Download - TAOBAO vs Ebay
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Elise LinBUS 550
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Background Overview
Macro and Micro
What made a difference in China eBay vs. Taobao: business strategies and technologies Comparison in the capital market
Conclusion
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1995:Pierre Omidyar founded eBay, an onlinemarketplace for buyers and sellers
1998: listed on NASDAQ
2002: acquired for $1.5 b 2002: started strategic alliance with in China 2005: acquired for $2.6 b
Voice Over Internet Protocol (VOIP)
eBays headquarters in SanJose
Growth Strategy: acquisition
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Source: Internet World Stats
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First MoverAdvantage
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1999: EachNet was founded by two Chinese entrepreneurs, American- trained MBAs inspired by eBays success
2001: EachNet held 90 % of Chinas Internet C2C market
2001: EachNet started to charge listing fees to sellers 2001: eBay approached EachNet 2002: eBay acquired EachNet for $180 m (record high in
China) 2002: eBay Japan struggled 2004: eBay China officially moved onto eBays global
platform
eBay considered China to be the companys secondmost important target market, after the U.S.
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C2C(Taobao)
B2C
Cloud computingInternet portals
Shopping searchengine
B2B
third-party onlinepayment platform
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Source:
www.people.com.cn
Alibaba Groups headquarter in Hangzhou,China
2% (Ma andmanagement
s)
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1999: Alibaba was founded in Jack Mas apartment 2002: Alibaba grew to be the leading B2B Website in
China 2003: Taobao was founded again in Jack Mas apartment 2004: Alipay was launched 2008: Taobao Mall, a dedicated B2C platform, is
introduced to complement Taobaos C2C marketplace 2010: Taobao Mall launches a new independent web
domain, Tmall.com 2011: Taobao broke into three separate companies,
Taobao Marketplace, Tmall.com and eTao 2012: Tmall.com changes its Chinese name to
strengthen its positioning as a source of high-quality,
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Centralization
-- Too globalized, not localized enough2005: Jack Ma: eBay may be a shark in the ocean, but I am a
crocodile in the Yangtze River. If we fight in the ocean, we lose but if we fight in the river, we win.
Less innovative and integrations intechnology(IT systems)
Arrogant, over-confident2004: Cobb: viewed Internet C2C as eBays primary expertise,and did not think that it could be matched by its competitors in
China
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eBay changed the Chinese operation to match with eBay global (listingcategorization, interface styles and technologies)
Taobao : categorizes as the typical structure of a local department store
eBay created a regional layer, eBay Asia in Korea
eBay Moved servers and the maintenance to Silicon Valley
Pricing changed
: insertion fees, final-value fees and features fees: 3% of the transaction as the service fee
: no fee
Inflexibility to respond to the customer
Chinese customerscomplained
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Source: Tmall
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eBay Taobao
Payment Services1. An Fu Tong by EachNet(2004)2. PayPal by eBay (2003)
Alipay (2003)
Payment descriptions An Fu Tong: Alipay +PayPal Secure buyers
Response fromcustomers Customer confusion Customer trust
Corporate response Emphasized 2 distinctsystems
Alipay available tomerchants beyondTaobao
Relationship with keygovernment
Encountered tight control offinancial service providers
Ma and his team hadlongstanding relationshipwith China officials
Integrations of ITsystems
Lack of integration Integrated deliveryservice requests into
Alipays user interface
Result 21% of its users use 79%
Competing in Technology Services (ITsystems)
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eBay Taobao
Marketing Strategy
Spend heavily inmarketing campaigns
Grassroots approach(bulletin boardservices)
Main website hadexclusive agreementswith all major Chinese
websites
Ants way toresponse (Strength innumbers)
Ma: eBay may have deep pockets, butwe will cut a hole in their pocket.
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Source: yahoo finance
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NASDAQ
China Shanghai CompositeIndex
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Nowadays it is important for corporations to go global,but key strategies have to be considered: Centralization vs. decentralization (empowerment, globalized) Potential issues from growing through acquisitions (cultural
conflict, IT integrations) Are you ready for the target market (Alibaba failed in Korea)
For contemporary companies, how to find the IT FIT thatcan go along with the company culture and the external
environment is a key to success How to generate the revenue (revenue streams) in order
to gain substantial competitive advantage in the market
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In the case eBay and Taobao, which company did eBayacquire?
a. EachNetb. EveryNetc. Baidud. Tmall
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In the case eBay and Taobao, why did Chinese customerscomplain about the eBay Chinas availability of service?
a. eBay Chinas servers were overloaded by too manyusers
b. Maintenance was done on California time schedulec. Hackers attacked eBay servers
d. Government censorship in China
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