eBay’s China effort took a big hit today, or use eBay’s own term, they are adopting a “new strategy” in the China C2C market: they are going to team up with Tom Online on the online auction site. Whatever the term they use, the real story is they were losing market share ever since they acquired the eachnet, and put it under eBay China umbrella. There are many external factors to their failure:

1) China’s economy is still very much cash based, credit card, online payment are not at the level of enable e-commerce yet.

2) Unlike the US, there are no credit system, there are no credit report or score for the individual. It’s not easy for eBay (or other auction sites) to prevent or curb fraud if a person intentionally tries to abuse the system.

3) Competition: Taobao, the subsidiary of Alibaba, is competing effectively because they know how to get the eyeball of target audience using whatever method works, such as popup windows. On the other hand, being a nice guy, eBay did not want to do the “evil”. This remind me one thing Ctrip did in year 2002 to 2004, they sent out tons of people to airport/train station/bus station, giving out booklets whether you want it or not. It worked for them.  

But eBay made their own sharef of mistake, too (whether they admit or not):

1) They were too desparate to get into the China market and they bought eachnet without thinking through the whole thing. At the time they already missed the Japan oppertunity. China, with the largest population, is too big to be missed. They pulled the trigger. They did keep the founder of EachNet for a while, but for whatever reason, they let Shao Yibo go after a while.

2) Like many multination companies, their local management don’t have enough autonomy. They were not given enough room to explore things while they have to hit some impossible revenue target (come up by some guys in San Jose).

So what do eBay China go from here? I don’t know. I think they will be there for a while now Tom Online is in charge. On the other hand, I noticed eBay China built up their R&D team in Shanghai quite rapidly in past few years. In other words, if they can not take a cut from the C2C transaction (e-commerce) in China, at least they are taking advantage of the Chinese engineering talents now. So Meg still has something to happy about.