e-bay in china(advised by suki) (2)

7/30/2019 E-Bay in China(Advised by Suki) (2)

1/33

E-BAY IN CHINA

Hong Kong Group:

Rex

Kathy

SukiLeocean


2/33

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?


3/33

A VIDEO INTRODUCES EBAY

http://v.youku.com/v_show/id_XNDc4MjE1

NTQ0.html
http://v.youku.com/v_show/id_XNDc4MjE1NTQ0.htmlhttp://v.youku.com/v_show/id_XNDc4MjE1NTQ0.htmlhttp://v.youku.com/v_show/id_XNDc4MjE1NTQ0.htmlhttp://v.youku.com/v_show/id_XNDc4MjE1NTQ0.html


4/33

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.


5/33

HISTORY ABOUT EBAY

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%

Alibaba invested in 2003-4 to enter C2C market (Taobao.com)

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


6/33

WHY E-BAY FAILED ITS BUSINESS IN CHINA?

1. Failure to recognize the Chinese market &

consumer

2. Not suitable format for Chinese consumer

3. Slow reaction to competitor

4. Movement of technology platform to U.S.

5. Bad relationship with Chinese government


7/33

FAILURE TO RECOGNIZE THE CHINESE MARKET

Neither one spoke Chinese or understood the localmarket among the top management team.

Ex) Chinese consumers prefer private deals, as

private transactions between buyers and sellerscan build trust.

eBay buyers and sellers are not allowed the direct

contact, while Taobao have allowed real-time directcommunication through an instant chat programbetween the two sides.


8/33

NOT SUITABLE FORMAT FOR CHINESE CONSUMER

EachNet focuses more on price information and

product listings, similar to eBays style in the U.S.

Taobaos Web page provides much more thanmere 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


9/33

SLOW REACTION TO COMPETITOR

eBay blindly indulges in its global first C2C brands

and neglects innovation.

Taobao's success was that it did not charge anytransaction fee from sellers on the website while

eBay had listing fees for its sellers.


10/33

MOVEMENT OF TECHNOLOGY PLATFORM TO U.S.

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


11/33

VEDIO -CEO EBAYhttp://v.youku.com/v_show/id_XMTg1MzkxNDc

y.html
http://v.youku.com/v_show/id_XMTg1MzkxNDcy.htmlhttp://v.youku.com/v_show/id_XMTg1MzkxNDcy.htmlhttp://v.youku.com/v_show/id_XMTg1MzkxNDcy.htmlhttp://v.youku.com/v_show/id_XMTg1MzkxNDcy.html


12/33

TAOBAO BEATS EBAY

Ebay Taobao

Posting fee Picture posting

feeSearching fee

Free

Transaction

commission

Yes Free

As the posting free or commission may highly transferred to the consumers,

Taobao is more attractive than EBAY for both consumers and sellers.


13/33

WHY TAOBAO IS MORE ATTRACTIVE?

Instant communication tools

Aliwangwang

Buyers and sellers can directly communicatewith each others

(e-Bay is banned this action)

Better relationship and long-term costumersare formed.


14/33

Trustful payment method

ALIPAY ()

3

rd

party is involved to manage the paymentprocess

TaoBao has great cooperation with the local

banks (ICBC)

The mode of payment or settlement on

online bank is born


15/33

PROCESS OF ALIPAY ()


16/33

FOR THOSE DONT HAVE ONLINE BANKING

SERVICE

FOR MAINLAND CITIZENS

convenience store / post office/ drug store

an banking accountUse mobile phone add-valued card

FOR OVERSEAS USERS

CREDIT CARDS PPS () for HK


17/33

WELL-STRUCTURED CONSUMER SUPPORT

TAO-BUYER FORUMN

Allow buyers and sellers discuss on the

forumn

Exchange for Information and own

experiences

TAOBAO UNIVERSITY

Training courses and platform for the users

Better understanding of the operation


18/33

After-sales and helping center (officially)

24 hours online consumer service center


19/33

PITFALLS AND CHALLENGES FOR RE-ENTRY TOCHINA 1. Low income in lower tier cities/rural areas

2. Direct competitors(i.e.TaoBao)

3. Low nternet coverage in some regions


20/33

LOW INCOME IN LOWER TIER CITIES/RURALAREAS Very big market in developed/first tier cities

Income distribution drastically varies amongcity classes

Most of the wealth and consumptions powerare possessed by first class cities such asBeijing and Shanghai

Rural areas purchasing power is pretty lowOnly economically established regions can

be the major market


21/33

URBAN VERSUS RURAL REGIONS


22/33

INCOME GAP BETWEEN URBAN AND RURALAREAS Since 1978

income gap haskept widening

Growth rates of

rural incomewas much lower

Slightly alleviate,but not eliminate

poverty in rural


23/33

DIRECT COMPETITORS

Direct competition on e-commerce market in

China

Examples: TaoBao.com, Baidu.com, etc.

Keen competitions facing e-Bay


24/33

Although China is now perceived as a verysizable market for online selling industry

Its demand is shared by other competitors

Whose competitiveness and business areeven better and greater that e-Bay in China

Example: TaoBao

Newshttp://www.chinadaily.com.cn/bizchina/2011-09/20/content_13739102.htm


25/33

EXAMPLE: TAOBAO


26/33

LOW INTERNET COVERAGE IN REGIONS

Network connections are not elsewhere in

China

Only 137m people online (according to the

China Internet Network Information Center)

Especially for poor provinces and rural

regions where lack internet coverage and

even computer


27/33

IMPLICATION FOR E-BAY

1) The potential online purchasers of e-Bay

could have been over-estimated despite

Chinas extremely large population size

2) The expansion of business to less-

developed areas is less likely and

handicapped by insufficient internet users


28/33

CHINAS INTERNET USAGE VERSUS U.S.


29/33

MOST OF THE REGIONS IN CHINA ARE RURAL AREAS, BUT

ONLY 27.3% CHINESE INTERNET USAGES ARE FROM

RURAL AREAS.


30/33


31/33

IF YOU WERE THE NEW

EBAY CHINA CEO,

WHAT WOULD YOU DO

DIFFERENTLY THIS

TIME FROM THE LAST

TIME?

Discussion:


32/33

JUST FOR REFERENCE1. Have good relationships between related

c2c companies (Alibaba, TaoBao)

2. Adapt Chinese culture and buyer behaviors

3. Focus on Consumer needs first


33/33

EBAY http://v.youku.com/v_show/id_XNDc4MjE1NT

Q0.html
http://v.youku.com/v_show/id_XNDc4MjE1NTQ0.htmlhttp://v.youku.com/v_show/id_XNDc4MjE1NTQ0.htmlhttp://v.youku.com/v_show/id_XNDc4MjE1NTQ0.htmlhttp://v.youku.com/v_show/id_XNDc4MjE1NTQ0.html

e-bay in china(advised by suki) (2)

Documents