Taobao/Ebay

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Case: Taobao VS eBay China

This case deals with the competition of dominant position in China's online market between domestic player Taobao and global internet C2C service leader eBay. EachNet was copyed from eBay's business model. As it confronted the difficulties raising capital, eBay entered China with its acquisition of the EachNet in 2002. The previous Chinese operation was changed significantly to align it with eBay worldwide systems including listing categorization, location of servers, pricing, structure of leadership. Ma, the founder of Alibaba.com Inc - the leading B2B website in China by 2002, realized the serious threat from eBay. Taobao was launched secretly until July 2003 when Ma thought it was ready to compete with eBay China. In the various competitions, Taobao took over eBay's market share gradually. Firstly, eBay approached advertising through investing heavily in its marketing campaigns and sighing exclusive contracts with almost all major Chinese website On the contrary, Taobao took advantage of BBS and posted messages to introduce Taobao to Internet users. Secondly, Taobao's entirely no-fee model helped itself won a significant number of eBay China's users. Thirdly, management of Taobao launched an integrated payment system, Alipay, within three months in 2003. In addition, Taobao also provided value added services like escrow services for buyers, discounted prices to users. Compared to the high efficiency of Taobao, eBay launched Secure Pay in Oct 2004, and Paypal, even later, in July 2005. Worse still, PayPal was prohibited from offering international transactions and flexible credit services. Furthermore, the partnerships between Taobao and Sohu/MSN China raised its profile. Meanwhile, eBay successfully got Global Resources as partner. The problem of counterfeit merchandise also brought out big burden to eBay while Taobao faced no such bind. There are other factors making eBay failed in China. The complexity of eBay's global platform...
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