Ebay Problems in Asian Markets

Dembosky, A. (2012). Ebay moves beyond its dotcom roots. Available:http://www.ft.com/cms/s/0/df3723ca-1773-11e2-8cbe-00144feabdc0.html#axzz2EbzDqb5Y. Last accessed 10th Dec 2012

EBay is an American transnational corporation that utilizes an online interface to transmit its business globally. To become a transnational corporation your business must facilitate its operations in more than one country. EBay hosts an online marketplace where consumers and merchants can trade new and used goods for discounted prices. EBay has made it easier to shop from other countries through the process of deterritorialization. The website is also a good example of globalizing culture; which will be discussed later in the paper. EBay has not only transformed the online marketplace, but has been especially successful doing so. In an interview conducted with Entrepreneur.com, a former Fortune 500 company IT consultant stated that, “EBay became a $10 billion company selling something used cheaper than new,” (Girard, 2011.) This emphasizes how successful this business has become and what the future may hold for EBay as well as companies alike.

eBay first entered the Chinese market in 2002 by acquiring a 33% stake in its local counterpart, EachNet, followed by a full acquisition a year later in 2003. Critically assess eBay.s choice of market entry strategy for China (use Key Country Matrix), listing both the advantages and disadvantages of its acquisition strategy (use Drivers (YIP) -CAGE Matrix). 30%

Read the case carefully and answer the following questions: 1.Till 2005, eBay EachNet was the leader in the Chinese e-commerce market, controlling more than half of it. But eBay EachNet soon lost its market leadership position to Taobao.com (Taobao). In this context, analyze the reasons that can be attributed to Taobao’s edge over eBay. 2.a. To enable people to trade with each other, Pierre Omidyar created a marketplace in September 1995 which was later called eBay. By mid 1997, eBay received one million page hits per

eBay was founded in 1995 and gained the first mover advantage establishing itself as the first major online auction site. The firm started out offering its' services as an intermediary, facilitating the auction of goods by providing a common platform to be used by buyers and sellers. Today the firm has evolved significantly, operating across the globe with more than 97 million different active users registered (eBay, 2012). In total, the organization facilitates the sale of more than US $2,000 every second of every day (eBay, 2012). The growth of the auction service has died classified the development as well as acquisition strategies to provide services and products that complement the core operations. For example, the acquisition of PayPal, the online payment provider has complimented the ability for consumers to pay for goods

However, most consumers of China do not trust e-commercial retailers since e-commerce market still has a rather shorter history in China. Most researchers found out that prices of most Dotcoms

eBay’s competitive strategy is to provide an online auction platform, which, without holding inventory or providing after sale services, connects buyers and sellers in the sale of “collectibles” and unique products and not just commodities. eBay is asset light and by holding no inventory, it has the competitive advantage of being able to scale fast and enter new markets with little capital expenditure. Since eBay is primarily known for its auction services (as opposed to its “Buy-it-now” feature, which is also available), buyers gravitate towards eBay in order to be able to negotiate in a dynamic pricing system. eBay establishes its customer base from a consumer’s desire to make a steal on purchases that they would not find on other websites where goods are offered at a fixed price. This works very well specifically in a lot of the collectible transactions as it is inherently implied that negotiation will be a part of the buying and selling process. In the after sale services realm, the fact that eBay clearly does not get involved shows the strategic thought behind not wanting to get involved in the seller’s end of the transaction. This implies that eBay ends up saving a lot of capital because of not having to come up with shipping and warehousing of goods. eBay’s strategy is coherent because all competitive strategic decisions are heavily based on the online bidding model of providing a platform that

The Alibaba group has thrived in the Chinese e-commerce sector from its inception in 1998. They currently account for over 70% of online shopping in China and delivered annual revenues of $636 million in the 12month period ending June 2009 (case p1-2). Alibaba’s successes are due to multiple factors that have allowed them to create corporate advantage, and thus establish market leadership in China (Case p1). The configuration and coordination of Alibaba’s

The company eBay Inc. is an American multinational Internet consumer-to-consumer corporation. Founded in 1995 by Pierre Omidyar in San Jose, California, it is now a multi-billion dollar business with operations localized in over thirty countries including China and India. It’s main enterprise is eBay.com, an online auction and shopping website that allows people and businesses to buy and sell a broad variety of goods and services internationally. Millions of collectibles, décor, appliances, computers, furnishings, equipment, domain names, vehicles, services, intangibles and other miscellaneous items are listed, bought, or sold daily on eBay. Anything can be auctioned on the site as long as it is not illegal and does not violate the eBay’s Prohibited and Restricted Items policy.

The e-commerce industry has become a major player in the global retail environment. E-Bay's large operating history has allowed the company to build a social capital of internet buyers and sellers that has now become its competitive advantage. However, intense competition in e-commerce has lead major players to lead expansion efforts in foreign markets where growing economies exist and the number of internet users is abundant. As a facilitator of online buyer-seller transactions, the only obstacle the company needs to overcome is quickly introducing its presence in new foreign markets where growth opportunities have been identified.

E-Bay is one of the dominant players in the global e-commerce market; but because of low entry barriers E-Bay is currently facing competition in its different market segments. Therefore, this market is full of competitors such as Amazon, Craigslist, Yahoo! Auctions, and other new players such as Alibaba, Jet.com and Overstock.com. The battle between e-commerce players engage in price- based competition to persuade buyers, therefore these players limit their ability to raise prices. Also, due to relatively low barriers to entry, new companies continue to crop up in the global e-commerce market, which intensify the competition. However, one of the biggest competitor of eBay is the drop off industry,

The entry strategy for Electronic Visions (EV) to enter the Asian market is by finding a partner inside such markets as China, Malaysia, and Thailand to help build up the company 's reputation through marketing and financing of the product. Having someone inside the market that is local can help build trust because Asian businesses only like doing business with people they know and trust, so this should be a good strategy to help EV enter the Asian market.

On the other hand, EBay in China was charging users to list products and services which will discourage sellers to set up online shops on its website. This will thus cause a decrease in goods and services provided on eBay and buyers will look for alternatives because of the lack of choices. Despite eBay announcing that it will no longer charge a transaction fee on sellers on its Chinese Web site in 2006, it was already too late as Taobao had already made use the period of time (where eBay still collects fees) to garner a loyal base of

The business opportunity for eBay as of right now is not great although there is a lot of potential growth in the future. In 2014, the Indian ecommerce industry showed a tremendous growth. This growth is driven by the rapid adoption of technology such as smartphones and tablets (ecommerce in India – Accelerating growth, 2015). There are opportunities for eBay to expand its market and invest more in the future. But there are also their competitions that they need to worry about. A company like Amazon is a well-known international online shopping superstore where you can buy almost everything. There are Flipkart and Snapdeal that started their online store in India. eBay is losing its battle with their competition. For example, eBay Inc. pumped in about `650 crore into the India business last year. In comparison, Flipkart raised about $1.4 billion from institutional investors in the last 13 months, while Snapdeal mopped up $1.1 billion in about the same time. Amazon also announced in that the company will pump in $2 billion into India. Amazon has infused `2,437 crore into its India arm. (live mint, 2016). Although eBay is not making as much revenue as they wanted the future generation in India will become more online. The Indian youth will dominate the county 's 130­million strong urban mass and it will drive the consumer market growth over the next 5­10 years (The

The fact that eBay does have some successful competition means that its strategic capability has become less unique. There is a hint in their competitor profile that innovation and perhaps adaptability to different cultures as they innovate is not core to eBay and something which has been developed more successfully by others working within their own national culture. Indeed, eBay rules in its own territory of North America and in Europe. The search capability of eBay also means that niche players do not really make sense, whereas the consumer trust that comes from being a big player is worth everything when trading on-line, as is the notion that whatever you want it will be on eBay because of its size. Thus, the so-called network effects of eBay (the bigger the company, the more successful it will be) and its first mover advantage that has led to this level are key to its success.