posted on December 20, 2006 12:19:55 PM new
Perhaps everyone here already has heard this news? I especially like the last sentence.
EBay to enlist a partner in China
Falling far behind rival Taobao, the Internet auction firm will open a site with Tom Online.
By Don Lee, Times Staff Writer
December 20, 2006
SHANGHAI — If only EBay Inc. had listened to Chinese Internet users like Gong Yunzhe.
The 25-year-old Shanghai woman is one of 30 million Chinese who have bought goods online. She tried EBay but found it costly and hard to use. Worst of all, none of its online stores had phone numbers or e-mail addresses on them.
By contrast, Taobao, EBay's rival in China, allowed Gong to chat instantly with sellers through messaging and voice mail.
"You can ask any question about the product, tell the seller when you want to get it and bargain to beat down the price," she said. "This is the Chinese way of buying products, not waiting for e-mail from the seller you are unfamiliar with."
The cultural gap is one big reason EBay's chief executive, Meg Whitman, is shifting strategy in China. She announced today in Shanghai plans to shut down the company's main website in China and join with a local partner, Tom Online Inc., a popular Internet portal and wireless operator based in Beijing.
It was a stark admission that the San Jose-based Internet auction firm was faltering here despite having spent hundreds of millions of dollars. It was less than two years ago that Whitman said: "We are on a tear to be the undisputed winner in China."
EBay's troubles in China underscore the difficulty of transplanting e-commerce business models across borders, especially in China, with its scrappy local competitors.
Taobao, operated by Alibaba.com and its celebrity boss, Jack Ma, has been quick to capitalize on EBay's missteps. Taobao's online auction market share in China stood at 67% early this year versus 29% for EBay, Chinese surveys show. It was the other way around three years ago.
Today's announcement is tantamount to saying, "EBay will no more directly operate its business in China, and retreat from China's market," said Hong Bo, an Internet industry analyst in Beijing.
He said it wasn't clear that teaming up with Tom Online would save EBay in China. Although word of the tie-up has boosted Tom Online's stock price, Hong said, the company doesn't have experience in e-commerce. EBay shares fell 29 cents to $32.13 on Tuesday.
Tom Online, a unit of Tom Group, which is owned by Hong Kong billionaire Li Ka-shing, would put in $20 million toward the venture and take a 51% stake in the new site, to be launched next year. EBay would contribute $40 million for a 49% interest.
Whitman said EBay wasn't giving up on China.
"We're still enthusiastic about China's market," she told reporters today at a news conference. "We don't see it as a failure. We see it as an evolution of our strategy in China."
EBay entered China in 2002 when it paid $30 million for one-third of Shanghai-based Eachnet.com. The following year it ponied up $150 million to take full control and began to integrate its online platform with Eachnet's.
That same year Ma launched Taobao, undercutting EBay by offering its service to sellers free, something that EBay reluctantly matched two years later. Chinese consumers found Taobao's simpler look more appealing and its online payment service easier to set up and use than EBay's PayPal e-commerce system.
"It took me two whole days to search page after page on EBay about how to apply and register for PayPal," said Yin Shaoming, 30, of Jiangsu province. "It wasn't until the third day that I started to get some clues."
Uploading products into stores wasn't much easier. And EBay's "e-store secretary," Yin said, "didn't provide any actual technical support for us to use this software."
Like thousands in China, Yin's wife, Dai Yian, runs a tiny business online. She buys clothes and materials from other sellers, then sells them on the Internet through her store on Taobao. Dai says her sales run about $1,300 to $2,500 a month. From that, she pockets about $450 in profit. She prefers Taobao's rating system, in which symbols such as hearts, diamonds and crowns show buyers' purchase history.
Dai says she isn't likely to change to Tom-Eachnet, the likely name for the new venture, because her business is already set up on Taobao. EBay will have to overcome Taobao's market size. Gong, the Shanghai consumer, recently shopped for a bottle of Kiehl's facial toner. She found 84 listings on EBay and 2,548 on Taobao.
Still, the number of Internet users in China — now at 123 million, second to the number of U.S. users — is growing rapidly. And many of them have dreams of launching their own online business. EBay said China's e-commerce market could rise to almost $6 billion next year. All of which means opportunities for EBay — if it can smooth out financial and cultural kinks.
Many Chinese don't like auctions or aren't familiar with them, preferring instead priced products. Most sellers on Taobao operate stores that are in most ways traditional, except that they are online. Most important, buyers and sellers want easy ways to communicate.
Tao Shulin, a Shanghai trader of canvas bags online, said he would be willing to give the new EBay a try. He hopes it won't nickel-and-dime him; he remembers the first two pictures that he uploaded were free, and after that it cost a penny each. "I cannot do that on EBay; otherwise I would go broke," he said.
"EBay was too Westernized," the 29-year-old said.
"We welcome customers to ask questions, because if they have to wait, they might change their minds. We can promote to them through [instant messaging]," Tao said. "But for EBay, usually it takes a whole day for us to reach each other. EBay didn't allow you to put your phone number on the site. So it was like in ancient times when we had to rely on a horse to deliver our messages."
posted on December 20, 2006 01:06:48 PM new
oh i like that last sentece too! Funny! I do think that ebay needs to boost it up a little though...interactive buying is what consumers want! I am all for live chats and voice mail responses..I think America should jump on board as well!
posted on December 20, 2006 01:22:36 PM new
Not me, the last thing I would want would be phone enquiries. You would never get anything done. I had 2 buyers once who called me over and over sometimes talking for almost an hour. I knew every bit of their history, illnesses, operations, husbands, etc. etc. I dreaded even answering the phone! One was just setting up on eBay, and phoned with questions all the time. My problem is, I hate being rude, so I just put up with it.
posted on December 20, 2006 01:31:42 PM new
Well our phone lines are open only monday thru friday 9-5. That is it. I know what you mean though they can talk your ear off. I just try to get them to the point without seeming rude. My favorite line is "now you were calling regarding...." and that usually gets the point across that they are diverting a bit. I have learned great customer service skills doing this, that is for sure. But I would love a live chat room at the bottom of my auctions that would put a stop to A LOT of repetitive questions.
posted on December 20, 2006 01:52:15 PM new
Ebay does not want customers and buyers to interact. Ebay is afraid they would lose a few cents if we were able to accually communicate. That is why emails go through their system now and you have to write those little # thingies if you are not writing about a transaction.
posted on December 20, 2006 01:54:30 PM new
Well I am sorry but that seems completely ridiculous. Look at the success places like www.woot.com is having. All that is is customer chat...it drives their very business. It would increase sales and keep honest sellers and lose the creeps. Buyers would feel more confident if they new there was a real living breathing person on the other end of the computer. I think sometimes they forget that one! Not to mention sellers and buyers would feel more inclined towards honestly if they got to know each other a little more.
[ edited by digitalbruce on Dec 20, 2006 01:55 PM ]
posted on December 20, 2006 06:18:29 PM new
Hi
Personally I feel that when I shop on web sites that are not popular like Gap, Walmart and such I don't know them or how they handle there business but I buy from lots of sites that I am not familiar with, and I don't worry, I don't want to talk with anyone, I just want to place an order and go on to something else.
On Ebay when I buy I do the same thing I just place my bid or use BIN and forget about it till it arrives, if there is a problem I contact the buyer and we work it out. If they don't respond and try to work it out I would just make a complaint with Ebay or Paypal not sure which one cause I never had to do that. Most all buyers I bought from were nice and we fixed the mistake they made which is good customer service.
I buy most everything on line, I even do my food shopping on line and have it delivered on the day I pick and delivered right to my Kitchen..........can't get any better then that...........lol
posted on December 21, 2006 05:51:57 AM new
Oh I understand that because that is how I basically do my shopping too..just buy and get out of there. But when you are selling things like high end electronics and video games a customer chat would boost sales. It would allow other customers to give their opinions and rate the product. If your products are good high quality merchandise you have nothing to worry about. Besides things like live chat get a "cult" following and really help the sales increase. I would love to have that option on ebay. We do have it on our personal site and it has worked out wonderfully not to mention it is hiliarious to watch. Sometimes we have merchandise that we know is not going to move on ebay we put it on our site and low and behold it flies off the shelves. It is just an interesting trend. Ebay needs to understand that the new wave of buyers wants the interactive sites. They want to feel invested in their purchases...it has been in the news recently just so you don't think I am just B.Sing everyone here...Ebay needs to have a team that is out there checking out these other sites and trends and making their site up to the minute. It would make it much more competitive. Not only that but ebay, the site itself, is losing a lot of customers to other sites that offer these things..and we will all suffer from that!
posted on December 21, 2006 06:39:09 PM newsarcasm mode on
I forecast that eBay will have as much success in the Middle Kingdom as it enjoyed in Japan. Of course it may obliterate huge chunks of investor's capital, but Meg knows what's best for China. I'm sure she's fully aware of the vast cultural gap between the "American" and the "Chinese" way of doing business.
posted on December 22, 2006 01:35:04 PM new
ST0NEC0LD613 wrote: So you predict that Yahoo will buy out eBay in China too.
No. It seems you conveniently forget recent history. I expect that eBay will ultimately fail in the Middle Kingdom, giving way to entrenched local companies that understand the vibrant Chinese market.
