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Why Does Ebay Have Problems In Asian Markets
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02 April 2010
Words: 568 | Pages: 3
Why does Ebay have problems in Asian Markets? This is the question to be answered in the first Case assignment of Business 401. In order to answer this question there must be discussion about Global marketing concepts, such as product, place, promotion, and pricing (the 4 pÐ²Ð‚â„¢s), method of entry, and entry decision. Then it is important to apply those concepts to the Asian Market. In the pages that follow I will discuss the marketing decisions of Ebay in their mission to expand into Asian markets. As well as, possible solutions to some of the decisions that didnÐ²Ð‚â„¢t work out so well.
Entering a foreign market with an unfamiliar culture is not for the weak, but the obstacles did not deter Ebay from attempting to jump into the Asia-Pacific region. The online auction site in South Korea, Internet Auction, is an eBay subsidiary. However, in Japan, Yahoo! beat eBay to the punch in introducing the country to online auctions. German media company Bertelsmann sells books and music to online Chinese consumers. And Amazon owns a majority share of Joyo.com Ltd., a British Virgin Islands-based firm with an established online retail site in China.
A significant component of a countryÐ²Ð‚â„¢s e-readiness score is its ability to support a retail ecommerce environment. This is calculated by the level of internet connectivity and technology infrastructure in a particular market. Share of retail commerce conducted on the internet, logistics support and online payment systems are also ingredients of the equation, as well as the legal and policy atmosphere and the availability of ecommerce technical support and tools.
According to the Economist Intelligence Unit (EIU) ranking of e-readiness, Japan is the number 2 internet market in the world behind the United States and South Korea is number 3. In sheer volume of users, China is the number 2 market in the world behind the United States. That is staggering because there is less than 10 percent of homes in China have internet connectivity. When added up,it is obvious that Asian markets are very tempting, either because of their sheer size or because the communications and financial infrastructures in place create supreme electronic marketplaces.
So where did Ebay go wrong? In South Korea, Internet Auction (Ebay subsidiary) now lags behind local competitor Gmarket. Gmarket, which has Yahoo money in the form of a minority investor, overtook eBay earlier this year in terms of revenue by using a more savoir-faire product mix and a more hard-hitting pricing scale.
In China it has been said that the aggressive pricing of the competitor and a faster site has created problems for Ebay. The inability to react to the pricing or upgrade the technology to stay ahead of the competition may only be indicators of bigger problems with the aforementioned cultural differences.
In conclusion, EbayÐ²Ð‚â„¢s difficulties in the Asian Market can be attributed to lack of foresight (China), poor timing (Japan), and failure to react to the competition (South Korea). In my opinion, they were poised for global domination of e-commerce but too much of a good thing may have hurt them in the Asian Market.
Looking to Asia for Sales
June 10, 2005 Jeffrey Grau downloaded from iMedia connections on 23 April 2008
China May Be eBay's Latest Challenge as Local Rivals Eat Into Market Share
October 12, 2006, Mangalindan, M, Wall Street Journal
BUS 401 Course disk
Out-eBaying eBay in Korea
Moon Ihlwan and R. Hof, July 17, 2006, Business Week