FINAL ASSIGNMENT

Semester: Spring 2020

Course: INB 372

Full Name: Zunaid Islam

Student ID: 1911727030 Sec: 03

Faculty: Adina Malik (ALK)

Date of Submission: ​ 27/05/2020

Marks obtained:

Final:

Quiz-2:

Bonus:

(This space is for faculty’s usage. Do not write here.)

Answer to Section 1

eBay, formerly known as AuctionWeb is ​The World’s Online Marketplace.​ eBay was founded in
1995 by Pierre Omidyar. eBay made a capable platform for the sale of merchandise and
administrations by an energetic community of people and businesses. Currently, eBay is owned
by eBay Inc., USA.​(The eBay Economy, 2003). ​It engages in business to business as well as

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customer to customer as its model of business. eBay has online operations in 49 countries. eBay
acts as a platform between Businesses, Merchants and Customers. The online website is their
actual product. eBay is using the International strategy as their main site was developed for
American markets and later, they expanded with the e-commerce site to different countries with
minimal local preferences.

eBay, throughout its journey has entered several markets worldwide. Some of the interesting
ones are:

1. China

eBay chose to enter the Chinese market because of the huge potential and large population to
serve, they believed, after the USA, China would be their biggest market. eBay entered China
with its ebay.com e-commerce site in 2002. For the entry mode, they chose a wholly owned
subsidiary. eBay acquired EachNet, a startup that served the same market as eBay. Considering
an entry mode, yes, I think, acquisition was a good choice to enter Chinese market as there is a
great competition in the e-commerce industry. Alibaba alone owns 56.5% of market share. Thus,
in this intense competition with a completely new environment and culture, acquiring a brand
that already had an identity and market share was a better option than starting fresh. However, it
doesn’t mean this good choice led to success. eBay failed in China. eBay’s market share
drastically dropped between the years 2002 and all the way till 2007. All while Taobao took over
the market. eBay made a mistake of implementing their international strategy in the Chinese
market. eBay held operations in China from the US. Their sales were based on auctions but the
customers in China wanted fixed-price deals and purchases. Taobao handled this by building an
informing framework for buyers and sellers. They offered free, as restricted to eBay charging a
posting fee, which took absent any advantage eBay had. ​(Why Amazon and eBay Lost in China,
2017)

2. Japan

eBay chose Japanese market to exploit the advanced technology Japan had and it was eBay’s
first Asian market to enter. They entered Japan in February 2000 with its ebay.com e-commerce
site. For the entry mode, they chose Joint Venture. eBay made a joint venture agreement with
Japan’s NEC Corporation (NEC). NEC was entitled to a 30 percent ownership within the joint
venture and the rest 70 percent was owned by eBay Inc itself. Considering an entry mode, No, I
don’t think joint venture was a good idea. The issue wasn’t with joint ventures but with whom
they ventured with. NEC is an electronics and IT company not an e-commerce store. Thus, they
served different markets and NEC lacked expertise in e-commerce which again led to a business
failure for eBay in Japan facing the ‘first-mover’ issue. Usually in Japan, people are more loyal
to an established brand who moved first and provided great quality and reliability. There already

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existed Yahoo! Japan serving the same market and gained the brand loyalty before eBay even
entered. On top of it, eBay charged service fees whereas Yahoo! did not. eBay should’ve joined
with a business that had more insight on the market and given them proper guidelines which
might have led to a better market research. ​(ICMR, 2008)

3. India

eBay chose to expand to India as they got a great acquisition offer which is the highest valued for
eBay’s South Asian market. eBay India entered the Indian market in 2005 with its ebay.in
e-commerce site. For the entry mode, they chose a wholly owned subsidiary. eBay acquired the
largest Indian online marketplace back in that time- Baazee.com. eBay entered even a lot earlier
before Amazon and Flipkart came into operation and eBay gained a first mover advantage.
Considering an entry mode, yes, eBay made the right choice of acquiring Bazee because firstly
they served the same market and secondly the acquired company already had a good reputation
in the market. This eventually led to a great success for eBay in India. eBay solved one of the
greatest issues of Indian dealers trying to find a trade opportunity with constrained capital. The
auction based sales techniques were liked by the Indians. eBay in India was an overall successful
business until 2018 when they faced a downfall and eventually left Indian market. But that was
not the end, eBay’s parent company- eBay Inc. bought 5.44% ownership in Flipkart, by selling
its eBay India operations along with $514 million in cash. The Indian market loved the concept
of eBay business which made them decide on re-entering India later this 2020. ​(Times Next,
2020)

To conclude, within the mentioned markets, India was the most successful one for eBay. I
support the entry strategy of acquisition as it is quick and there is no share of profits and conflicts
of interest doesn’t arise unlike joint ventures. Acquisitions have been successful for eBay in
India as they chose the right company to take over. They entered India at the right time before
intensive competition took place and enjoyed the benefits of a first mover.

Answer to Section 2

Few of the noted difficulties eBay faced during expansion were:

1. Extortion is a critical risk factor for eBay. detailed that around 1 in 10,000 transactions inside
the UK were fraudulent ​(BBC, 2005)

2. Employee Recruitment- eBay hired a CEO who lacked internet knowledge in Japanese
culture. ​(Prezi, 2014)

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3. Lack of sufficient market research data- People in Japan were tough to survey as they were
more conservative in nature than the Americans. (Nathaniel, 2014)

4. Differences in Asian Cultures were tough for eBay to understand where needed to rely less on
word of mouth in the beginning stages and focused more on noticeable and recognizable
advertising. ​(Nathaniel, 2014)

5. eBay’s service charges were not acceptable in many markets including that of China and
Japan. ​(ICMR, 2008)

Answer to Section 3

Covid-19 is affecting eBay in several ways both positively and negatively. Here is how:

1. eBay is facing unstable product pricing where merchants are inflating prices in order to make
money out of human desperation for certain products which in return is affecting eBay brand
reputation. (Karolina, 2020)

2. As countries close their borders and cities are on lockdown, eBay faces less site traffic and
decreased product sales. (Charlie, 2020)

3. eBay is facing several breaks in the regular supply chain. (Charlie, 2020)

4. Shipments are being cancelled and delayed again leading to revenue and sales loss. (Charlie,
2020)

5. However, in some countries eBay rather faced a growth in sales as people are purchasing
commodities from online stores rather than supermarkets. (Charlie, 2020)

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References:
eBay in Japan. (2008). ICMR. https://www.icmrindia.org/casestudies/catalogue/Business
Strategy/eBay in Japan-Business Strategy Case Studies.htm

Dave Chaffey. (2019). Focusing on eBay strategy. Smart Insights.

https://www.smartinsights.com/ecommerce/ecommerce-strategy/ebay-case-study-2/

Karolina Kulach. (2020). Coronavirus on eBay. Webinterpret.

https://www.webinterpret.com/us/blog/ebay-coronavirus-sell-right-price/

Charlie Osborne. (2020). Coronavirus: Business and technology in a pandemic. ZDNet.

https://www.zdnet.com/article/ebay-and-amazon-are-losing-the-battle-against-coronavirus-profit
eering/