TAOBAO vs Ebay

8/12/2019 TAOBAO vs Ebay

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Elise LinBUS 550


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Background Overview

Macro and Micro

What made a difference in China eBay vs. Taobao: business strategies and technologies Comparison in the capital market

Conclusion


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1995:Pierre Omidyar founded eBay, an onlinemarketplace 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)

eBays headquarters in SanJose

Growth Strategy: acquisition


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Source: Internet World Stats


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First MoverAdvantage


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1999: EachNet was founded by two Chinese entrepreneurs, American- trained MBAs inspired by eBays success

2001: EachNet held 90 % of Chinas 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 eBays global

platform

eBay considered China to be the companys secondmost important target market, after the U.S.


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C2C(Taobao)

B2C

Cloud computingInternet portals

Shopping searchengine

B2B

third-party onlinepayment platform


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Source:

www.people.com.cn

Alibaba Groups headquarter in Hangzhou,China

2% (Ma andmanagement

s)


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1999: Alibaba was founded in Jack Mas apartment 2002: Alibaba grew to be the leading B2B Website in

China 2003: Taobao was founded again in Jack Mas apartment 2004: Alipay was launched 2008: Taobao Mall, a dedicated B2C platform, is

introduced to complement Taobaos 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,


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Centralization

-- Too globalized, not localized enough2005: 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 intechnology(IT systems)

Arrogant, over-confident2004: Cobb: viewed Internet C2C as eBays primary expertise,and did not think that it could be matched by its competitors in

China


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eBay changed the Chinese operation to match with eBay global (listingcategorization, interface styles and technologies)

Taobao : categorizes as the typical structure of a local department store

eBay created a regional layer, eBay Asia in Korea

eBay Moved servers and the maintenance to Silicon Valley

Pricing changed

: insertion fees, final-value fees and features fees: 3% of the transaction as the service fee

: no fee

Inflexibility to respond to the customer

Chinese customerscomplained


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Source: Tmall


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eBay Taobao

Payment Services1. An Fu Tong by EachNet(2004)2. PayPal by eBay (2003)

Alipay (2003)

Payment descriptions An Fu Tong: Alipay +PayPal Secure buyers

Response fromcustomers Customer confusion Customer trust

Corporate response Emphasized 2 distinctsystems

Alipay available tomerchants beyondTaobao

Relationship with keygovernment

Encountered tight control offinancial service providers

Ma and his team hadlongstanding relationshipwith China officials

Integrations of ITsystems

Lack of integration Integrated deliveryservice requests into

Alipays user interface

Result 21% of its users use 79%

Competing in Technology Services (ITsystems)


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eBay Taobao

Marketing Strategy

Spend heavily inmarketing campaigns

Grassroots approach(bulletin boardservices)

Main website hadexclusive agreementswith all major Chinese

websites

Ants way toresponse (Strength innumbers)

Ma: eBay may have deep pockets, butwe will cut a hole in their pocket.


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Source: yahoo finance


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NASDAQ

China Shanghai CompositeIndex


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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 thatcan 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


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In the case eBay and Taobao, which company did eBayacquire?

a. EachNetb. EveryNetc. Baidud. Tmall


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In the case eBay and Taobao, why did Chinese customerscomplain about the eBay Chinas availability of service?

a. eBay Chinas servers were overloaded by too manyusers

b. Maintenance was done on California time schedulec. Hackers attacked eBay servers

d. Government censorship in China


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TAOBAO vs Ebay