This past weekend, I received a phone call from a cousin that lives in China. We ended up talking about her small business and online shopping. She revealed to me that eBay would be returning to China to sell designer goods. I guess eBay couldn’t resist the tempting Chinese market of 500+ million online users. A search on Google results in this article by the BBC, boasting a “40% […] increase of goods” purchased by the Chinese on eBay’s English site.
Despite the large potential, I believe there are problems that eBay faces in re-entering the Chinese market.
- Five years ago, when eBay faced competition by Alibaba Group Holding Ltd.’s Taobao.com, the company, which already had trouble gaining popularity in Asia, fled China – fast. The Chinese haven’t forgotten this massive failure.
- Other e-commerce giants, like Amazon.com Inc., had a difficult time penetrating the Chinese market, even with designer goods and a well-known brand. eBay will need some serious product differentiation from other online retailers if it wants to stay in the game. It doesn’t help that the new site’s name is ebay.xiu.com, forcing eBay to share the spotlight.
- If incumbent Chinese online retailers somehow manage to sell designer goods in the near future, eBay will lose majorly. The young, wealthy middle class people that shop online want designer goods, but they want them fast. Shipping will take at least 7 business days since the goods are sourced from the US. Most of my family members in China that shop online still prefer Chinese sites like Taobao.com.