eBay is an online company where people and companies do business by selling and buying a wide variety of goods and services globally, also known as e-commerce. Ebay’s business is different from the traditional selling and distribution.
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It is similar to the auction market where bids are presented on the trading ground and the customer with the lowest bid gets the item being sold. Nevertheless, on eBay, buyers and sellers are not physically present like the face-to-face business at the auction floor (Ihlwan & Hof, 2006). This paper focuses on eBay, how it entered the Asian markets and problems faced.
EBay’s market platform is structured in a way that only buyers who can gain access to the e-commerce website participate in the market. Ebay started as a unique market and its aim was to connect customers from the whole world to trade goods and services. In essence, it is a market without stores or physical presence. In addition, it earns its income through the fee paid by the buyers and sellers, which is transacted through pay pal and Bill me online money transfers. Goods are delivered through FedEx, DHL and mail (Mangalindan, 2006).
Ihlwan (2006) affirms that eBay has entered many countries, for example, the UK, Canada, Germany, and Australia and other sites in Japan and France. eBay entered Asian markets through acquisition and joint strategies because it wanted to have fast access and create a leadership position. It acquired three big online markets in Asia. For instance, In 2003, eBay bought EachNet, which was the top e-commerce site in China. As it carried out its online business, it faced challenges from a rival company – the Taobao.
It later gave up and involved eBay EachNet into a joint venture with another big company – the Tom online. Despite merging, Taobao has stayed on the lead, and that is why eBay decided to try other business strategies such as linking Chinese entrepreneurs and exporters to eBay clients in other places of the world. eBay targeted big companies such as Tang companies, which sell dresses. eBay has helped Tang to pursue global customers, thus still operating in China.
Another advantage that eBay had over Taobao is that it gained more consumer reach outside the country. Although Taobao had opened a website called alibaba.com, which catered for midsize exporters and importers around the globe, it did not cater much to consumers. Consequently, eBay got an opening and had many service agents who cater to Chinese sellers.
Chan (2007) argues that although eBay found its way into China’s market, it was faced with many challenges, including the limitations enforced by China’s communist government. Such limitations were based on the use of the Internet, limitations on some of the products and the tax and duties enforced on Internet trade.
Mangalindan (2006) highlights that as eBay acquired Chinese Companies such sachet, they thought that they would dominate China’s e-commerce, especially when they developed a technology platform to support eBay China. However, when they introduced the platform, they were forced to centralize all their online businesses in the US.
This structure raised more restrictions on access to the eBay website in the US because the Chinese buyers and sellers were unable to gain access to the website. Other companies such as Taobao got almost 86 percent of Chinese online market, and eBay gained only seven percent of the market.
In Korea, eBay’s subsidiary known as Internet Auction was once a leader in the online auction market. It gained a lot of market share, but in 2006, Gmarket Company surpassed eBay because it sold billions of goods and services. According to Ihlwan (2006), Gmarket had an income of $29.6 million in the first quarter and totaled to $59.3 million in 2005.
This increase took everyone by surprise because no one expected it to perform that way since it was a new Company. However, eBay had almost given up as it started to look for markets elsewhere, but later returned and secured agreements to have a 67% venture of the Gmarket in a deal equal to $1.2 billion.
eBay operates sites in Singapore, Philippines, and Malaysia. It has promotional sites in upcoming markets like Vietnam and is involved in mobile phone shopping where it collaborates with Singapore operator M1 Mobiles phones and helps its members to shop as they are on the go. eBay has opened micro sites that offer different goods and services sold in other places for example, Singapore.
In conclusion, eBay remains the world’s largest trade market where millions of goods and services are sold. Nevertheless, it is still striving to attain its initial goal, which was to build a worldwide trading platform that would make a trade for goods and services easier and accessible to everybody, anywhere around the globe. It has used many options to look for new market opportunities. They have tried to acquire companies that already exist and have formed partnerships in different companies.
Despite facing challenges in other countries, it is still the most popular shopping place on the Internet. However, eBay should try to come up with many strategies to strengthen itself in the market place. For example, the acquisition of Skype will help in communication to consumers who might require oral communication. This will help eBay to have a competitive advantage over its rivals such as Yahoo auctions.
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Chan, I. (2007). EBay has its eye on Southeast Asia. Business Week. Web.
Ihlwan, M. (2006). Gmarket eclipses eBay in Asia. Business Week. Web.
Ihlwan, M. & Hof, R. (2006). Out-eBaying eBay in Korea. Business Week, 3993, 74.
Mangalindan, M. (2006). China may be eBay’s latest challenge as local rivals eat into market share. Wall Street Journal, 248, pC1 (2).