taobao
Competing for PartnershipsPartners
eBay • nearly all the major websites in China• Global Resources• Tom.com (Hong Kong based)
Taobao • Sohu portal websites• MSN China (Microsoft's portal)
The Problem of Counterfeit Merchandise
• the market was flooded with counterfeit merchandise (clothing and accessories).
• Few buyers complained • 70% of C2C sales were of counterfeits in clothing and
accessories.• In China, no online service providers are responsible for
damages due to counterfeiting.• raised a serious dilemma for eBay corporate• In 2007, LVMH sued Taobao, lead to an agreement. • in 2008, LVMH sued eBay in a Paris court, it won the case.
Why did eBay China’s performance continue to decline?
• eBay’s global decision-making processes severely dragged down the speed of decision making in its China operation.
• Centralization harmed eBay China’s technical performance.
• Frequently change eBay China’s leadership. (3 CEOs w/n 2 Yrs)
• Relies on professional market research reports and data• Treated customers as external entities• Negative attitude toward media
Solutions for multinational firms
• Localizing top management team• Fast decision making with decentralized power
structure• Adopt a positive attitude toward media and
social networking• Partnership with strong locals• Grow market first and profit from it later
Is Taobao a Profitable Company?
• constant pressure to generate revenue• promise to offer all services free for three
more years• In May 2006, offered a fee-based service &
suspended a month later.• Alibaba.com Inc. support three more years’
fully free services on Taobao.com
Questions
1. Which one is the decision making process for eBay?
A. Decentralization B. Centralization
Questions
2. What is the payment system of Tao bao?A. PaypalB. An Fu TongC. AlipayD. Aliwangwang
Questions
3. What is the % on sales of counterfeits in clothing and accessories.A. 50%B. 60%C. 70%D. 80%
Cited Page• http://www.ebay.cn• http://www.eachnet.com• http://www.baidu.com/s?ie=utf-8&bs=Tongyu+Sun&f=3&rsv_bp=1&rsv_spt=3&wd=
%E5%AD%99%E5%BD%A4%E5%AE%87&rsv_sug3=2&rsv_sug=0&rsv_sug1=2&rsv_sug4=533&oq=SunTongyu+&rsp=0&rsv_sug2=1&rsv_sug5=0&inputT=2849
• http://www.baidu.com/s?ie=utf-8&bs=%E5%AD%99%E5%BD%A4%E5%AE%87&f=3&rsv_bp=1&rsv_spt=3&wd=%E9%A9%AC%E4%BA%91&rsv_sug3=5&rsv_sug=0&rsv_sug1=2&rsv_sug4=1122&oq=mayun&rsp=0&rsv_sug2=1&rsv_sug5=0&inputT=3644
• http://tech.sina.com.cn/i/2013-05-10/01188323836.shtml• http://www.omidyar.com/team/pierre-omidyar• http://www.baidu.com/s?ie=utf-8&bs=Tongyu+Sun&f=3&rsv_bp=1&rsv_spt=3&wd=
%E5%AD%99%E5%BD%A4%E5%AE%87&rsv_sug3=2&rsv_sug=0&rsv_sug1=2&rsv_sug4=533&oq=SunTongyu+&rsp=0&rsv_sug2=1&rsv_sug5=0&inputT=2849
Thank You
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