Ebay TaoBao

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technical opinion DOI: 10.1145/1435417.1435450 BY CAROL XIAOJUAN OU, ROBERT M. DAVISON Why eBayLost to TaoBao in China: The Global Advantage CONSUMER-TO-CONSUMER (OR C2C) electronic commerce involves electronically-facilitated transactions between consumers through third parties.9 In China, a number of C2C platforms have emerged, such as eBay (China), TaoBao and PaiPai. TaoBao, established in 2003, has quickly assumed a dominant position in this market, underlined by the December 2006 decision b
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  technical opinionDOI: 10.1145/1435417.1435450BY CAROL XIAOJUAN OU, ROBERT M. DAVISONWhy eBayLost toTaoBaoin China:The GlobalAdvantageCONSUMER-TO-CONSUMER (OR C2C) electroniccommerce involves electronically-facilitated transactionsbetween consumers through third parties.9 In China,a number of C2C platforms have emerged, such aseBay (China), TaoBao and PaiPai. TaoBao, established in2003, has quickly assumed a dominant position in thismarket, underlined by the December 2006 decision byeBay to quit the C2C market in China altogether,4, 8merging its China operations with those of telecomsprovider TOM Online. In China, C2C platformsencourage buyers to contact sellers so as to build upthe necessary trust and confidence to engage in onlinetransactions, as well as negotiate product, financialand logistical details. In this article, we focus on theway C2C platforms compete and in particular howbuyers are stimulated to be both aware and trustful ofsellers through buyer-seller communication channels.Following this introduction, we presentbrief case descriptions of TaoBaoand eBay (China). These descriptionsare supplemented with informationgleaned from interviews with activebuyers and sellers from these twoplatforms. The significance of thecompetitive issues is then the focus ofdiscussion, where we also draw in theliterature on awareness and trust. Finally,we suggest how the C2C marketis likely to develop in China.TaoBaoTaoBao (www.taobao.com) founded in2003, is a wholly owned subsidiary ofAlibaba, China  s leading e-commercecompany. As a C2C trading platform,TaoBao has the highest number ofproduct listings, the highest volume oftransactions (RMB43.3 billion in 2007,with a C2C market share of 83.9% inChina) and, with 80+ million registeredusers, the highest penetrationrate among the 253+ million Internetusers in China.a Alexab ranks TaoBaoas the 47th most visited Web site globally,  5th in China. TaoBao uniquely indicatesthe online status of all sellerswith a bi-polar coloured icon and TaoBao  sinternal search engine enablesbuyers to list only those items whosesellers are online (see Figure 1). Thismeans that a prospective buyer cancheck if a seller is online, and if so, canuse TaoBao  s integrated IM system,WangWang, to contact them. Wang-Wang is an embedded, pseudonymouscommunications tool, sharing TaoBao  suser-ids, and so is the default IMsystem for all TaoBao users.eBayeBay (China) (www.ebay.com.cn) wasthe China arm of the U.S. headquarteredeBay. Acquired in 2003 fromEachNet (founded in 1999), this wasthe first mover in the Chinese C2C sector.Until late 2006, eBay (China) andTaoBao were regarded as key rivals,though since December 2006, witha www.cnnic.cn (Nov.2008).b www.alexa.com (Nov. 2008).JANUARY 2009  VOL. 52  NO. 1  COMMUNICATIONS OF THE ACM 145  technical opinionFigure 1: Screen Shot of TaoBao  s Web pageeBay  s decision to quit the C2C arena inChina, that situation has changed dramatically.EBay (China) is now rankedby Alexa as 49,474th globally and 2,438in China. eBay (China) attempted acomeback, relaunching its EachNetsite, but Alexa  s figures indicate thatthis has not succeeded, as EachNetis currently ranked 6,920th globallyand 586th in China, with a C2C marketshare of 8.7% according to CNNIC.While the functionality of TaoBao andeBay (China) is similar, there are somenotable differences. For example, eBay(China) does not indicate a seller  s onlinestatus, for instance. Also, althoughSkype is linked into eBay (China), ithas to be downloaded and installed asa separate application. Furthermore,not many users have Skype IDs: we randomlysurveyed 500 sellers in 10 categoriesand found that only 24.6% hada Skype ID listed. For those sellers whodo have a Skype ID, there is no indicationas to their online status, and infact, of the 24.6% who do have a SkypeID, only 5.4% were actually online whenwe checked during the evening peaktrading hours. Most buyers will thereforehave to use email to contact sellers(email addresses are provided) or elseleave a message on an online messageboard that eBay (China) provides.Interviews with Chinese C2C UsersIn order to assess TaoBao and eBay(China) from the user perspective, weinterviewed 10 users of these two platforms,focusing in particular on theinterface differences between the platforms,as well as the communicationchannels and their importance for successfultransaction completion. We re-port these interviews in Table 1.DiscussionThe interview data reveals that buyersTable 1: Interview Reflections from eBay and TaoBao Buyers and SellersBeing Online >> One buyer specified  when I shop in TaoBao, I only select items from sellers who areTrust >> Seller online because I like to communicate with the seller and solve t  ransactional problemsAdvantage immediately  . Similarly  the icon (active blue or inactive grey) in TaoBaohelps me filtersellers. By appearing online, those sellers express their readiness to communicate withcustomers, and so I trust them more. Online status is even more important for meif itis the first time to transact with a seller. It seems that online sellers are more willing totake care of buyers  needs because they make the communication channel open  .Buyers Need toCommunicatewith SellersBeforeTransactingOne interviewee commented  searching for online sellers is critical because whenconsumers buy things, they must have questions to ask. The transaction intention increases a lot if the seller is online. Trust can be also developed during theconversationin WangWang. Although Skype is also used as a consumer-buyer communication channelin eBay (China), only a few sellers put it to use. Sellers  online statuses are unknown inthe web pages until you try to contact them by logging into Skype. This design createsinconvenience and reduces my communication intention with the sellers  .Sellers Need Some sellers also comment  I like the embedded WangWang in TaoBao becauseto Signal their potential buyers always want to communicate with me directly. TaoBao provides aWillingness to uniform IM for such demand for both buyers and sellers. I don  t need to switch amongCommunicate different IMs (e.g., ICQ, QQ, Skype). With WangWang I can easily signal my willingnessand readiness for communication. That is good for me to build consumers  first-stageconfidence in transactions  .Enacting Both buyers and sellers pointed out that WangWang can fulfil consumers  needs forimpulsive impulsive purchasing:  sometimes people want to buy because of impulse.Under thispurchasing situation, they want to communicate with sellers immediately. If thesellers are notonline, the impulse may not wait for another day  .What motivates Some buyers and sellers have moved from eBay (China) to TaoBao because of thethe switch to convenience provided by the embedded IM. For instance,  WangWang isthe mostTaoBao? critical determining factor for me to switch to TaoBao from eBay (China). I can save theproducts and the sellers in my WangWang bookmark list. I can directly select sellers inWangWang and communicate with them  .have a strong preference for being ableto locate online sellers so as to communicatewith them immediately aboutpotential transactions. They also preferthat the communication channel be
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