Why Ebay Failed in Asia

Pierre Omidyar founded EBay on September 3, 1995 after many years of successful business in the United States eBay decided to expand its business to Asia; unfortunately business was not as successful in Asia as it was in the United States. (1) Understanding the four principles of marketing will help explain why eBay did not succeed in Asia. Product, Place, Price and Promotion are rules that eBay did not take into consideration by or clearly understand before proceeding into unknown territory.

Not knowing tendencies of Asians was one of many issues that prevented eBay from succeeding. Unlike America where we are more trusting of strangers and purchasing second hand goods in Asia there’s a stigma against buying or using used goods; in some parts of Asia even amongst siblings people don’t pass down their clothes. (Schonfeld, 2005) There is significant variation in beliefs, attitudes, perceptions in Internet buying behavior across regions that eBay should have understood (2).

According to Kotler and Gertner’s Journal of a Brand Management published 2002 it states that people will buy products based on where it is assembled or who promotes it. This is true when it comes to the Asian market. Some and most Asians are reluctant to buy goods simply because they do not like what region on Asia it comes from. In America there have been many complaints by customers in online chat forums stating that counterfeit and crappy goods are being sold online by eBay and customers are not able to file a complaint or receive a refund.

EBay did not consider the pricing process when developing its prices for simple online trades. EBay was charging commission for all trades when its competition did not. In China an online trading site by the name of TaoBao (which means to search for treasure) (3) you can list and sell for free in South Korea by using Gmarket (5) it is available for individuals wanting to take advantage of a small fee based Internet auction. Understandably eBay wants to profit off of sales made but they cannot compete with low costs or free. Once realizing charging a fee was hurting sales they made necessary price adjustments as stated in the price process but it was too little too late TaoBao had already established trust with the Asian market.

(2) Chinese consumers like to buy from brands and products from people that they trust and where customer service was a priority. Many consumers dislike eBay because of bad service and they it did not focus on building up trust. (2) Since trust is a big issue TaoBao established an escrow service which did not release payment until the buyer received it’s merchandise and was satisfied eBay later followed this but there were so many issues that Asian customers did not like about eBay it was once again too late to regain the lost customers and revenue. (2) EBay was not able to communicate with customers is a timely manner to prevent loss of cliental.

Location, Location, Location! Ultimately eBay failed due to ignorance and lack of research of the Asian market. They did not keep up with the competition; nor did the take into consideration all aspects of international marketing when developing a business strategy. To make a bad situation worse, eBay hired a CEO who was new to the Internet business and chose a subdued marketing approach in comparison to Yahoo. (4) In the future in order for eBay to avoid loosing business it would be in the best interest if they conducted the proper research on the local market to prevent another failure in Asia.

Works Cited
“EBay.” Wikipedia. Wikimedia Foundation, 18 Jan. 2013. Web. 21 Jan. 2013. “Jana No MBA.” : Why EBay Struggled in Japan, China, and Other Asian Markets. Jananomba, 26 July 2012. Web. 21 Jan. 2013. “Taobao Introduction.” Taobao Introduction. Taabao, n.d. Web. 22 Jan. 2013. Tong, Jian, Bo LiChemi Perry, Jason Martin, and Wei Wang. “Reentering Asian Markets, EBay Rolls with New Strategy.” Forbes India Magazine. Forbes India, Sept. 2011. Web. 22 Jan. 2013. “Who Owns Gmarket.” Weblog comment. Wordnik.com. N.p., n.d. Web. 20 Jan. 2013.