BUS 401E-Bay Problems in the Asian MarketsThis case assignment examines the problems that E-Bay is facing in the Asian Market. E-bay, the king of online auctions around the world is falling from the throne as aggressive rivals move up to control more of the market share. Local and international rivals are tapping into their profits, as E-Bay moved down into the number two position in China and in South Korea. The company TaoBao which Yahoo owns 40% has now taken the top spot in China and local competitor Gmarket has taken the top spot in South Korea over once giant E-Bay. E-Bay is steadily losing its market leadership to Taobao, which maintains over 67% of mainland China's online auction market. E-Bay invested over $100 million in China to fight this fast rising company, but they are still losing ground. (Business Week page 2)Many factors that are in play are contributing to the decline of E-Bay in the Asian Market. Many people feel that E-Bay has failed to understand the unique Chinese marketplace and culture. E-Bay in direct contrast to its competition Taobao, provides no phone support to its customers and highly discourages buyer-seller contact that could lead to haggling. Haggling is a part of the Asian culture that allows the consumer the perception that he is in control of the transaction. China's culture makes them great mimickers but they lack innovation and the ability to put new ideas into play. According to Rob Hoff of Business Week, when you are doing business with China they will accept you with open arms at least until the Chinese have a better understanding of your business concepts. Once they get a grasp of your techniques they will duplicate the process and then a company will be looking for new business in the Chinese culture. E-Bay also failed to quickly react when Taobao entered the market with no user or transaction fees. Asians are not responding compared to some local companies, they are responding better and prefer sites that are founded and hosted domestically. Taobao caters to the Asian market by lowering their fees and providing an excellent service to the internet community. Troubles in the Asian community deepened when in September 2006, Martin Wu, the chief executive for E-Bay resigned after one year. Gmarket has also presented E-bay with some challenges. Gmarket offers an intriguing mix of cheaper listings, fixed prices and a web site that explodes with flashing product come-ons. They also have a lot of cash following a 5 % ownership stake taken by Yahoo Inc and a recent IPO. Gmarket has also changed the way on line auctions are being conducted, which has greatly appealed to the Asian community. They place less emphasis on an open auction format than e-Bay does. The company offers goods at a fixed price with an option to negotiate (another popular option) with a seller on an exclusive basis. This allows buyers to conclude deals quickly instead of waiting until are bids are completed in open auctions. Currently E-Bay...
