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