Why does E-Bay have problems in its Asian Markets?

in International-marketing

eBay Inc. is an American consumer- to- consumer internet company that manages eBay.com which is an online auction and shopping online site where people from the whole world are able to learn and order variety of products and services from the whole world. This company was founded in America in the year 1995 and is recognized as one of the success stories of the dot-com bubble. Funny enough, this company has not been able to enter into the Asian markets as whenever it makes attempts enter into Asian markets it usually fails.

According Mangalindan (2006), eBay entered in China in the year 2003 when it acquired Eachnet. During this period, many analysts thought that its operation in China would fail the way it failed in Japan. It is very interesting to see that this company is failing in Asian markets where as it is operating very productively in the United States of America. One of the explanations that can be given to the failure of this company is China and Japan, as indicated by Ihlwan and Hof (2006), is the aspect of distribution. As indicated in the marketing mix, the 4 Ps denotes place, promotion, product, and price and hence the aspects of place, price, and promotion have resulted to the drawbacks on this company. In this respect, eBay has failed in South Korea after failing in China and Japan.

One thing that has contributed to this failure is the fact that in open auction, buyers have to wait until all bids are complete. In other companies like Gmarket in South Korea offers goods at fixed prices and hence buyers are allowed to conclude deals instantly (Chan 2007). This option is also available with eBay in South Korea but it faces stiff competition from Gmarket as it is further long and has its 90% of its sales volume using this method. In terms of place, it has been reported by merchants that it is easier to list goods or products in Gmarket than at internet auction and hence it is because of this that eBay is failing in Asian markets (Ihlwan 2006). In terms of prices, eBay failed in Asian market as unlike its competitors like Taobao which offered free basis services, eBay in its initial stages charged listing fees as it is the case in the United States of America.

Chan (2007) illustrates that, eBay failed in China because Chinese are more likely to pay for internet services that they feel that they satisfy them. In this case, Chinese youths are using a lot of money is paying for internet services especially online game personas and buy ringtones to be used in their mobile phones (Ihlwan 2006).

The mode of entry, as discussed by Mangalindan (2006), has negatively impacted the performance of eBay in Asian markets. In this respect, eBay in the year 2006 formed an alliance with Tom Online which is a wireless internet company. This resulted to the failure of this company in China and it has been argued by analysts that its joint venture with Tom Online was not well grounded. Ihlwan and Hof (2006) indicate that, this company fails because it extensively apply its /American alliance models in Asian markets.

In conclusion, it can be stated that eBay is failing in Asian markets because it extensively utilize marketing systems that are used in the United States of America rather than researching first on how Asian markets operates.

 

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Why does E-Bay have problems in its Asian Markets?

This article was published on 2012/03/30