1. shopping
2. auctions

Elise Lin
BUS 550
• Background Overview
• Macro and Micro
• What made a difference in China
• eBay vs. Taobao: business strategies and technologies
• Comparison in the capital market
• Conclusion
• 1995:Pierre Omidyar founded eBay, an online marketplace for
buyers and sellers
• 1998: listed on NASDAQ
• 2002: acquired
for $1.5 b
• 2002: started strategic alliance with
in China
• 2005: acquired
for $2.6 b
Voice Over Internet Protocol (VOIP)
Growth Strategy: acquisition
eBay’s headquarters in San Jose
Source: Internet World Stats
First Mover
Advantage
• 1999: EachNet was founded by two Chinese entrepreneurs,
American- trained MBAs inspired by eBay’s success
• 2001: EachNet held 90 % of China’s Internet C2C market
• 2001: EachNet started to charge listing fees to sellers
• 2001: eBay approached EachNet
• 2002: eBay acquired EachNet for $180 m (record high in China)
• 2002: eBay Japan struggled
• 2004: eBay China officially moved onto eBay’s global platform
eBay considered China to be the company’s second most
important target market, after the U.S.
B2B
C2C
(Taobao)
Internet portals
B2C
Cloud computing
Shopping search engine
third-party online
payment platform
2% (Ma and
managements)
Alibaba Group’s headquarter in Hangzhou, China
Source: www.people.com.cn
•
•
•
•
•
1999: Alibaba was founded in Jack Ma’s apartment
2002: Alibaba grew to be the leading B2B Website in China
2003: Taobao was founded again in Jack Ma’s apartment
2004: Alipay was launched
2008: Taobao Mall, a dedicated B2C platform, is introduced to
complement Taobao’s C2C marketplace
• 2010: Taobao Mall launches a new independent web domain,
Tmall.com
• 2011: Taobao broke into three separate companies, Taobao
Marketplace, Tmall.com and eTao
• 2012: Tmall.com changes its Chinese name to strengthen its
positioning as a source of high-quality, brand-name products
• Centralization
-- Too globalized, not localized enough
2005: Jack Ma: eBay may be a shark in the ocean, but I am a crocodile
in the Yangtze River. If we fight in the ocean, we lose–but if we fight in
the river, we win.
• Less innovative and integrations in
technology(IT systems)
• Arrogant, over-confident
2004: Cobb: viewed Internet C2C as eBay’s primary expertise, and did
not think that it could be matched by its competitors in China
• eBay changed the Chinese operation to match with eBay global (listing categorization,
interface styles and technologies)
• Taobao : categorizes as the typical structure of a local department store
• eBay created a regional layer, eBay Asia in Korea
Inflexibility to respond to the customer
• eBay Moved servers and the maintenance to Silicon Valley
Chinese customers complained
• Pricing changed
: insertion fees, final-value fees and features fees
: 3% of the transaction as the service fee
: no fee
Sources: eBay
Source: Tmall
Competing in Technology Services (IT systems)
eBay
Taobao
Payment Services
1. An Fu Tong by EachNet
(2004)
2. PayPal by eBay (2003)
Payment descriptions
An Fu Tong: Alipay + PayPal
Secure buyers
Response from customers
Customer confusion
Customer trust
Corporate response
Emphasized 2 distinct systems
Alipay available to
merchants beyond Taobao
Encountered tight control of
financial service providers
Ma and his team had
longstanding relationship
with China officials
Integrations of IT systems
Lack of integration
Integrated delivery service
requests into Alipay’s user
interface
Result
21% of its users use payment
services
79%
Relationship with key
government
Alipay (2003)
Marketing Strategy
eBay
Taobao
Spend heavily in
marketing campaigns
Grassroots approach
(bulletin board services)
Main website had
exclusive agreements
with all major Chinese
websites
“Ants way” to response
(Strength in numbers)
Ma: “eBay may have deep pockets, but we
will cut a hole in their pocket.”
Customers perceive
Taobao as informal
and friendly
Categorizes
similar to local
department stores
No fee policy and
secured Alipay
service discourage
customers from doing
offline trasactions
Integrated an instant
messaging service
into each seller’s
webpage
AliWangwang: http://www.taobao.com/wangwang/2010_fp/buyer.php?TBG=43351.80787.3
Source: yahoo finance
NASDAQ
China Shanghai Composite Index
• Nowadays it is important for corporations to go global, but key
strategies have to be considered:
• Centralization vs. decentralization (empowerment, globalized)
• Potential issues from growing through acquisitions (cultural conflict, IT
integrations…)
• Are you ready for the target market (Alibaba failed in Korea)
• For contemporary companies, how to find the IT FIT that can go
along with the company culture and the external environment is
a key to success
• How to generate the revenue (revenue streams) in order to gain
substantial competitive advantage in the market
In the case eBay and Taobao, which company did eBay acquire?
a.
b.
c.
d.
EachNet
EveryNet
Baidu
Tmall
In the case eBay and Taobao, why did eBay in China have only
21% of its users use their payment services?
a.
b.
c.
d.
Taobao had first mover advantage
eBay China’s payment system constantly crashed
Customers confused about multiple payment systems
None of the above
In the case eBay and Taobao, why did Chinese customers
complain about the eBay China’s availability of service?
a.
b.
c.
d.
eBay China’s servers were overloaded by too many users
Maintenance was done on California time schedule
Hackers attacked eBay servers
Government censorship in China
Q&A
Beijing's Bird's Nest stadium
National Aquatics Center, Beijing, China