Download - E-Bay in China(Advised by Suki) (2)
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E-BAY IN CHINA
Hong Kong Group:
Rex
Kathy
SukiLeocean
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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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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 -
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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.
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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
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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
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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.
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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
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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.
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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
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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 -
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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.
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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.
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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
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PROCESS OF ALIPAY ()
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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
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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
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After-sales and helping center (officially)
24 hours online consumer service center
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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
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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
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URBAN VERSUS RURAL REGIONS
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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
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DIRECT COMPETITORS
Direct competition on e-commerce market in
China
Examples: TaoBao.com, Baidu.com, etc.
Keen competitions facing e-Bay
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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
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EXAMPLE: TAOBAO
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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
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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
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CHINAS INTERNET USAGE VERSUS U.S.
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MOST OF THE REGIONS IN CHINA ARE RURAL AREAS, BUT
ONLY 27.3% CHINESE INTERNET USAGES ARE FROM
RURAL AREAS.
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IF YOU WERE THE NEW
EBAY CHINA CEO,
WHAT WOULD YOU DO
DIFFERENTLY THIS
TIME FROM THE LAST
TIME?
Discussion:
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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
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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