Case study: E-Bay in China

Résumé du document

The proposed case deals with the eBay Company's plan to expand its activity to China.

eBay is a US company offering e-commerce, e-payments and internet communication services globally. It was founded in 1995 in California. eBay is the international online market place enabling trade on a local, national and international basis with a diverse and passionate community of individuals and small businesses; eBay offers an online platform where millions of items are traded each year. At eBay, sellers can list products to sell on the website while buyers can browse them and bid on the interesting ones through auctions. The company doesn't make the mediation but just informs the seller and the buyer by e-mail when a bid exceeds the seller's reserve price. At any time, eBay takes possession of the product sold. By this way, the business model of ebay is simple: it charges fees to the sellers when they put up the product for sale, optional fees are also practiced for making goods more visible and in addition, eBay makes a good margin of profit on the sale. The company's service is completed by a customer service composed of personal customer services such as chat, e-mail and phone. The customer service is also composed of bulletin boards, customer support boards, personal pages, forums, personal shopper alerts (to provide potential buyers e-mail alerts), the turbo lister, pro-stores, feedback forums.

eBay has become a global brand because the company is managed by people with competencies in different parts of business such as marketing, finance and technology as well, but also thanks to a simple and accurate business model where the company takes fees and commissions on transactions done through its site. The company is developing itself in the global market thanks to a strategy including acquisitions, alliances and joint-ventures with local partners. Today, the international activity of the company in 35 countries represents 18% of the whole turnover.

Today, the company's plan is to expand its activity to China through a joint-venture with the China-based online and wireless operator TOM online in which ebay would have 49 % of ownership.

ebay is already present in the Chinese market because the company owns EachNet, a domestic online auction company. In addition, eBay also owns Skype, a global online communication company, which was already integrated indirectly in China through a joint-venture with TOM online.

TOM online is a local online company well-establsihed in the Chinese market with a very good experience and a knowledge of the market and with interesting political connections.

China represents an attractive place to do business, an ongoing economic growth, a gradual integration to the global trading community, an increasing place for internet and mostly an enormous population. In China, the population tends to get more and more access to the internet and to become more and more interested in the e-commerce applications.

Extraits

[...] Each Net got the same activity as E-Bay and was equipped by a rich business knowledge, a strong domestic and international experience and a well-though strategy. This concept was mainly used by Chinese early adopters because of the trading culture focused on a combat between retailers and customers to get the best deal, the concept looked such as bizarre. Although, the start-up succeed on it by adapting the business model of E-bay to the Chinese customers such as payments systems, demographics and customer behaviors. [...]

[...] To give more task to local employees, we should charge the local employees to find out and manage the relationship with outsourcing companies. The second solution would be to improve the brand image also by offering the previous cited services but here by adding these services with our local team. The idea would be to recruit some extra people with specialized skills in technology development for building up a social network, these people will be in charge to build up a social network which will allow people to interact between themselves, they will have as well the mission to integrate the skype technology in the social network, they will have to work in a closely cooperation with Tom Online for the development. [...]

[...] The reward system with have to be as well of quality and will need to give good and interesting rewards. The relationship with customer will need to be improved and the company will have to implement a close relationship with them. The source of change will be the early-adopter we will have to check out the first people using the new services or getting registered in order to implement a close relationship with them. We will have to pay attention also to blog and website giving advices about the Chinese websites. [...]

[...] With both alternative solutions, we can easily point up that the main objective is to cover this lack of trust by either working with Chinese companies or by adding the services missing important to Chinese customer. In addition, we plan to add a reward system that will reward the best customers; it will allow improving the relationship with the customers and reinforcing the trust. Through this strategy, we can expect to improve our legitimate on the Chinese market toward Chinese customers, we should become more a Chinese company and by this way gain more confidence from Chinese people, we definitely hope to improve as well our relationship with customers through the customer service and the social networking. [...]

[...] Case study: E-Bay in China Summary I. Comprehend the case situation II. Defining the problem III. Identify the cause IV. Generating alternative solutions V. Decision VI. Taking actions I. [...]