Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Team 11 Hangzhou - Introduction 
Taobao 
The battle within the Chinese e-commerce 
market and what we can learn from it.
Introduction 
“eBay may be a shark in the ocean, but I'm 
a crocodile in the Yangtze River. 
If we fight in the ocean, we ...
3 
Contents: 
Inception Analysis Outcome 
• Company structure 
• Timeline of events 
• Timeline in numbers 
• Interrogatio...
Inception Analysis Outcome 
Company structure: 
4 
Team 11 - Taobao 
International B2B platform Domestic B2B platform 
B2C...
Situation Analysis Outcome 
Timeline: 
5 
Jack Ma 
founded 
Alibaba 
Launch of 
Zhao Cai 
Jin Bao 
1998 1999 2000 2001 200...
Inception Analysis Outcome 
Market share: 
6 
90 
80 
70 
60 
50 
40 
30 
20 
10 
0 
2002 2003 2004 2005 2006 2007 
Team 1...
Inception Analysis Outcome 
Interrogation: 
» How was Taobao able to succeed against 
eBay and to force them to leave the ...
Inception Analysis Outcome 
External analysis|PEST: 
8 
Political/ Legal 
• Single party 
socialist 
republic 
(Rubber 
St...
9 
Inception Analysis Outcome 
External analysis|Market: 
Team 11 - Taobao
Inception Analysis Outcome 
External analysis|Five Forces: 
10 
Team 11 - Taobao 
Intensity of Rivalry (HIGH) 
• Taobao vs...
Inception Analysis Outcome 
External analysis|Competitors: 
11 
Team 11 - Taobao 
eBay Paipai 
Future Objectives Regain sh...
Inception Analysis Outcome 
Internal analysis|Resources: 
12 
Team 11 - Taobao 
Tangible: 
» Financial “backup” of 
Alibab...
Inception Analysis Outcome 
Internal analysis|Capabilities: 
13 
Area Capability 
Executive Team (CEO) Ability to motivate...
Inception Analysis Outcome 
Internal analysis: 
14 
Core competencies Competitive advantages 
Understanding of the local 
...
Inception Analysis Outcome 
Interim conclusion|SWOT: 
15 
Team 11 - Taobao 
Strengths 
• Understanding of Local 
Culture 
...
Analysis of the battle 
Taobao vs. eBay
Inception Analysis Outcome 
The battle|Strategies: 
17 
Team 11 - Taobao 
Strategy 
Localization 
Global brand 
image
Inception Analysis Outcome 
The battle|Vision of eBay: 
» To capture market share in order to create 
profits 
» First Mov...
Inception Analysis Outcome 
The battle: 
19 
Team 11 - Taobao 
“I'm not a tech guy. 
I'm looking at the 
technology with t...
Inception Analysis Outcome 
The battle|Vision of Taobao: 
» Protect Alibaba from eBay 
» Knowing the market advantage 
» N...
Inception Analysis Outcome 
The battle|Chinese consumer: 
In 2002, the Chinese consumer was not used 
to the internet: 
» ...
Inception Analysis Outcome 
The battle|Chinese consumer: 
Transaction Fees: 
» eBay charged transaction fees 
» Taobao cha...
Inception Analysis Outcome 
The battle|Localization: 
23 
Taobao eBay 
• Localized the website, by making it 
more appeali...
Inception Analysis Outcome 
The battle|Web design: 
24 
Team 11 - Taobao
Inception Analysis Outcome 
The battle|eBay: 
» Applied their global strategy to an 
undeveloped market. eBay misunderstoo...
Inception Analysis Outcome 
The battle|Trust: 
» Affect-based trust vs. cognition-based trust 
26 
Team 11 - Taobao
Inception Analysis Outcome 
The battle|Taobao: 
» Strengthening the comprehensive cooperation 
with banks. 
» Building the...
Inception Analysis Outcome 
The battle|Alipay: 
28 
Team 11 - Taobao 
Buyer Seller 
Buyer Alipay Seller
Inception Analysis Outcome 
The battle|Monetization: 
29 
Taobao eBay 
• No Revenue Model 
• No Transaction fees 
• 80% of...
Inception Analysis Outcome 
The battle|Monetization: 
30 
Team 11 - Taobao 
“Free is not a business 
model. It speaks 
vol...
Inception Analysis Outcome 
The battle|Interim conclusion: 
31 
Team 11 - Taobao 
“eBay may have 
deep pockets, but we 
wi...
Inception Analysis Outcome 
Comparison: 
32 
Team 11 - Taobao 
Taobao eBay 
Business practice and 
management 
• CDG • Sha...
Inception Analysis Outcome 
Lessons learned: 
33 
» Understand the consumer 
» Understand the market/country/culture 
» Lo...
Closure 
Thank you 
FOR YOUR ATTENTION!
Upcoming SlideShare
Loading in …5
×

Taobao vs. eBay - The battle within the Chinese eCommerce market

17,736 views

Published on

Team presentation in the module Global Strategy with the task to analyze the battle between eBay and Taobao within the Chinese eCommerce market and its inferences.

Published in: Business
  • What if you had a printing press that could spit out hundred dollar bills on demand? Do you think that would change your life? ♣♣♣ http://ishbv.com/ezpayjobs/pdf
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Follow the link, new dating source: ❶❶❶ http://bit.ly/39sFWPG ❶❶❶
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Sex in your area is here: ❶❶❶ http://bit.ly/39sFWPG ❶❶❶
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • Looking For A Job? Positions available now. FT or PT. $10-$30/hr. No exp required. ●●● https://tinyurl.com/rbrfd6j
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here
  • This Single Mother Makes Over $700 per Week Helping Businesses with their Facebook and Twitter Accounts! and Now You Can Too! ♣♣♣ http://t.cn/AieX6y8B
       Reply 
    Are you sure you want to  Yes  No
    Your message goes here

Taobao vs. eBay - The battle within the Chinese eCommerce market

  1. 1. Team 11 Hangzhou - Introduction Taobao The battle within the Chinese e-commerce market and what we can learn from it.
  2. 2. Introduction “eBay may be a shark in the ocean, but I'm a crocodile in the Yangtze River. If we fight in the ocean, we lose, but if we fight in the river, we win.“ - Jack Ma (2005)
  3. 3. 3 Contents: Inception Analysis Outcome • Company structure • Timeline of events • Timeline in numbers • Interrogation Team 11 - Taobao • External analysis • Internal analysis • Analysis of the battle • Comparison • Lessons learned
  4. 4. Inception Analysis Outcome Company structure: 4 Team 11 - Taobao International B2B platform Domestic B2B platform B2C and C2C exchange Online payment service
  5. 5. Situation Analysis Outcome Timeline: 5 Jack Ma founded Alibaba Launch of Zhao Cai Jin Bao 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Foundation of EachNet Team 11 - Taobao eBay failed in Japan and pulled out Launch of Aliwangwang Introduction of PayPal in Rebranding in eBay EachNet China Launch of Taobao Launch of AliPay Launch of eYoubao eBay shuts down its Chinese site Taobao market leader with 84% eBay enters China by purchasing EachNet
  6. 6. Inception Analysis Outcome Market share: 6 90 80 70 60 50 40 30 20 10 0 2002 2003 2004 2005 2006 2007 Team 11 - Taobao Taobao eBay
  7. 7. Inception Analysis Outcome Interrogation: » How was Taobao able to succeed against eBay and to force them to leave the Chinese market? » What are the reasons for the defeat of eBay? » What can multinational as well as small local companies learn from the events? 7 Team 11 - Taobao
  8. 8. Inception Analysis Outcome External analysis|PEST: 8 Political/ Legal • Single party socialist republic (Rubber Stamp Parliament) • Business based on the relationship with government officials Team 11 - Taobao Economic • One of the fastest growing economy in the world • Rising disposable income • Growing luxury consumption among the young Sociocultural • Guanxi (personal connections & good relationships) •Cash-based society Technological • 2nd largest spender in R&D spending • 200 million internet users • Huge growth in the e-commerce business
  9. 9. 9 Inception Analysis Outcome External analysis|Market: Team 11 - Taobao
  10. 10. Inception Analysis Outcome External analysis|Five Forces: 10 Team 11 - Taobao Intensity of Rivalry (HIGH) • Taobao vs eBay • Paipai • Low switching cost • Lack of product differentiation Bargaining Power of Suppliers (MEDIUM) • ICT providers • Increasing number of online retailers • Taobao and eBay as major players Bargaining Power of Buyers (MEDIUM) • Increasing number of buyers • Low switching cost • Taobao and eBay as major players Threat of New Entrants (HIGH) • High Industry Growth • Low Product Differentiation • Low Switching Cost • Few Competitors • Low Capital Requirement • Low Chance of Retaliation Threat of Substitute (MEDIUM) • Brick and Mortar • Shopping Experience • Try and Claim the Product Right Away • No Transaction Risk
  11. 11. Inception Analysis Outcome External analysis|Competitors: 11 Team 11 - Taobao eBay Paipai Future Objectives Regain share in the Chinese market Gain more market share Current Strategy • Collaborative Strategy signed exclusive advertising rights with major portals Sina, Sohu, and Netease with the intention of blocking advertisements from Taobao • Acquisition Acquired 15% stake in e-commerce website JD.com to build stronger competitor against Alibaba Group Holdings Assumption Presence of a niche market Lots of room to grow Competitor’s Capabilities Strong international trading network and huge financial resources Huge community base (QQ)
  12. 12. Inception Analysis Outcome Internal analysis|Resources: 12 Team 11 - Taobao Tangible: » Financial “backup” of Alibaba.com » Technology Intangible: » Pioneer visionary CEO » Young local employees » Strong Brand Equity » Strong start-up culture of friendship and informality » High Trust between employees
  13. 13. Inception Analysis Outcome Internal analysis|Capabilities: 13 Area Capability Executive Team (CEO) Ability to motivate employees and deliver strong and Team 11 - Taobao emotional messages. Management Ability to understand Chinese customer’s needs. IT Ability to deliver new functionalities and features in a timely fashion. Logistics Good delivery system. Payment Reliable payment system. Communication Ability to create a sense of community among customers. Design Ability to design in accordance with customer’s taste. Relationship Strong social capital among Chinese companies.
  14. 14. Inception Analysis Outcome Internal analysis: 14 Core competencies Competitive advantages Understanding of the local customer Strong social capital with companies Strong motivating corporate culture Team 11 - Taobao Design and delivery of customer centered products and services Superior relevant partnerships Employee citizenship Superior value for customers
  15. 15. Inception Analysis Outcome Interim conclusion|SWOT: 15 Team 11 - Taobao Strengths • Understanding of Local Culture • Market Expertise • Strong Brand Equity • Employees citizenship • High trust among customers • Strong partnership network • Free of charge Weaknesses • Quality Control (counterfeit) • Revenue Opportunities • Growing internet usage • Growing online shopping • Growing disposable income • Growing branded/luxury market Threats • E-Bay competition • Smaller companies competition (Paipai)
  16. 16. Analysis of the battle Taobao vs. eBay
  17. 17. Inception Analysis Outcome The battle|Strategies: 17 Team 11 - Taobao Strategy Localization Global brand image
  18. 18. Inception Analysis Outcome The battle|Vision of eBay: » To capture market share in order to create profits » First Mover Advantage » Adopted current global strategy » German COO, American technician » Headquarter based in Silicon Valley, USA 18 Team 11 - Taobao
  19. 19. Inception Analysis Outcome The battle: 19 Team 11 - Taobao “I'm not a tech guy. I'm looking at the technology with the eyes of my customers, normal people's eyes.” - Jack Ma
  20. 20. Inception Analysis Outcome The battle|Vision of Taobao: » Protect Alibaba from eBay » Knowing the market advantage » No Revenue Model “let [the consumer] make money before we do” » Improve China, and develop the Chinese entrepreneurial spirit » Headquarter based in Hangzhou 20 Team 11 - Taobao
  21. 21. Inception Analysis Outcome The battle|Chinese consumer: In 2002, the Chinese consumer was not used to the internet: » No guarantee about quality, payment, fraud and default » No established legal system 21 Team 11 - Taobao
  22. 22. Inception Analysis Outcome The battle|Chinese consumer: Transaction Fees: » eBay charged transaction fees » Taobao charged no transaction fees Advertisement: » eBay advertised online » Taobao advertised on TV 22 Team 11 - Taobao
  23. 23. Inception Analysis Outcome The battle|Localization: 23 Taobao eBay • Localized the website, by making it more appealing to the Chinese. • Imitated a noisy Chinese department store. • Chose the colors red and orange which signify prosperity and festivity • Unique navigation for men and for women. • Very noisy website with plenty of information. • Fixed prices, since Chinese prefer new products over used products. Therefore the auction model is not so popular. Team 11 - Taobao • Adapted the current site. Translated it to Chinese. • Maintained western preferences for clean and sparse websites. • Focused on the auction model for used products.
  24. 24. Inception Analysis Outcome The battle|Web design: 24 Team 11 - Taobao
  25. 25. Inception Analysis Outcome The battle|eBay: » Applied their global strategy to an undeveloped market. eBay misunderstood the consumer. » eBay underestimated the importance of local culture. » eBay had poor customer service, there was no telephone line, only through email, did not establish the rapport necessary for Chinese business. 25 Team 11 - Taobao
  26. 26. Inception Analysis Outcome The battle|Trust: » Affect-based trust vs. cognition-based trust 26 Team 11 - Taobao
  27. 27. Inception Analysis Outcome The battle|Taobao: » Strengthening the comprehensive cooperation with banks. » Building the shopping platform by associating with strong enterprises (sharing resources with Sohu.com) » Establishing an identifying secure trading platform (National ID Card) » Wangwang (seller-buyer chat) » Cash Payments » Alipay (payment intermediary) 27 Team 11 - Taobao
  28. 28. Inception Analysis Outcome The battle|Alipay: 28 Team 11 - Taobao Buyer Seller Buyer Alipay Seller
  29. 29. Inception Analysis Outcome The battle|Monetization: 29 Taobao eBay • No Revenue Model • No Transaction fees • 80% of revenues from advertising • 20% of revenues from collaborations through Alibaba Team 11 - Taobao • Transaction fees (1-5%) • Keyword auctions • Ads • 80% of revenues from transaction fees • 20% from ads
  30. 30. Inception Analysis Outcome The battle|Monetization: 30 Team 11 - Taobao “Free is not a business model. It speaks volumes about the strength of eBay’s business in China that Taobao is unable to charge for its products” - Meg Whitman “E-commerce was new in China. People were wary of scams. Chinese consumers were not familiar with online marketplaces, and merchants were reluctant to sell online without significant incentives. They wanted the marketplace to be free so they could dip their toes in the water” - VP Porter Erisman
  31. 31. Inception Analysis Outcome The battle|Interim conclusion: 31 Team 11 - Taobao “eBay may have deep pockets, but we will cut a hole in their pockets.” - Jack Ma
  32. 32. Inception Analysis Outcome Comparison: 32 Team 11 - Taobao Taobao eBay Business practice and management • CDG • Shanghai Tang • Tsingtao Vision • Esquel • Samsung Innovation • Samsung • Zara
  33. 33. Inception Analysis Outcome Lessons learned: 33 » Understand the consumer » Understand the market/country/culture » Localize and adapt service or product to the market » Commitment and perseverance » Continuous innovation » Create and follow a strong vision Team 11 - Taobao
  34. 34. Closure Thank you FOR YOUR ATTENTION!

×