The dominant online trading platform, eBay, is having a difficult time expanding into the Asian markets, especially in China. Despite eBay’s previous failure to penetrate the Chinese market, the company needs to develop an effective strategy to compete in China’s markets against existing local competitors. The company eBay was found in 1995 and since then they have had much growth and success over the years. They became the dominant player in the online auction house industry through their unique business model. Their business model united buyers and sellers in an online marketplace and attracted 221 million registered users.
Their unique business model enabled e-commerce at multiple levels including local, national, and international through an array of websites that they have acquired. eBay acquired several online competitors such as PayPal, Rent. com, Shopping. com and most recently a partnership with Xiu. com, eBay Style. These trading platforms allowed eBay to offer distinct services and target-specific market niches.
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This allowed them to penetrate new market spaces and attract a range of users. The company also expanded internationally and have been successful in certain markets. eBay was considered a leader in each of its market with the except of Japan and China. eBay’s first attempt into China’s market was through the acquisition of a Chinese online auction company, Eachnet. They integrated their global strategy platform to Eachnet’s Chinese operations, essentially changing how the website originally operated. Since then, the company has lost most of their market share to local competitor Taobao. After several years eBay then decided to partner with Beijing-based Tom Online. This indicated that eBay failed to adapt to local needs and successfully compete with China’s online auction market leader, Taobao.
This shows that eBay failed to create a community effect in China as they did with their other international markets through their global platform. When eBay acquired Eachnet, their service was running on a global platform in San Jose, CA. Any decisions or features to make for China’s market would take longer to implement. This caused a lack of flexibility and adaptation to the Chinese market and they cannot respond to changes in the market conditions and needs quickly compared to their local competition.
A possible solution for eBay to successfully compete in China’s market is to improve their platform with eBay Style. The new platform will implement a feature which will allow users to communicate with each other via instant messaging. This has proven to be very effective with their rival Taobao and it will allow the users to connect with one another and create value and a sense of community in China’s market, which eBay previously could not create. It will also improve the time it takes for users to purchase items from one another on their platform. Another solution for eBay is to establish joint ventures and partner more with local Chinese companies to help them penetrate the large growing market.
This strategy will give eBay the knowledge and ability to adapt to the local needs and create brand awareness throughout China’s market that they could not do before. Through the acquisitions and partnerships eBay will be able to diversify their product and services and establish a firm foot in the market and be able to compete against existing local competitors. The recommended solution for eBay is to establish joint ventures and partner with more local Chinese companies in order to diversify their products and services tailored to the local needs and capture a large portion of China’s market.