Taobao.net and Online Shopping in the Chinese Market
1. What does this case study teach us about the "critical success factors" for any marketing firm wanting to establish strong internet presence on the web?
This case study deals with two online companies: Alibaba.com « serves as an e-commerce aggregator, bringing together buyer and sellers» and Ebay.com which is a Web site auctions, became a world reference. In China, the high-powered US brand didn’t succeed (Ebay) contrary to the Chinese start up growing brand (Alibaba). The question is: why one succeed in China and not the other one? This is what it will be explains in this case study.
The strengths of Alibaba are:
- « Alibaba succeed because it filled a void »
-« Alibaba allows the users and sellers to contact each other directly »
- « Alibaba is free of charge »
- « In mid-August, Yahoo! acquired last year for $120 million, 3721.com competes with Baidu.com, which is partly owned by Google »
By opposition to Alibaba, the weaknesses of Ebay are:
- « Ebay has attracted a lot of negative press by raising fees, placing the burden offraud detection on its buyers and sellers, and abysmal customer support that amounted to little more than automated emails »
- « The need to adhere to Ebay’s global platform, which hinders customization »
- « It lacks a Chinese online payment platform like PayPal »
Moreover, thanks to the following factors, market shares of Alibaba.com have increased:
- safety and security ofpayments made over the web
- pricing polices used by web browser companies to attract users to adopt and stay with their brand
- effective target marketing
- effective customer service and relationship management
Indeed, customers on Internet have not the same expectations those customers who buy directly in physical shops.
So, thanks to these different points, Alibaba.com hasanswered to the demand and to the expectations of the users of the Web. That’s why, market shares of this company have increased rapidly and it became the reference for Online Shopping in the Chinese market.
Complementary informations, I found this article which deals with the case of Ebay in China: « In China, eBay is ally since 2006 with the Hong Kong company TOM Group. Together, they createda joint venture to develop the site e-commerce Eachnet. Eachnet's mission: to try to catch the company Taobao, the giant local alone holds nearly 80% market share. The agreement between eBay and TOM Group has begun to deteriorate in view of the disappointing performance of Eachnet in recent years. The millions of dollars sunk by the alliance TOM / eBay are not enough to catch their "colt"Eachnet. [...] Unless a radical change in strategy, the time to make eBay accounts might well decide to pack up from 2010.» (Source: www.solutions-logiciels.com).
So, “critical success factors” for any marketing firm wanting to establish strong Internet presence on the Web deals with a main point: the web company has to answer to the expectations of its consumers. Thus Website of the company has tofollow these points:
- easy to use website
- safety for payment
- low prices and no additional fees
- product variety : big range of products
If a Web company respects these ideas, it has chances to establish strong Internet presence on the Web.
2. Visit the Taobao website and evaluate its relative effectiveness compared to other competitive online shopping sites such asEbay or Amazon. What are some of the similarities of these sites?
Taobao (which literally means "find something valuable") is China’s C2C Internet selling platform, similar to Ebay or Amazon. So, what are the similarities of these sites? :
- There is an option for foreigners to sell on Taobao
- Exchanges are in C2C business
- Ebay is ally since 2006 with the Hong Kong company...