Launched in 1995, eBay is one of the biggest success stories of the dot-com bubble. Its business model was one of its kind at the time. People selling used goods to other people couldn’t be easier and more profitable so its popularity took off like wildlife. By the early 2000, it set its sights on the lucrative Chinese market. Confident with its business model and strategy, expectations were high and some say it was destined to succeed in the Chinese market. eBay officially withdrew from the Chinese market in 2006. So, what exactly happened? Alibaba happened.
Although eBay had a leading start in China, it assumed its strategies that had worked so well in the west will continue to work in a Chinese environment. However, as large as eBay was at the time it lost its competitive advantage to smaller late arrivals Alibaba and its subsidiary Taobao, because its lack of understanding how the typical Chinese consumer think and their shopping habits
While there are many reasons why eBay’s initial launch failed to take off in China, we will take a look at it from a branding, localisation and marketing angle:
A vast majority of Chinese people don’t understand English hence the name ‘eBay’ to them have little meaning. Taobao on the other hand translate into ‘Finding Treasure’ hence people were more interested and curious as to what goods or ‘treasures’ they can buy online.
When eBay launched in China in the early 2000, eCommerce was only just beginning to pick up steam and people were hesitant about buying online due to concerns of privacy and security. Taobao listened to the people and implemented several features that was used to combat eBay namely free listings, Alipay and pay on arrival for products.
eBay adopted its successful C2C model at the time to China. However, Chinese people in general don’t like buying used or second hand items unless they were poor. The irony is the poor most likely couldn’t afford a computer at the time.
Taobao came late to the auction market but being a Chinese company understood how Chinese people shop and their values. By carefully analysing their opponent coupled with local understanding of how Chinese customers buy online, they were able to beat a much larger opponent in their home turf. Alibaba in the year 2015 has almost six times the GMV of eBay. However, all is not lost as eBay is set to make a comeback once again trying to tap into this lucrative Chinese market.
Having a strategy that works in your home country does not necessarily mean it will work in China. China is a diverse, rich and sometimes complicated culture with many aspects different to the west.