Ebay in Asia

Topics: EBay, Electronic commerce, Yahoo! Pages: 6 (2504 words) Published: September 10, 2008
1.Why has eBay struggled in Japan, China and other Asia markets? eBay is an online auction service whose business model is ideally suited to the Web. EBay stores no inventory and ships no products. Instead, it derives its revenue from the movement of information, an ideal task for the Internet. EBay has taken its model to numerous foreign markets and been successful, particularly in England, France, and Germany, however, eBay has failed to achieve the same success in the Asian markets. There are several reasons behind eBay failure in Japan, China and its slow growth in other Asian markets, such as: •Global Brand Image vs. Localization: failure to localize the brand to appeal to Asian costumers. Understanding how to localize a brand can do wonders for a company. •Use success in the US as proof-of-concept. This leads to over-confidence. The fact eBay dominates in the US or Europe means little to Asian costumers •Failure to understand and adapt to local market and culture •Failure to react quickly to local competition

Poor decision making between headquarters and local management •Low-key approach to marketing
In Japan. eBay's failure in Japan was a series of missteps. Firstly, eBay joined the market five months after Yahoo auctions, giving its competitor a massive head start to establish itself. In auctions, there is a significant first-mover advantage. A site with more sellers attracts buyers and more buyers bring sellers. This was a lesson both companies had learned through a very different experience in the U.S, where eBay led the way and Yahoo! tried with limited success to build an auction business in its shadow. Jack Ma believes EBay's failure in Japan was due to an inability to build what he calls the 'community effect' in the country. For Ma, the community effect begins with customer satisfaction. And, eBay failed to understand the Japanese buying psyche. They tried to target the younger market, and forced them to pay by credit card, but didn't realize that most young Japanese prefer to pay "cash on delivery" or by bank deposit. The final nail in the coffin was imposing a commission charge of up to 5% - where its competitor Yahoo charges nothing at all. Clearly fatal and basic flaws in their business plan. Another possible misstep was Whitman's choice of Okawara, a second-generation Japanese-American from Hawaii, as president and CEO. Okawara was well-known in Japan for turning a faltering frozen-pizza business into a $100 million company. But at 60, she was twice the age of most of her eBay Japan employees and new to the Internet. Okawara herself attributes the problems to the late launch: "When we arrived last year, the 800-pound gorilla was already positioned." Even when eBay did get in gear, it took too long, critics say, to embellish its Japanese site with the local touches needed to attract users. Over time, categories had to be changed and more free features, such as horoscopes, product reviews, and newsletters, had to be added "so it makes more sense from a Japanese point of view," says Okawara. These alterations took months. At the same time, eBay Japan also took a low-key approach to marketing, relying on its usual formula: rather than spend big bucks on advertising, just let auction fans spread the word. That passivity backfired in Japan because eBay had too few users. In contrast, Yahoo Japan spends some 8% of revenue on promotions that include renting billboards in trendy Tokyo districts, opening an Internet cafe with Starbucks, and covering the planes of a domestic airline with Yahoo's purple-and-yellow logo. By 2002, the San Francisco-area company admitted defeat, laying off all 17 of its Japan employees and shutting down the site with about 25,000 listings. All its Japanese customers would be directed to its US based auction operations/site. At the time, eBay was the number one auction site in all of the other 18 countries in which it operated and one of the few successful internet...
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